China's EV Price Edge Overshadows U.S. Struggles in Global Race

The cost dynamics of electric vehicles (EVs) in China and the U.S. show stark contrasts, with EVs now more affordable than internal combustion engine (ICE) vehicles in China, while the U.S. market continues to struggle with a price premium of approximately $14,000 per vehicle. According to JATO Dynamics, an automotive data analytics firm, this gap has narrowed since 2019, but remains significant compared to the cost parity achieved in China. Dan Sperling, founding director of the UC Davis Institute of Transportation Studies, noted that the $14,000 figure might be overestimated but acknowledged the substantial price gap as a real and persistent issue in the U.S. market [2].

In China, the shift toward EVs has been marked by intense competition among automakers, particularly from domestic producers such as BYD, which has dominated both local and international markets. The average price of a Chinese ICE is around €22,500 ($26,205), while a battery electric vehicle (BEV) costs 3% less, or €21,900 ($25,509) on average. This is a major change from five years ago, when ICE vehicles were 10% more affordable. The Chinese market has benefited from lower labor and battery costs, as well as robust domestic supply chains, which have enabled manufacturers to produce EVs at scale and at competitive prices [2].

Conversely, U.S. automakers such as General Motors, Ford, and Stellantis—collectively referred to as the "Big Three"—have been slower to adapt and face ongoing financial challenges with their EV programs. Despite significant investments and initiatives, these companies remain unprofitable in their EV segments. For instance, Ford recently announced a $5 billion initiative to develop an affordable electric pickup by 2027, but its EV division has accumulated over $12 billion in losses since early 2023. Similarly, GM reported that while its electric portfolio reached a "value profit positive" status in Q4 2024, it still incurs losses on fixed costs like labor and plant maintenance [2].

Stellantis, another key player in the U.S. market, posted a €2.3 billion net loss in the first half of 2025, with operating margins shrinking to 0.7%. The company has attempted to boost EV sales by slashing prices on certain models and investing €1.5 billion for a 21% stake in Chinese automaker Leapmotor. However, these efforts have yet to yield substantial profitability. Industry experts suggest that the U.S. automotive sector lacks the structural policies—such as tax credits, purchase mandates, and subsidies—that have enabled China to drive EV production and affordability [2].

The U.S. has made progress in narrowing the affordability gap between EVs and ICEs, but the pace has been slow. JATO data shows that in 2019, gas vehicles were 44% cheaper than EVs, while in 2024, the difference narrowed to 31%. Nevertheless, the absence of consistent and supportive federal policies, such as those seen in China, has left U.S. automakers at a disadvantage. Sperling emphasized that the U.S. has been preoccupied with tariff-related strategies, which, while offering short-term protection from Chinese imports, could lead to long-term complacency among domestic automakers [2].

As the EV market evolves, the need for a strategic policy shift becomes increasingly evident. Without robust incentives and a more competitive industrial strategy, U.S. automakers may continue to struggle in the global EV race. In contrast, China’s aggressive market dynamics and supportive domestic policies have positioned it as a leader in the EV space, with BYD and other local manufacturers setting new benchmarks in affordability and scale [2].

Source:

[1] Tesla, GM, Ford EV buyers get extra breathing room ahead of tax credit expiration (https://finance.yahoo.com/news/tesla-gm-ford-ev-buyers-get-extra-breathing-room-ahead-of-tax-credit-expiration-161759362.html)

[2] In China, EVs are now cheaper than gas cars. In the U.S., ... (https://fortune.com/2025/08/26/china-ev-prices-cheaper-gas-us-big-three-gm-ford-stellantis/)

[3] Ford's (F) EV Plan Branded as 'Desperate Gamble' by ... (https://www.tipranks.com/news/fords-f-ev-plan-branded-as-desperate-gamble-by-analysts)