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Total cost of ownership (TCO) for EVs has been sufficiently competitive to drive market uptake predominantly in premium vehicle classes.
Under current market and regulatory conditions, EVs are generally cheaper in their total cost than their conventional counterparts for consumers who can afford more expensive vehicle models or who can charge at home, ideally using a photovoltaic (PV) system. Presuming at-home PV charging and an ownership period of five years, total cost of ownership is already lower for EVs in just over half of cases.
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Additional price incentives are a promising option for promoting the widespread uptake of e-mobility, particularly in the case of used and budget vehicles.
The reinstatement of Germany’s EV rebate scheme in combination with government-backed leasing and financing programmes could bolster consumer uptake of new EVs. To ensure the greatest possible impact, these measures should apply in particular to affordable and efficient all-electric models. Additional support for used vehicle purchases could also be extended to enable broader access to e-mobility for lower income households, who are generally reliant on used vehicles.
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Effective market conditions can stabilise the residual value of EVs.
The single largest factor influencing TCO is depreciation, which varies significantly depending on duration of ownership. Assuming an ownership period of five years, EVs are less expensive than comparable combustion-engine vehicles in 24 per cent of cases; given an ownership period of ten years, this figure rises to nearly 50 per cent. Stabilising the residual values of electric cars requires bolstering consumer confidence in the market and in the technical reliability of the vehicles, especially in relation to battery technology. Policymakers can augment consumer confidence in vehicle purchase by demonstrating a clear commitment to broad-based EV adoption. In the short-term, free battery checks for used vehicles could also be beneficial for enhancing consumer trust in EV investment.
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For consumers who are predominantly dependent on public charging infrastructure, EVs are rarely more affordable than combustion engine vehicles.
If consumers rely on public charging infrastructure located outside motorway networks, EVs are cheaper overall in just eight per cent of the usage scenarios. And in some scenarios, they are 25 per cent more expensive. Improved competition in the market for public charging infrastructure could help to reduce costs for consumers, particularly for those dependent on public charging stations. To this end, policymakers should enhance implementation of the existing legal framework for price transparency and non-discriminatory market access.
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Volatile gasoline and diesel prices add uncertainty to cost calculations for combustion engine vehicles and can make EVs comparatively cheaper.
Carbon prices will rise in the coming years to better account for the negative externalities of fossil fuels. A continually increasing carbon price, implemented in a just manner as part of the EU Emissions Trading System (EU ETS2), will steadily improve EV total cost of ownership. Rising carbon prices will provide additional incentive for consumers to reduce their dependency on oil imports. If fuel prices were to increase by 20 per cent, approximately 70 per cent of EVs would be more cost-effective than their conventional counterparts when charged using a home PV system.
This content is also available in: German
Policy Levers for Affordable EVs
The total cost of ownership of EVs and combustion engine vehicles and policy design options for effective market uptake
Preface
The broad-based adoption of electric vehicles (EVs) is crucial for preserving the competitiveness of the German automotive industry as well as for achieving Germany’s climate targets. In recent years, political and business leaders have repeatedly emphasised the goal of putting 15 million all-electric vehicles on German roads by 2030. However, at the beginning of 2025, the German EV fleet consisted of just 1.65 million vehicles, significantly falling short of expectations and requirements.
Total cost of ownership (TCO) is a decisive factor for the competitiveness of electric vehicles in relation to their conventional counterparts. However, consumers typically focus on a vehicle’s sticker price. In the process, they often underestimate the TCO – that is, the overall cost of owning a vehicle over a given period, including fuel costs, insurance, taxes, maintenance, and depreciation. While EVs are frequently cheaper to operate than conventional vehicles, they often have higher retail prices. Excessive consumer focus on sticker prices is thus a clear hurdle to the expansion of e-mobility.
In 2021, Agora Verkehrswende published its first TCO analysis, comparing the cost of owning various EV models to that of equivalent combustion engine vehicles. Our study showed that all-electric EVs were already an affordable alternative to their conventional counterparts. However, our calculations took the considerable purchase rebates then offered by the German government into account. This rebate programme was discontinued at the end of 2023, triggering a sharp decline in EV sales. Fortunately, thanks to the EU’s fleet-wide CO2 emission limits, EV uptake is surging once again. Indeed, all-electric vehicles made up 19 per cent of new vehicle registrations in August 2025 – a new record for Germany. However, from a European and global perspective, German EV adoption remains sluggish.
Drawing on ADAC data, the new (German) study “Stellschrauben für günstigere E-Pkw” examines 15 EV models from five vehicle classes, comparing their total cost of ownership with that of comparable gasoline and diesel vehicles. The analysis takes numerous factors into account, including annual distance driven, charging methods, fuel prices, duration of ownership, and other aspects of usage behaviour. After varying usage assumptions for each vehicle model, we compare TCO estimates for 356 possible scenarios.
Unlike publications that primarily target potential buyers, our analysis does not directly compare specific EV and combustion-engine models. Rather, it spotlights the scenarios in which electric vehicles are cheaper – or, alternatively, more expensive – than combustion engine vehicles. Our primary aim is to provide policymakers with evidence-based guidance for assessing potential policy impacts and for designing effective measures that accelerate the adoption of electromobility. However, consumers may also take an interest in learning how individual factors impact total cost of ownership.
Our findings clearly show that the German government has many options for improving the cost competitiveness of electric vehicles, and, by extension, for strengthening the German automotive industry. The missing ingredient is political will.
Key findings
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Stellschrauben für günstigere E-Pkw
Stellschrauben für günstigere E-Pkw. Gesamtkostenvergleich von Elektro- und Verbrennerfahrzeugen und wie sich die Rahmenbedingungen politisch gestalten lassen
