The electric car market is booming. So why are British drivers still paying a premium?

The electric car revolution is no longer hypothetical, it’s roaring ahead at a speed that is literally making roads quieter, communities cleaner and transforming the auto industry in real time. More than one in four cars sold this year are set to be EVs, and in China, most of them already cost less than £23,000 a piece. But if EVs are becoming cheaper and more widespread, why are British and European drivers still paying premium prices?

This week’s “Global EV Outlook” from the International Energy Agency (IEA) offers a clear answer: the global EV market is booming, but protectionist barriers are shielding domestic carmakers from cheaper imports, particularly from China, and unfortunately that means they’re keeping prices artificially high for consumers like you and me. But they’re also protecting local manufacturing jobs in legacy car companies. They’re protecting regional economies and brands that have literally shaped the world’s economy over the last 50 years but are now struggling to keep up with the innovative supply chain superiority that Asia’s biggest car makers have been perfecting for the last decade. The question is, how long can these measures protect these jobs, and is it actually worth it?

Last year, more than 17 million EVs were sold worldwide, growing by 3.5 million sales in a year, and showing no signs of slowing down. In the first quarter of 2025 alone, global EV sales are up by another 35 per cent.

Unsurprisingly, China remains the epicentre of global EV growth. More than 11 million EVs were sold there in 2024, making up nearly half of all new car sales in the country. After years of European and American car makers betting big on the Chinese market, it seems that these billion-dollar symbols of industrial superiority simply can no longer compete. In 2020, foreign-branded cars made up more than two-thirds of all car sales in China, now, they’ve fallen to just 32 per cent, and most believe even this declining market share looks fragile. One of the biggest reasons is cost. EVs are not only cheaper to run anywhere in the world, in China, they’re now cheaper to buy as well. Last year, two-thirds of EVs sold were cheaper than petrol cars in their same class, and that’s without any government consumer subsidies. Contrast that with Germany, where electric cars cost 20 per cent more than their internal combustion cousins, or in the US, where Tesla’s almost monopoly has pushed that gap closer to 30 per cent.

What’s keeping EV prices high in Europe and the US? Local manufacturing and labour costs are one key element, but tariffs and trade policies are playing an outsized role. Last year, the EU increased tariffs on Chinese-built EVs as high as 45.3 per cent, and even before Donald Trump found his way to the White House, Joe Biden had already placed a 100 per cent tariff on Chinese EVs. The UK on the other hand didn’t follow in the tariff trend last year, and is now seen as one of the best opportunity markets for Chinese EV makers, and British drivers should expect a flood of new brands and new low-cost models available this year.

The reality though is that Chinese companies are not just winning on sticker price, they’re dominating on everything from supply chains to automation, efficiency and even choice. China accounts for more than 70 per cent of global EV production and there is so much competition, it’s driving down global battery prices at a rate of knots. Battery prices had already been falling for years, but in China they dropped by an additional 30 per cent last year. But they’re also dramatically expanding choice. In the US, where Chinese cars are effectively banned, drivers could choose from 24 new electric car models launched last year. Across the EU there are close to 290 models to choose from, but in China, consumers can choose from over 700 different EVs.

Since an electric vehicle is effectively a battery on wheels, this dramatic decline in battery prices and ramp-up in choice brings us to a challenging question: Is the West pricing itself out of the EV transition to protect local jobs? And if it is, is this a price worth paying?

The case for protecting domestic jobs is real. The auto industry employs millions of people across Europe and the US, and global supply chains put these jobs at a real risk. If Chinese consumers have already abandoned foreign cars en masse, will European consumers remain loyal, and pay more for these marquee local brands? Last year’s tariffs suggest that policymakers at least don’t believe they will.

And this is genuinely something worth protecting. But this also comes at a real, everyday cost. EVs are cleaner, quieter and cheaper to run, and transport emissions across the EU, US and UK remain stubbornly high. Every family that can’t afford to switch to a cheaper EV remains locked into ongoing petrol bills and higher maintenance costs. Even if oil prices fell to $40 a barrel, charging an EV at home in Europe would still be half the cost of filling up a conventional car.

That’s the real policy dilemma facing just about any country with a local car industry right now. Should we hold on, and protect local jobs and local brands as long as we can by blocking Chinese competition? Or should we do everything possible to support cheaper, cleaner and quieter cars on the road? This is a fine balance, and one with risks on both sides.

There’s no easy answer. But as policymakers in Washington, Westminster and Brussels contemplate whether or not to hold onto protectionist tariffs or open up their markets to this new generation of cars, they should be honest about the real trade-offs, and prepare to support those workers in the long-term, and aim to at least achieve a fair transition, even if its not the fastest.