According to a new study by JATO Dynamics, the average selling price of a new electric vehicle (EV) in China has nearly halved (by 47%) since 2011, while US and European markets have seen EV prices rise over the same period by 38% and 28% respectively.
In May 2021, the study found that EVs on average for around 50,000 euros (PKR 95.7 lac), were 52% more expensive than ICE (internal combustion engine) cars in the UK, and 54% more expensive in the Netherlands. However in comparison, in China which is the world’s biggest EV market, customers can purchase a brand new electric car for as little as 3,700 euros (PKR 7.08 lac).
In 2011, the average selling price for EVs in China was 41,800 euros (PKR 80.0 lac), and it has dropped 47% to 22,100 euros (PKR 42.3 lac) this year. China’s success in producing affordable EVs boils down to several factors, including the government’s decision to heavily invest in the domestic market from as early as 2009.
In 2010, the Chinese government announced a trial program to provide incentives of up to 60,000 yuan (PKR 15.11 lac) for private EV purchases, and 50,000 yuan (PKR 12.59 lac) for PHEVs in 5 cities including Shanghai, Shenzhen, Hangzhou, Hefei and Changchu. The incentives remained in place for 10 years and was due to be phased out by December 2020, but the Covid-19 pandemic forced its extension in order to bolster sales.
Contrary to this, average retail prices for EVs in the US is rising faster than any other major global market. For example, the average EV prices in the US today is 36,200 euros (PKR 69.29 lac), up from €26,200 (PKR 50.14 lac) in 2011. While the new tax credit system has helped accelerate the growth of its premium EV segment, lower income buyers don’t benefit as much, and carmakers are not motivated to produce more affordable EVs.
Just this year, 40% of EVs sold in China were affordable city cars, which had an average retail price of 6,700 euros (PKR 12.82 lac). In Europe, consumers require at least 15,740 euros (PKR 30.12 lac) to drive home a new EV, and in the US it is 24,800 euros (PKR 47.46 lac). Based on these findings, it is clear that Western markets need to catch up with China, or risk falling further behind. According to Volkswagen Sustainability Advisory Council member, Ye Qi:
“China has been hugely successful in the race of EV leadership – growing and evolving their model ranges at incredible pace, which is a positive result of a number of factors working in tandem. Unless OEMs in Europe and the US finds avenues to create more affordable EV offerings, they run the risk of losing their home market advantage to Chinese competitors. As the popularity of SUVs has continued to grow in Western markets, the segment looks set to be an important battleground for manufacturers seeking to establish themselves as leaders within the EV market.”
“In the short term at least, government subsidies and incentives will continue to support EV sales, but for how long remains a crucial question for the industry,” he added.
A 3d animation professional with over 20 years of industry experience having served in leading organizations & production facilities of Pakistan, an avid car enthusiast and petrolhead with an affection to deliver writings to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com