A new study by the International Council on Clean Transportation (ICCT) and the Fraunhofer Institute for Systems and Innovation Research (Fraunhofer ISI) has found that battery electric vehicles (BEVs) in Germany became significantly more affordable between 2020 and 2025 when adjusted for inflation and vehicle specifications, despite an increase in average list prices.
The study, based on more than 100,000 data points covering six vehicle segments from small cars to luxury models, identifies Germany—Europe’s largest automotive market—as an indicator of broader trends across the region.
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The researchers found that the apparent rise in average electric vehicle prices largely reflects a shift toward larger and more premium models rather than higher prices for comparable vehicles.
Comparable Electric Vehicle Prices Declined
Average list prices for battery electric vehicles in Germany increased from about €37,000 in 2020 to approximately €53,000 in 2025. However, the study said this increase was driven by changes in the mix of available models, with mid-size and upper mid-size vehicles accounting for 73% of electric models available in 2025.
After adjusting for inflation and vehicle characteristics including weight, driving range and motor output, researchers found that comparable battery electric vehicles became around 18% cheaper over the five-year period.
By comparison, comparable internal combustion engine vehicles recorded a real price increase of about 2% during the same timeframe.
ICCT Europe Managing Director Peter Mock said the findings demonstrate how the electric vehicle market has matured.
“Our results show that the market for electric cars has evolved significantly in recent years. Today, these vehicles offer, on average, longer ranges and more engine power, while the actual prices of comparable models have fallen. This a clear indicator of where Europe’s automotive market is headed.”
Lower Battery Costs Support Better Vehicle Performance
The study found that global battery prices declined by between 21% and 24% in nominal terms between 2020 and 2025, falling from approximately €165–185 per kilowatt-hour to around €130–140 per kilowatt-hour.
After accounting for inflation, battery prices declined by roughly 35% to 37%.
Researchers noted that the reduction in battery costs has not yet been fully reflected in vehicle prices. Instead, manufacturers appear to have used much of the savings to improve vehicle performance, with average driving range increasing by about one-third during the study period.
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Patrick Plötz, Head of the Department of Energy Technology and Energy Systems at Fraunhofer ISI, said additional price reductions may still be possible.
“The significant drop in battery costs has not yet fully translated into lower list prices. This means that the potential for further price reductions in electric vehicles has not yet been exhausted.”
Electric Vehicle Choices Continue to Expand
According to the report, the number of battery electric vehicle models available in Germany increased from 38 in 2020 to 159 in 2025.
Over the same period, the number of internal combustion engine models declined from 275 to 194.
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ICCT researcher Kyle Morrison said electric vehicle buyers now have a much wider range of options in many market segments.
“The number of electric models has grown fourfold in just five years. In the medium and upper medium segments, meaning mid-size and larger cars, consumers now have roughly as many electric options as combustion engine vehicles.”
However, the study found that smaller vehicle categories continue to offer fewer battery electric options, with 19 electric models available in the mini and small-car segment compared with 35 internal combustion models in 2025.
Policy Stability Seen as Key to Future Growth
The researchers said long-term regulatory certainty, including stable carbon dioxide fleet emissions standards, will remain important to support continued investment in vehicle electrification and battery manufacturing.
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The study concludes that predictable policies could help accelerate progress toward price parity between electric and combustion-engine vehicles while encouraging manufacturers to expand electrification across all vehicle segments.