In February 2023, the New York Times reported, using data from the International Council on Clean Transportation (ICCT), a research and advocacy organisation, that electric cars in America could reach the point that year where they cost the same as, or less than, comparable internal combustion engine vehicles. The main reasons were falling battery costs, price cuts by EV makers and the new federal tax credit for clean vehicles.
This is a news post first published on 13 February 2023. The forecast and figures are as reported then.
Key takeaways
- "Price parity" can mean the same sticker price, or the same total cost of ownership once fuel, servicing and incentives are counted. The second arrives earlier.
- The battery pack is the largest single cost in an EV, so its price per kilowatt-hour largely decides when parity arrives.
- In 2023, US buyers could also claim a federal clean vehicle credit of up to $7,500 for qualifying models under the Inflation Reduction Act.
- Parity reached segment by segment: smaller cars and crossovers first, large pickups later.
- For the chip industry, every EV carries far more power semiconductors than a petrol car, so EV adoption is a direct demand driver.
What "price parity" means
There are two ways to compare an electric car with a petrol car:
| Measure | What it compares | When EVs tend to win |
|---|---|---|
| Purchase price parity | Sticker price of comparable models, with or without incentives | Later; depends on battery cost and subsidies |
| Total cost of ownership (TCO) | Purchase price plus energy, maintenance, insurance and resale value over several years | Earlier, because electricity per mile and servicing usually cost less |
The 2023 forecast was mainly about purchase prices for some segments, helped by incentives. On running costs, many EVs were already cheaper to own than petrol cars before that.
Why EV prices were expected to fall
Battery cost
The battery pack has long been the costliest part of an electric car. BloombergNEF's annual battery price survey reported an average lithium-ion pack price of about $139 per kWh in 2023 and about $115 per kWh in 2024, compared with well over $1,000 per kWh in 2010. A figure of around $100 per kWh has often been quoted as the level at which EVs match petrol cars on price without subsidies.
Worked example (illustrative)
The numbers below are illustrative, not from the ICCT study. A mid-size EV with a 60 kWh pack:
- At $150 per kWh, the pack costs about $9,000.
- At $100 per kWh, the pack costs about $6,000.
That $3,000 saving on one part is a large share of the price gap between many EVs and their petrol equivalents, before any tax credit is applied.
Price cuts and incentives
Early in 2023, Tesla cut prices across its range in the US and other markets, and other makers followed on some models. At the same time, the clean vehicle credit under the Inflation Reduction Act offered up to $7,500 on qualifying new EVs, subject to price caps, income limits and battery sourcing rules. Together these moved the purchase price of several models into the same range as comparable petrol cars.
What has changed since
Parity did arrive for some models and segments during 2023 and 2024, especially when credits were included, while larger vehicles such as pickups stayed more expensive. Battery prices kept falling. Policy also moved: the federal new clean vehicle credit was ended for vehicles acquired after 30 September 2025, so US buyers no longer get that discount. Outside the US, low-cost EVs from Chinese makers pushed prices down further in China and some export markets.
Why this matters for semiconductors
An electric car needs far more power electronics than a petrol car. The traction inverter, on-board charger and DC-DC converter all use power transistors, increasingly silicon carbide (SiC) MOSFETs in the inverter because they cut switching and conduction losses and extend range. Add battery management chips, motor control microcontrollers and gate drivers, and the semiconductor content per vehicle rises substantially. Cheaper EVs mean more EVs, which is why chip makers such as Infineon, STMicroelectronics, onsemi and Wolfspeed invested heavily in SiC capacity.
FAQ
Are electric cars cheaper than petrol cars now?
It depends on the market, the segment and the incentives available. On total cost of ownership many EVs already compare well; on sticker price, smaller models reached parity first.
What is the ICCT?
The International Council on Clean Transportation is an independent research organisation that publishes analysis on vehicle emissions, efficiency and costs.
Why is the battery so important to the price?
It is the most expensive component. A drop in cost per kWh lowers the price of every EV and lets makers offer longer range at the same price.
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