An analysis by the European advocacy group Transport & Environment (T&E) shows that the average price for electric cars in the EU will have fallen in 2025 for the first time in five years. Buyers pay an average of 42,700 euros, 1,800 euros (or around 4 percent) less than last year.

Affordable small cars are the drivers of lower prices

New, affordable small cars in the so-called B segment are primarily responsible for this price slide. Models such as the fully electric Renault 5 (from 28,000 euros) or the Citroen E-C3 (from 20,140 euros) reduced the average costs in this highly sought-after vehicle class by a whopping 13 percent.

In the larger and more expensive segments (D and E), price parity with comparable combustion engines will be achieved as early as 2024.

The driving force: Strict EU targets are working

This trend is no coincidence. T&E attributes the price decline directly to the European Union’s stricter CO2 fleet limits.

Between 2020 and 2024, despite falling battery prices worldwide, car manufacturers primarily relied on high-margin, large electric SUVs, which drove up average prices on the market by around 5,000 euros.

The new, stricter CO2 targets for the years 2025 to 2027 are now forcing manufacturers to rethink: In order to avoid fines, mass-market and more affordable electric cars must be brought onto the market.

The strategy is working: car companies, which together represent half of the market, have already met their requirements in the first half of 2025. Only Volkswagen and Renault are currently lagging behind as individual companies, but according to the forecasts they should also achieve their goals on time by the end of 2027.

Five demands on politicians

To ensure that Europe does not lose out in the global e-car race and that the vehicles become affordable for the general public, T&E is calling for a course from politicians as part of the upcoming review of the CO2 limit values ​​(“Car CO2 review”). The experts’ recommendations:

• Honest consumption information: In the future, car labeling must show real everyday consumption (real-world information) instead of just laboratory values ​​(WLTP) and make the vehicle’s entire CO2 footprint transparent. For the high-volume, smaller segments (A to C), T&E expects final price parity with combustion vehicles by 2030. But this scenario is shaky if politicians give in to pressure from the auto industry and the EU weakens its CO2 targets for 2030, warn the environmental lobbyists.
• No tricks when it comes to deadlines: The three-year average period for the 2030 fleet targets is to be deleted in order to maintain the pressure.
• Focus on real small cars: So-called “super credits” (multiple credits of electric cars towards fleet goals) should be strictly limited and only granted for compact vehicles under 4.1 meters long.
• Clear commitment to electromobility: From 2035 onwards, loopholes for biofuels will be closed and corresponding “fuel credits” will no longer be awarded.
• Sustainability in production: Credits for the use of low-emission steel should only apply to “Made-in-EU” steel that is produced without fossil fuels.

If the general conditions remain strict, T&E expects the final price parity with combustion vehicles for the high-volume smaller segments (A to C) by 2030. But this scenario is extremely wobbly. For example, if the five-year averaging of emissions targets required by parts of the industry were introduced, the electric car market share could plummet from the targeted 47 percent to just 32 percent in 2030.

Chinese manufacturers are pushing massively into Europe

In addition, in such a case, manufacturers would probably again put their margins above sales figures: according to the study, an average electric car would then be 2,300 euros more expensive in 2030 than it would be if the current climate targets were maintained.

Sebastian Bock, head of T&E in Germany, warns urgently against weakening the standards decided by the EU Parliament. A reduction would “not protect European industry in the long term”, but would only delay the upcoming price slide and only protect companies’ margins and dividends in the short term.

Meanwhile, the international competition is not sleeping: Chinese manufacturers are pushing massively into Europe and are now even ahead of the traditional German premium brands when it comes to new registrations of plug-in hybrids.

Bock’s conclusion on the current market situation is therefore unmistakable: “Thanks to the CO2 targets, there are now finally cheaper electric cars in Europe. If we stay on course now and don’t water down the targets for 2030, new electric cars will soon be cheaper than combustion engines.”