Electric cars in Germany are breaking with a long-standing trend: for the first time, their real prices are falling while traditional gasoline and diesel vehicles are getting more expensive. A study by the International Council on Clean Transportation (ICCT) and the Fraunhofer Institute for Systems and innovation Research documents the shift.
Researchers analyzed car-market data from 2020 to 2025, adjusting prices for inflation and improvements in vehicle specifications. On that quality-adjusted basis, the real price of fully electric cars fell by 18% over five years, while combustion-engine models rose by 2%. This compares like-for-like value over time; it does not mean the listed price of every electric model declined.
Indeed, the average sticker price for new electric cars climbed from €37,000 to €53,000 during the same period. The study attributes this apparent contradiction to a changing mix of vehicles: manufacturers moved away from basic city cars and increasingly offered better-equipped, longer-range models in mid- and high-end segments. Nearly three-quarters of new electric cars sold are now in those higher segments. As larger vehicles and more equipment enter the market, the average showroom price can rise even while comparable vehicles become less expensive in real terms.
One basic driver of falling real prices is the rapid evolution of lithium-ion battery technology. The study reports that battery-pack production costs dropped by up to 37% between 2020 and 2025. Those savings do not automatically reach buyers. Manufacturers can put lower pack costs toward vehicle upgrades or margin protection; some may reduce retail prices. During this period, the shift toward greater range and improved specifications absorbed some of the potential savings.
The market’s range of choices expanded sharply. German buyers could choose from about 38 electric-car models in 2020 and 159 by 2025, roughly four times as many. Around 35 electric models were priced below €30,000 in 2025, extending the market beyond premium vehicles. Meanwhile, the range of combustion-engine options shrank from 275 to 194, reflecting manufacturers’ changing investment priorities and the influence of stricter European emissions rules.
Rising prices for gasoline and diesel cars are partly linked to the cost of increasingly complex emissions-control systems and the gradual loss of economies of scale as investment shifts toward electrification. The trend echoes developments elsewhere in the industry, including a growing focus on urban electric vehicles, as highlighted in recent launches of compact EVs.
Battery improvements and production efficiencies could bring electric and combustion-car prices closer, but the timing of price parity will depend on vehicle mix, technology costs and manufacturers’ pricing decisions. A wider selection of lower-priced models gives consumers more options. Continued reductions in production costs could also strengthen the case for electric vehicles.
Germany is Europe’s largest car market and often sets the pace for broader trends across the continent. The ICCT’s September 2026 market monitor put battery-electric vehicles at 28% of German new-car registrations over January-September, nine percentage points above the comparable period in 2025; in September alone, their share reached 35%. Those figures show the market expanding alongside the growth in model choice, but they do not establish price reductions as the sole cause of higher adoption. The coming years will show whether these pricing and sales trends persist as technology and policy change, alongside consumer preferences.
