Electric vehicle prices plunged below those of traditional, petrol-fueled cars in China over the past five years but remain higher than the price of traditional cars in the United States, according to the International Energy Agency. 

The chart above compares the prices of EVs relative to traditional petrol-fueled cars. The 0% mark on the y-axis signals where EVs become less expensive than traditional cars. Government subsidies for buyers are not included in the calculations. 

EV sales grew 25% in the first quarter of this year globally. China, where more than four out of ten new cars sold are electric, accounted for the lion’s share of sales overall. In Europe, 25% were electric and in the U.S. 11%.  

Small EVs in China saw the sharpest decline in prices compared to traditional cars between 2018 and 2022, as Chinese automakers fell into a savage competition for market share and the prices of batteries fell sharply. The small-car segment also dominates sales in China, so that competition pushed the overall average price across all segments below the cost of traditional cars. This trend was also helped by increasingly competitive models of medium-sized cars and SUVs, which nearly reached cost parity with traditional SUVs by 2022.  

The market in the U.S. is at the other end of the spectrum. Prices for larger and more expensive electric vehicles — which dominate the U.S. market — fell relative to traditional cars, but they didn’t fall nearly enough to compete with traditional models without subsidies. Still, EVs continued to close the gap last year and this year as Tesla, which accounts for a large share of EV sales, cut prices.  

The Biden administration’s recent move to slap 100% sanctions on Chinese-made cars is likely to keep the price of all EVs sold in the U.S. higher than they would be otherwise compared to traditional cars.  

The picture in Europe is mixed, with electric vehicles generally closer in price to traditional cars but with a persistent gap.