Greater price parity between electric cars and petrol/diesel is helping to drive EV demand as models become more accessible and affordable.

The price gap between BEVs and ICE vehicles in the UK fell from 51% in 2018 to 18% in 2024

A new report from Jato Dynamics reveals that the price gap between electric cars (BEVs) and internal combustion engine (ICE) vehicles in the UK fell from 51% in 2018 to 18% in 2024.

This was caused by declining prices of BEVs (-11%) and rising prices for ICE vehicles (+14%).

Within the Eurozone, the price premium for BEVs has dropped from 53% in 2018 to 22% in 2024. The average price of a BEV in the region has dropped by 15%, while the average cost of an ICE has risen by 7%.

Felipe Munoz, global analyst at Jato, said: “The narrowing of the BEV-ICE price gap cannot only be attributed to the availability of cheaper BEVs on the market. Although carmakers’ electric offerings are improving in terms of both quality and affordability, ICE cars have risen in price overall.

“This is a result of factors such as increased regulation, stricter standards and the introduction of more high-tech features, all of which have combined to hike the final retail price of these vehicles. In the meantime, electric cars have benefitted from lower battery costs, which has caused BEV prices to decline,” Munoz continued.

But despite continuous efforts from legacy carmakers to make electric vehicles more affordable, a significant price gap between BEVs and ICE vehicles still remains, proving a barrier to the EV switch, according to Jato.

And the firm warns that the contrast between the situation in the West and China is stark. Within the Eurozone, the average retail price of a BEV was 118% higher than in China in 2018. In 2024, this figure totalled 111%. A similar situation has played out in the UK, where the price gap increased from 100% to 122% over the same period. In the US, the gap decreased from 125% to 109%.

This means that China is moving faster than the West to develop more affordable BEVs, putting it in a commanding position.

“China is already one of the major players in the automotive space, and this is not something that is going to change any time soon. After all, a Chinese BEV is likely to be more appealing to consumers than a comparable model from a Western automaker, simply due to the enormous price difference,” Munoz concluded.

Jato’s report on ‘Closing the gap: The progress towards affordable EVs and the growing threat from China’ is online here.