In today’s challenging BEV market, car manufacturers have two levers to pull to convince consumers to buy – product and price. Price is still one of the most powerful incentives, but at what cost? Mark Carpenter, managing director with Escalent’s Automotive & Mobility Europe practice, looks at whether discounting is enough to grow the market in Europe.
Growing the battery electric vehicles (BEV) market continues to be a challenge for automotive manufacturers.
Established automakers have invested heavily in research, development and engineering to develop BEV ranges. But while they remain committed to long-term electrification, they are also seeing take-up slow since the early adopter stage a few years ago, with some scaling back or delaying BEV programmes.
We can cite a few reasons why this might be the case. Price sensitivity, lack of charging infrastructure, range anxiety and more are perhaps the biggest concerns.
Price remains key driver
Of these, price has a great deal of influence. In our EVForward Europe 2025 Incentives DeepDive study, we asked new-vehicle buyers what would motivate them to actively consider buying a BEV and 44% of Europe’s buyers indicate that reduced pricing would encourage them to engage.
Buyers, it seems, regard BEVs as more expensive than ICE models. Since nearly half (40%) of new-car buyers view BEVs as a work in progress, this could lead to a perception that the price premium is not entirely justified.
In simple terms, automotive brands have two levers to pull – price and product – to accelerate BEV adoption. The product proposition either needs to evolve to justify higher pricing, or the vehicles need to become more affordable.
Price elasticity across new cars
Europe’s new-car buyers fit into three distinct groups when it comes to price elasticity, according to our EVForward research.
First, are the EV Owners and EV Intenders, those who own a BEV already or are more likely on average to buy one as their next vehicle. Second, is the EV Resistant group, which is strongly opposed to BEV adoption. The final group is EV Open, representing the middle ground that is neither for nor against EVs.
Of the three groups, the last one demonstrates the highest levels of price elasticity with one in three considering a BEV even if it was priced 10% or higher than an ICE equivalent. As pricing becomes more attractive, consideration more than doubles in this group.
This middle ground of buyers represents one of the biggest untapped opportunities for driving BEV sales.
The question then is how EV manufacturers and dealerships balance this sensitivity to pricing and the price point they actually set. While it’s tempting to push prices down, we know that discounting alone won’t grow the market.
Finding the sweet spot
The price sticker on the windscreen still commands attention, drawing customers in and driving consideration among those who might otherwise delay their purchasing decisions. In fact, around half (47%) of new-car buyers acknowledge that incentives are very influential at the time of any new vehicle purchase, rising to 57% for BEVs.
But while the pile it high, sell it cheap approach may work for supermarkets where offers on the shelf drive instant consumer behaviour, it is a very different proposition in the automotive trade. That big investment in research, development and platform engineering has to pay off at some stage.
By understanding where price shifts buyer behaviour and then finding the sweet spot between what automakers want to charge and what people are willing to pay is critical to success.
However, manufacturers first need to grow equity in the BEV proposition. This means making their offerings emotionally appealing to consumers, whether that is around environmental considerations or addressing fears around range and charging infrastructure, instead of trying to justify higher pricing.
Competition raises the stakes
This becomes even more important as Chinese brands enter the market. China-based automakers have grabbed the BEV opportunity with both hands. The sheer scale of their industrial might, together with lower production costs, means that a growing range of new brands is competing for share in what has always been an intensely competitive automotive market for well-established brands.
These brands have the ability and opportunity to make BEVs more affordable while also capturing share from incumbent brands.
This means that pricing plays an even more influential role.
Ultimately, it comes down to having a sound pricing strategy and bringing to market attractive, compelling BEVs that consumers want to buy. While discounts will always appeal to new-car buyers, they must be carefully considered in light of the price elasticity dynamics of the various influencing factors.
Author: Mark Carpenter, managing director, Escalent Automotive & Mobility Europe
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