Electric vehicles are often criticized for failing to become cheaper as quickly as their batteries. A new German market study, however, suggests that comparable EVs did become substantially less expensive between 2020 and 2025, even though the typical advertised price seen by shoppers moved in the opposite direction.
Researchers from the International Council on Clean Transportation and the Fraunhofer Institute for Systems and Innovation Research examined over 100,000 passenger-car configurations offered in Germany. After accounting for inflation and differences in vehicle size, power, battery capacity, and range, the analysis found that battery-electric vehicle prices fell by approximately 18 percent in real terms.
Comparable internal-combustion vehicles became roughly 2 percent more expensive over the same five-year period. The study therefore indicates that EV technology was becoming cheaper at the model level, even when showroom pricing made that progress difficult to recognize.
The apparent contradiction comes down to the difference between changes in individual vehicle prices and changes in the overall selection of vehicles on sale. Germany gained far more EVs during the period, yet much of that expansion occurred among larger, better-equipped, and consequently more expensive models.
Battery Costs Fell Faster Than Vehicle Prices
Global battery costs declined by approximately 35 percent in real terms between 2020 and 2025, according to the study. That reduction was nearly twice the estimated 18 percent decline in the adjusted prices of equivalent electric vehicles.
Cheaper batteries did not translate dollar-for-dollar into lower retail prices because manufacturers had several other uses for the savings. Automakers could install larger battery packs, extend driving range, improve performance, add equipment, or recover some of the substantial research and development costs associated with launching new electric platforms.
The results do not necessarily show that manufacturers simply kept all the savings as additional profit. They suggest that part of the cost reduction was absorbed into making EVs more capable and competitive rather than producing dramatically lower window stickers.
Why The Median Price Still Increased
The median advertised EV price in Germany rose from approximately €38,000 in 2020 to around €54,000 in 2025. That increase looks alarming in isolation, yet it largely reflects how the market’s model mix changed rather than an across-the-board rise in the cost of comparable cars.
Germany’s selection of battery-electric models expanded from 38 vehicles in 2020 to 159 in 2025. Much of that growth came from lower-medium, medium, and upper-medium segments, where larger crossovers, sedans, and premium vehicles naturally carry higher prices.
Adding dozens of expensive vehicles can push the market median higher even while an existing model becomes cheaper. In simple terms, the price of a particular EV may fall, yet the typical EV in the showroom can become more expensive because the showroom now contains a greater share of high-end products.
Affordable Small EVs Remain Limited
Smaller EVs have not expanded at the same rate as larger models. Mini and small cars reportedly accounted for only 14 percent of the battery-electric models available in Germany during the study period.
That imbalance means buyers looking for an affordable entry point into electric motoring still face a relatively narrow selection. Falling component costs cannot transform the market if manufacturers continue concentrating their product plans on larger vehicles with higher margins and more equipment.
The report therefore highlights a supply problem as much as a pricing problem. Affordable EVs can become technically easier to build, yet consumers will not benefit fully until manufacturers offer enough small, lower-priced models to change the broader market mix.
Germany’s Results Do Not Apply Everywhere
The findings focus specifically on Germany, Europe’s largest new-car market. Taxes, incentives, fuel prices, manufacturer strategies, and consumer preferences differ substantially in other regions, meaning the same percentages should not automatically be applied to the United States or other countries.
Even so, the study offers an important warning about interpreting average or median vehicle prices. Those figures can rise because shoppers are being offered a different group of vehicles, not necessarily because each vehicle has become more expensive.
EVs may therefore be getting cheaper beneath the surface, just not in the way buyers immediately notice. Battery savings are delivering longer ranges, stronger specifications, and lower adjusted prices, while the industry’s preference for larger and more expensive models continues to keep the typical sticker price elevated.