Electric vehicle prices drop below hybrids amid battery technology shifts

The global automotive industry is undergoing a major shift as electric vehicles (EVs) reach price parity with hybrid models. Driven by a 37% drop in lithium-ion battery costs between 2020 and 2025 and China's dominance in battery production, the average price of an EV fell to approximately $37,000 in 2025, while hybrid prices rose to $39,000.

Toyota is responding to these shifts by transitioning its hybrid lineup from nickel-metal hydride (NiMH) to high-performance lithium-ion batteries. This move, expected to scale significantly between 2027 and 2028, aims to improve efficiency and reduce production costs by tens of thousands of yen per vehicle. Toyota is also researching solid-state batteries, which could potentially offer 1,200 km ranges and charging times under 10 minutes.

In specific markets like Vietnam, the transition is visible in sales data. VinFast has seen significant growth, with its electric models occupying numerous top-selling positions. Meanwhile, the broader industry is moving toward advanced chemistries like lithium iron phosphate (LFP) to avoid expensive cobalt and toward solid-state technology to address range and charging concerns.