Battery electric vehicle prices fell 18% and model choice quadrupled between 2020 and 2025
Report
Price and market trends of battery electric and internal combustion engine vehicles in Germany, 2020–2025
Overview
Key barriers in the transition to battery electric vehicles (BEVs) include lower model availability and a lack of affordable models compared with internal combustion engine vehicles (ICEVs). This report examines the development of model availability, vehicle prices, as well as other vehicle characteristics over time using historical passenger car data for Germany from 2020 to 2025. More than 100,000 observations, i.e. combinations of vehicle make, model, powertrain and other specifications, provided a solid base to determine trends within the mini, small, lower medium, medium, upper medium, and luxury passenger car segments.
Key findings
Battery electric vehicle prices decreased by about 18% in real terms between 2020 and 2025, compared with a 2% increase for combustion engine cars.
When following individual models and controlling for changes in vehicle mass, engine power, battery capacity, and electric range, the study finds that median BEV prices decreased by about 18% in real terms (adjusted for inflation). ICEV prices increased by around 2% in real terms. Meanwhile, global average battery costs decreased by about 35%–37% in real terms,
Nominal BEV model prices (not adjusted for inflation) remained nearly constant from 2020 to 2025. In contrast, nominal ICEV model prices increased by about 24% over the same period. Global average nominal battery costs decreased by about 21%–24%.
Global battery costs declined substantially but did not fully translate into lower vehicle prices.
As batteries are the dominant cost component of battery electric vehicles, understanding how battery prices evolved can explain overall BEV price trends. The study finds that global nominal battery prices decreased by around 21%–24% (35%–37% when adjusted for inflation) over five years, which equals an average compound decrease of 4.7%–5.4% (8.6%–8.8% adjusted for inflation) per year.
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.
Battery electric model availability has increased more than fourfold.
The number of battery electric vehicle models available in Germany increased significantly, from 38 in 2020 to 159 in 2025. The medium segments, which include lower medium, medium, and upper medium, accounted for 73% of BEV models in 2025, an increase from 16 in 2020 to 116 in 2025. The mini and small segments accounted for only 14% of offerings combined, reflecting a lower availability of lower cost BEVs.
The market median price of battery electric vehicles increased due to more medium and upper medium battery electric models on offer.
Despite the price decreases on model level, across all vehicle segments, nominal median BEV price offers increased by 42%, from €38,000 in 2020 to €54,000 in 2025. However, this was largely driven by a change in vehicle models available—with an increased share of more expensive large and upper mid-size BEVs entering the market. Median nominal prices internal combustion engine vehicles increased by 15%, from €41,000 to €46,000.
Policy recommendations
To help address remaining price barriers and continue developing the battery electric car market in Germany, our recommendations to policy makers include:
- Ensuring regulatory certainty to drive investment in full electrification across all vehicle segments and battery manufacturing. This can narrow the model availability gap between ICEVs and BEVs, especially in the mini and small segments, and incentivize manufacturers to pass on cost savings to consumers by signaling continued BEV adoption and increasing BEV market competition. The EU’s CO2 performance standards have provided such certainty, though recent proposals to lower targets risk undermining this.
- Targeted fiscal incentives for vehicle purchase or lease aimed at less affluent households can help bridge the gap between BEV and ICEV models in the mini and small segments. At the EU level, the recently proposed multiplier for smaller BEVs could incentivize manufacturers to deploy more vehicles in these segments. 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.
- Right-sizing batteries for BEVs across vehicle segments to reduce costs. A previous ICCT study found that with the increased availability of fast charging infrastructure, battery electric passenger cars with longer ranges provide little additional driving benefit to most drivers while increasing purchase and charging costs.