Raw shift in vehicle dominance approaching: electric cars poised to take over the market as funds dwindle
Record Breaking Electric Car Registrations in Germany
In a remarkable turn of events, Germany has seen a significant surge in the adoption of electric vehicles (EVs) over the past year. According to the Association of International Automakers (VDIK), over 297,000 new electric cars were registered from January to July 2025, marking an impressive 38.4 percent increase compared to the previous year.
The first quarter of 2025 saw an average of 82,000 pure electric cars worth 3.4 billion euros being exported each month from Germany. This trend continued in the second quarter, with the electric share reaching 29 percent in new registrations. The high demand for electric cars is set to continue throughout the year, as reported by the ADAC.
The increased availability of affordable electric cars is a key factor contributing to this growth. The Association of International Automakers attributes this to the significantly larger offer of electric cars in the affordable entry-level classes.
On a global scale, the share of electric vehicles has more than doubled in the past three years. One in five new cars worldwide is electric, according to a recent study by KfW Research. The global value of EV exports is five times higher than that of imports.
In contrast to the falling or stable prices of EVs, the prices for internal combustion engine (ICE) vehicles have been on the rise. Over the past year, the average price of new EVs in the U.S. has decreased by around 4.2 percent, while prices for ICE vehicles have increased by approximately 1.5 percent. This has led to a shrinking price gap between EVs and ICE vehicles; in fact, average monthly EV payments are now comparable to or even lower than those for gasoline cars.
Several key factors contribute to this evolving pricing situation. Battery price declines are significant but offset by larger battery sizes in EVs. Government incentives and subsidies had previously supported EV affordability, but the recent expiration of federal EV rebates is creating urgency to buy now before prices rise again. Growing market competition and diversification among EV brands have increased pressure to reduce prices and improve consumer options, contributing to more affordable EV choices. Leasing of EVs has surged, becoming the dominant financing method by early 2025, which helps buyers manage the higher sticker prices by lowering monthly payments and making EVs more accessible.
In summary, the pricing trend shows EV prices falling modestly or stabilizing while ICE vehicle prices rise slightly, narrowing the cost gap. This is driven by battery technology dynamics, phasing out of government incentives, increased market competition, and shifting financing methods like leasing. The shift towards electric vehicles is undeniable, with Germany leading the charge in Europe.
