The latest Jato Dynamics study led by Felipe Munoz shows that the narrowing price gap between electric (BEV) and thermal (ICE) has led to greater adoption of electric vehicles in Europe as models become more accessible and affordable – Despite this, the high cost of Western BEVs remains a barrier to entry for consumers, while Chinese manufacturers are now offering electric cars for as little as €3,250 in China. The gap between the world’s largest Chinese market and the others is not closing, on the contrary.
A similar situation played out in the UK, where the BEV-ICE price gap fell from 51% in 2018 to 18% in 2024. This was caused by falling BEV prices (-11%). and the increase in prices of ICE vehicles (+14%). Similarly, in the United States, the BEV-ICE price gap decreased from 53% in 2018 to 15% in 2024. However, in this case, the price of ICE vehicles did not increase, while the cost of BEVs in US dollars decreased by 25%. “The reduction in the BEV-ICE price gap cannot be attributed solely to the availability of cheaper BEVs in the market. Although electric offerings from automakers are improving both in terms of quality and affordability, the overall price of ICE cars has increased,” confirms Felipe Munoz, global analyst at JATO Dynamics.
Electricity prices fall in Europe and the USA
Despite continued efforts by traditional automakers to make electric vehicles more affordable, a significant price gap between BEVs and internal combustion engine (ICE) vehicles remains. This is according to the latest report from JATO Dynamics, which explores China’s unrivaled capacity to produce affordable BEVs and its role in the global shift to electric vehicles. Within the eurozone, the price premium – the additional cost a buyer must pay for a BEV compared to an ICE vehicle – has fallen from 53% in 2018 to 22% in 2024. The average price of a BEV in the region fell by 15%, while the average cost of an ICE increased by 7%.
But it is very insufficient against China…
-Despite this, the contrast between the situation in the West and China is striking. Within the Eurozone, the average retail price of a BEV was 118% higher than in China in 2018. In 2024, this figure has totaled 111%. A similar situation played out in the United Kingdom , where the price gap increased from 100% to 122% during the same period. In the United States, the gap fell from 125% to 109%.
The Chinese market is moving much faster
This means that China is moving faster than the West to develop more affordable BEVs. As countries around the world transition from fossil fuels to cleaner sources of renewable energy, China’s competitiveness in the electric vehicle market puts it in a dominant position. “China is already one of the major players in the automotive space, and that’s not something that’s going to change anytime soon. After all, a Chinese BEV is likely to be more attractive to consumers than a comparable model from a Western automaker, simply because of the huge price difference,” Munoz concluded.
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