China has now crossed a massive benchmark in the electric-car race: battery-powered vehicles are now cheaper than their gas counterparts. In the U.S., by contrast, EVs still face a steep premium; roughly $14,000 on average, according to new data from JATO dynamics, an automotive data analytics firm.
Dan Sperling, founding director of the UC Davis Institute of Transportation Studies, told Fortune he thought the $14,000 figure was overestimated – but conceded that there was a strong, real gap.
That chasm reflects more than just consumer preferences, Sperling said. In China, there’s also been a “frenzy of competition” to make low-cost EVs, with the heads of different provinces trying to oust each other for the top spot. Labor and battery costs are also lower in China, thanks to its domestic supply chains.
“People talk about subsidies, but at this point the subsidy effect is pretty minor,” he added.
The average price of a Chinese internal combustion engine is €22,500 (approximately $26,205), whereas a battery electric vehicle costs 3% less, or €21,900 ( $25,509) on average, according to JATO. That’s a big change from just five years ago, when gas EVs cost 10% more.
The results are visible everywhere. Leading Chinese automaker BYD sold more than 4 million cars last year—10 times what it sold in 2020—and now dominates roads across the world, from Bogotá to Budapest. In Europe, its compact Dolphin model retails for under €20,000 ($23,200), roughly half the price of Tesla’s Model 3.
BYD’s relentless pace of new launches, tight control of its battery supply chain, and willingness to sacrifice short-term profits are overwhelming legacy automakers, analysts previously told Fortune. China’s trade partners also argue that Beijing is fueling overproduction that’s flooding export markets with cut-rate EVs.
Meanwhile, Sperling warned that the U.S. is too caught up playing tariff games to develop its own EV industry. His words echoed the old adage that the best defense is offense. Tariffs of more than 100% have kept Chinese cars out of the American market, a protection that may buy time, but also risks making U.S. automakers complacent.
“There’s a long history showing that absolute protectionism undermines an industry rather than supports it,” he said.
Without the pressure of direct competition, the Big Three of the automotive industry – GM, Ford and Stellantis – have less incentive to innovate with EVs, Sperling said.
Still, the U.S. has also improved EV affordability relative to gas cars over the last five years, according to the JATO data. In 2019, gas cars were 44% cheaper than electric cars, and in 2024 the gap narrowed to 31%.
But while progress is being made, Sperling said that the U.S. is missing the kind of structural policies – tax credits, purchase mandates, subsidies generally – that spur automakers to build EVs at scale.
The struggles of the Big Three
To be sure, automakers are attempting large EV pushes, even as EV-related losses pile up.
Ford announced a new $5 billion EV initiative this month, where the automaker will reconfigure its Kentucky plant to build a $30,000 electric pickup by 2027, an ambitious attempt to build EVs at scale.
Analysts say it could either mark a historic reinvention or sink billions more into an already money-losing division: Ford’s EV arm has racked up more than $12 billion in losses since early 2023.
GM also announced in June that it’s investing $4 billion in domestic manufacturing, including its EV wing. In the last quarter of 2024, GM’s electric portfolio became “value profit positive,” meaning that for each electric vehicle sale, GM covers the costs of making each car (but not the fixed costs involved, such as the labor or the EV plants).
GM has the second most robust EV portfolio in the American market, sitting behind Tesla in terms of total sales. However, James Picariello, senior automotive research analyst at BNP Paribas Exane, previously told Fortune that he estimated GM lost some $2.5 billion on the 189,000 electric vehicles it built and sold to dealerships last year.
Earlier this year, GM said on an earnings call that it hoped to bring about $2 billion in savings improvement for its EVs.
Stellantis has also stumbled in its EV transition, posting a €2.3 billion net loss in the first half of 2025 as operating margins shrank to just 0.7%. The automaker has struggled to spark U.S. demand, slashing prices on electric models like the Jeep Wagoneer S to move inventory.
At the same time, tariffs and weak demand have pushed Stellantis to extend furloughs at its Termoli site in Italy. Yet the company is still pressing forward: it unveiled the STLA Frame platform, a flexible architecture supporting gas, hybrid, EV, and hydrogen drivetrains. Additionally, Stellantis partnered with China’s Leapmotor in hopes of staying in the game, investing €1.5 billion for a 21% stake in the company. Stellantis hopes that its incumbent advantage and respected brand can combine with the Leapmotor’s innovation to deliver a more affordable EV.
Industrial policy failures
For industry experts, part of the price gap is clearly attributable to the U.S. failure to promote electric vehicles with policies. President Donald Trump has flip-flopped on his opinion of EVs, but his Big, Beautiful Bill act ended tax credits for new, used and leased EVs.
Meanwhile, China’s decades of forced joint ventures – requiring foreign automakers to partner with domestic automakers in EV manufacturing – built a workforce fluent in EV technology and software, Sterling said. For America, he suggested a version of that approach: “encourage joint venture investments” to accelerate the know-how needed to catch up, like the one that Stellantis is doing with China.
“You create a whole cadre of technicians and engineers and workers that are adept with the technology,” Sterling said. “Detroit is badly lacking that.”
He rejected the idea that Detroit is doomed, but stressed it depends entirely on policy. In his view, legacy U.S. automakers are currently coasting on SUVs and pickups, without making the investments in EVs or software that Chinese rivals have already mastered.
“If the U.S. continues to keep out the Chinese and discourages electric vehicles, it will take decades to catch up,” Sterling said. “But if policies change, yes, it can catch up for sure.”
