Hybrid cars, which have long served as an economical bridge between internal combustion engine vehicles and fully electric models, are giving way to electric vehicles in the global market. New data reveals that the average sales price of electric vehicles has now fallen below that of hybrid models.

According to information shared by Mobility Global, the average price of electric vehicles fell to $37,000 last year. In the same period, the average price of hybrid vehicles increased by 16 percent to $39,000.

The Impact of China’s Battery Production

This decrease in electric vehicle prices is primarily due to the 37 percent decrease in lithium-ion battery costs between 2020 and 2025. Battery packs account for approximately 30 to 40 percent of the total cost of an electric vehicle.

BloombergNEF attributes this cost reduction to excess capacity in China, which controls approximately 80 percent of the global battery market. Additionally, the use of cobalt-free lithium-iron phosphate (LFP) batteries, which are less affected by price fluctuations, is becoming more widespread.

Major manufacturers such as Renault and Volkswagen have announced they will switch to this cost-effective battery technology. The aggressive expansion of Chinese manufacturers in the global market also plays a critical role in the price drop.

While the number of electric vehicles exported from China was below 100,000 in 2020, this number reached 1.64 million last year. In developing markets such as Southeast Asia and South America, electric models are offered to consumers at more affordable prices compared to hybrid vehicles.

Market Dynamics and Changing Preferences

Looking at the data from the last five years, electric vehicle prices are showing a downward trend, while internal combustion engine vehicle prices are showing a slight increase. Prices of plug-in hybrid models have significantly decreased in parallel with the decline in lithium-iron battery costs.

The conflicts in the Middle East, which have driven up oil prices, stand out as another factor increasing consumer interest in electric vehicles. Rising fuel costs make electric vehicles a more financially viable option for many buyers.

What are your thoughts on this price stabilization in the market?