Why Electric Vehicles Are Pricier in the United States Compared to China
In the first half of 2023, EVs in Europe had an average price of €66,864 ($70,462 USD), while in the U.S., the average price was €68,023 ($71,683 USD). In comparison, the average price of an EV in China was much lower at just €31,165 ($32,842 USD), less than half the price.
Several factors contribute to this price disparity. In the U.S., the fear of running out of battery charge, known as range anxiety, has led automakers to focus on expensive lithium-ion battery technology. To offset this cost, most EVs in the U.S. are premium vehicles such as crossovers and SUVs. On the other hand, China has adopted less costly battery technologies, leading to lower EV prices.
However, it’s important to acknowledge that China’s cheaper EVs also have some drawbacks. Workers in the U.S. and Europe are paid more due to strong labor unions, but in China, this might not be the case. Concerns have also been raised about forced labor practices in China’s manufacturing industry, particularly in relation to the Uyghur population.
Apart from production costs, government subsidies play a significant role. China has heavily subsidized EV purchases, contributing to their affordability. While the U.S. and European countries provide tax advantages as well, China’s approach has been more successful in fostering a diverse range of EV models.
In terms of vehicle options, Chinese consumers have the most choices. They can select from 235 different EV models, including both premium and more affordable options. This wide selection supports China’s intention to establish its relatively new automotive brands in international markets.
In the United States, electric vehicles (EVs) are more expensive than traditional internal combustion engine vehicles. The cheapest EV costs over twice as much as the least expensive conventional vehicle. However, in China, the most affordable EV costs 9% less than the cheapest conventional vehicle available. This highlights a growing price difference in the automotive industry.
As a result, Chinese EVs are not only cheaper domestically but also globally. China’s automakers aim to gain market share in various countries by producing low-priced EVs, making their average EV prices lower than competitors worldwide.