The price of battery electric vehicles (BEVs) fell by 18% in real terms in Germany between 2020 and 2025, compared to a 2% increase for combustion engine cars, according to a new study by the International Council on Clean Transportation (ICCT).
In nominal terms, meanwhile, BEV prices remained relatively unchanged over the five year period, while combustion engine vehicle prices rose by approximately 24%.
The study, which was undertaken alongside researchers from the Fraunhofer Institute for Systems and Innovation Research (ISI), examined more than 100,000 passenger vehicle configurations across Germany to assess trends in pricing, model availability and vehicle characteristics between 2020 and 2025.
Battery costs
As the researchers noted, much of the price decline for BEVs was driven by declining battery costs, which fell between 35% and 37% in real terms over the period – however they added that manufacturers did not fully pass on these savings to customers.
Global average nominal battery costs decreased by between 21% and 24% during the period.
‘As batteries are the dominant cost component of battery electric vehicles, understanding how battery prices evolved can explain overall BEV price trends,’ the study noted.
‘These cost reductions created the potential for lower BEV purchase prices. However, manufacturers have not fully passed through advancements in battery production to consumers. Instead, they may have opted to improve vehicle characteristics, such as electric range (approximately +30%), or recoup research and development investments.’
There was also a significant increase in the availability of BEV models between 2020 and 2025, with the number of models available on the German market increasing from 38 to 159 over the period. Most of this expansion occurred in the lower medium, medium and upper medium vehicle segments.
At the same time, the report concluded that access to relatively affordable electric vehicles remains limited, with mini and small car segments accounting for 14% of BEV models available in 2025.
Regulatory certainty
The report recommends that policymakers maintain long-term regulatory certainty to ‘drive investment in full electrification across all vehicle segments and battery manufacturing’, as well as calling for targeted financial incentives for lower-income households purchasing or leasing electric vehicles.
‘At the EU level, the recently proposed multiplier for smaller BEVs could incentivise manufacturers to deploy more vehicles in these segments,’ the report notes.
‘At the German national level, the newly introduced purchase subsidy is targeted at less affluent households but does not specifically support smaller vehicles or lower list prices. Including a higher bonus for smaller BEVs or introducing a vehicle price cap could help close both the model and price gap.’ Read more here.
