The average retail price for an electric vehicle (EV) in the UK is 52% higher than that of an equivalent internal combustion engine (ICE) powered model.
A new report from Jato Dynamics, called EVs – A pricing challenge, finds that not enough is being done to produce affordable EVs across several markets.
While the pricing of EVs in China - the world’s largest market for EVs – has significantly fallen by almost half (47%) since 2011, US and European markets have seen EV prices rise over the same time period, by 38% and 28% respectively.
David Krajicek, CEO at JATO Dynamics, commented: “Governments and manufacturers have made significant progress over the last decade in expanding the EV market, however, the industry remains under pressure as it continues to adapt to the requirements of sustainability targets and shifting market forces.
“The incentivisation of EVs has supported Western manufacturers seeking to expand their offering as consumer demand has evolved, however, the industry’s key players must start to address the price gap between EVs and ICE cars if they are to remain competitive with their peers in China.”
In May 2021, EVs were on average 52% more expensive than ICE cars in the UK, and 54% more expensive in the Netherlands. In Germany, the average retail price of an EV is €39,755 (£34,068) compared to €36,979 (£31,689) for ICE vehicles. Norway is the only exception – the average retail price for EVs is €44,500 (£38,134) compared to €53,000 (£45,418) for ICE cars.
Consumers in China, meanwhile, can buy a brand new EV for as little as €3,700 (£3,170).
Jato says government-led incentives have been a “vital factor” supporting the automotive industry to offset the price gap between traditional cars and EVs. China’s commitment to the development of affordable EVs has strengthened the market to such an extent that its government is now in the process of phasing out incentives, while OEMs in Europe and the US continue to rely on such schemes to boost their sales.
Unless OEMs in Europe and the US find avenues to create more affordable EV offerings, Jato believes they run the risk of losing their home market advantage to Chinese competitors.
The latest EY Mobility Consumer Index (MCI) found 58% of consumers said they are willing to pay a premium for an EV, with 39% of those respondents willing to pay a premium of up to 20%.