If you want to buy an electric vehicle in the United States, the cheapest option costs more than twice as much as the least expensive internal combustion vehicle on the market. If you want to buy a new EV in China, the most affordable option costs nine percent less than the cheapest internal combustion vehicle available to you.
This is a sign of the price gap that keeps growing wider in the automotive industry. While the EVs being sold by legacy automakers in the U.S., Europe, and elsewhere still cost more than their internal combustion counterparts, in China, anyone can afford an EV.
In the first half of 2023, the average EV cost €66,864 ($70,462 USD at current exchange rates) in Europe and €68,023 ($71,683 USD) in the U.S., according to data from JATO Dynamics. By contrast, the average EV cost less than half as much in China, ringing in at just €31,165 ($32,842 USD).
Average Retail Price Of EVs H1 2023 In USD
That’s a reflection of a number of factors. For starters, range anxiety in the U.S. has encouraged its automakers to invest almost exclusively in expensive lithium-ion battery technology. In order to conceal the cost of the battery, the majority of EVs are crossovers and SUVs and tend to be premium vehicles. By contrast, less expensive battery chemistries in China have helped drive down the cost of EVs.
Not every aspect of China’s cheap EVs is so rosy, though. Robust unions in the U.S. and Europe mean that workers are paid considerably more there. In addition, well-founded reports that a large portion of China’s manufacturing industry is supported by forced Uyghur labor throw into question the ethics of its success, and raise alarm bells about its human cost.
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However, production costs aren’t the only factor. The Chinese government has also subsidized the purchase of EVs significantly. While U.S. and European countries are also offering tax advantages, China’s approach has been more successful at nurturing an industry that offers a wide variety of vehicles.
While American consumers can choose from 51 all-electric models and Europeans are offered 135, Chinese buyers can pick from 235 EVs. That means that, while there are premium vehicles on offer, there are also cheaper models available. And that may be intentional.
With an eye on international markets, China’s automakers are producing low-priced EVs to earn their relatively novel brands a foothold in a variety of markets. That makes the average Chinese EV cheaper than its competitors around the world, not just in China.
