Electric car or not? Price always makes the difference

The transition from internal combustion engine (ICE) cars to battery electric vehicles (BEVs) is as exciting as it is challenging. The pressure exerted by governments for the adoption of less polluting powertrains, China's intention to play a leading role in this market and the exponential growth of Tesla have increased demand for these cars worldwide.

Preliminary figures for 2023 indicate a total of 9.8 million pure electric light vehicles sold worldwide, representing 11% of global light vehicle sales. All of this is positive, if prices are not taken into account. According to a study carried out by JATO Dynamics in October 2023, the average price of an electric car in the United States is 35% higher than that of a petrol car and 39% higher in Europe. This is not the case in China, where the average price of an electric car is 27% lower than that of a petrol car.

Until the price gap narrows, BEVs will continue to play a lesser role, at least in Europe and North America.

Living with the enemy

The big price difference becomes a major problem when the same customer has to choose between electric, petrol or diesel within the same brand. While Tesla, Lucid, Polestar, NIO, Xpeng and many others have started out as purely electric car brands, traditional companies are having to face up to the transition, and it's not easy to go from decades of producing cars with internal combustion engines to producing electric cars. Not to mention the need to adapt their know-how and commercial structures to the new reality.

That's why we continue to see a wide range of petrol-powered cars alongside highly publicised electric cars. Although all car manufacturers are aiming to produce and sell only electric vehicles within the next 10 to 20 years, the current reality is that internal combustion engine cars account for around 80% of sales (including mild hybrids and full hybrids).

ICE vs electric

Meanwhile, electric cars are struggling to gain a foothold, partly because of their internal combustion engine counterparts from the same brand. This is one of the reasons why many electric models simply don't take off, or struggle to sell enough. There are many examples:

• Volkswagen ID.3 vs Volkswagen Golf: Although the current generation of the Golf no longer tops the sales charts in Europe, its electric counterpart, the ID.3, is not dominating the continent with significant volumes. This applies to both Europe and China. In Germany, the popular classic Golf costs on average 17% less than the ID.3, whose design is also more controversial.
• Ford F-150 ICE vs. Lightning: Why choose the electric version of this pick-up if its average retail price in the United States is 41% higher than that of the same vehicle powered by a combustion engine? In these cases, the consumer is primarily looking for load capacity and interior comfort, not the vehicle's mode of propulsion.
• Fiat 500e vs Fiat 500: Although the former uses an entirely new platform since 2020 and the latter has been on the market since 2007, they are virtually the same car in terms of interior space and city handling. However, in Italy, the average price of the electric 500 is twice that of the combustion 500. So once again the question arises: are those who buy a city car really looking for 'clean' mobility or simply an easy solution?
• Mercedes EQA vs GLA, BMW iX1 vs X1: Although the gap is smaller in the higher segments, there are still differences with which we close this review. In the case of Mercedes, the electric version is 9% more expensive than the ICE version (excluding AMG versions) and in the case of BMW, the iX1 costs on average 11% more than the X1.

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The author of the article, Felipe Munoz, is a specialist in the automotive industry at JATO Dynamics.