The price gap between battery electric vehicles (BEV) and internal combustion engined (ICE) models has fallen from 51% to 18% over the past six years in the UK, according to a new report from Jato Dynamics.
Jato says the shrinking gap was caused by declining prices of BEVs (down by 11% over the period) and rising prices for ICE vehicles (up 14%).
Despite this, the average retail price of a BEV in UK is still 122% higher than in China.
As countries across the globe shift from fossil fuels to cleaner sources of renewable energy, Jato says that China’s competitiveness in the BEV market puts it in a commanding position.
The data and analytics specialist has published its new report, ‘Closing the gap: The progress towards affordable EVs and the rising competition from China’, which explores China’s unrivalled ability to produce affordable BEVs and its role in the global switch to EVs.
China is now responsible for two-thirds of global EV registrations.
The latest figures from Rho Motion show that EV sales grew by 40% year-on-year in China in 2024 to 11 million units.
Despite continuous efforts from legacy carmakers to make BEVs more affordable, the price gap between BEVs and ICE vehicles remains.
Felipe Munoz, global analyst at Jato Dynamics, said: “The narrowing of the BEV-ICE price gap cannot only be attributed to the availability of cheaper BEVs on the market.
“Although carmakers’ electric offerings are improving in terms of both quality and affordability, ICE cars have risen in price overall.
“This is a result of factors such as increased regulation, stricter standards and the introduction of more high-tech features, all of which have combined to hike the final retail price of these vehicles.
“In the meantime, electric cars have benefitted from lower battery costs, which has caused BEV prices to decline.”
Munoz said China’s position as one of the major players in automotive is not going to change any time soon.
He added: “After all, a Chinese BEV is likely to be more appealing to consumers than a comparable model from a Western automaker, simply due to the enormous price difference.”
Chinese car makers are expected to make a significant dent in the UK car market over the next few years, bringing an influx of cheaper BEVs.
However, this position could be severely impacted by the potential for future tariffs on Chinese imports, if the UK decides to follow suit with the US and EU.
