What is happening with the EV market?
December 6, 2023 • No Comment.
What is happening with the EV market?In 2023, Australians have purchased 65,743 new EVs, up from more than 21,771 during the same period last year. Year-to-date sales of battery electric vehicles have reached 80,446. What is happening with the EV Market? EVs now represent 7.7% of the monthly sales and 7.2% of sales year to date. If you need data to dig deeper into EV sales, this EV Index AAA Data Dashboard link will fill that need. You're welcome! In the world's automotive industry, there is a growing uneasiness about the speed at which electric vehicles will become the primary car choice.
Why aren't more Australians buying an EV?
The big picture.For two reasons, it's hard to get mainstream car buyers off the fence when buying an EV.
First, EVs are expensive.Prices have come down, but they're still out of reach for many buyers. In Australia, fully electric cars range in price from $44,990 (total drive-away price) for the MG ZS EV to $770,000 for the Rolls-Royce Spectre. The Tesla Model Y medium SUV is Australia's best-selling BEV, the 2023 Model Y rear-wheel drive auto priced at $65,400 ($68,900 in Q1 2023). The Nissan Leaf is a high-selling small car BEV with a listed price of $50,990, and the MG ZS EV is the cheapest at $44,990 (total drive-away price). Higher interest rates make financing EV car purchases more expensive than in previous years, resulting in many buyers holding on to their current cars until prices and interest rates come down. Most EV uptake is from baby boomers and buyers in their late 30s and early 40s. Baby boomers, the single most significant group of car buyers, still have access to money and are paying cash for cars or using the equity in their homes, allowing access to cheaper finances. This access also allows them the capability to invest in EVs, which are still too expensive for younger buyers. Hence, the crazy Tesla numbers. The other group (of new-car buyers) are younger people in their 30s or 40s who may have given up on buying a home and are treating themselves to a new car instead. This group are also more philosophically invested in climate change and the future threat to the planet of carbon emissions from combustion engines.
Second, charging remains an obstacle.Australia has an estimated 390 charging locations for a country spanning 7.7 million square kilometres. We have over 100,000 EV cars now in circulation, so it is not hard to see why consumers are concerned. EV sales in Australia have jumped more than 400% since the middle of 2022, from less than 2% of new car sales in June 2022 to around 8% in recent months. This growth has been partly attributed to The Treasury Laws Amendment (Electric Car Discount) Bill. It was passed through the Federal Parliament in December 2022. It provides up to $2000 off the purchase price of battery-electric and plug-in-hybrid vehicles (PHEV) and Fringe Benefits Tax (FBT) exemptions for fleets and novated leases.
Chief Executive Rohan Martin of the National Automotive Leasing and Salary Packaging Association (NALSPA) says, "When you're dealing with a once-in-100-year technology change, it's extremely difficult to make accurate long-term forecasts. But what we understand from research and experience in other countries is that 5% of market penetration represents a critical tipping point, after which EV take up becomes much more rapid."
Challenges For EV SalesHowever, there are challenges to the uptake of EVs, even with the support of the Federal Government's national EV strategy and the proposed introduction of a balanced fuel efficiency standard. Investment in EV infrastructure is a crucial priority if Australia is to transition to EVs. Recent initiatives by the Queensland and New South Wales Governments were welcomed by the Federal Chamber of Automotive Industries (FCAI). Still, more is needed to alleviate people's fear of being unable to charge their vehicle. Each state and territory has its own plan. The Queensland government has recently allocated $42 million towards installing 2500 EV chargers over the next three years. 2000 of these will be for the Government fleet. The New South Wales Government has allocated $10 million in grants. This is to retrofit more than 100 apartment buildings with EV charging stations.
Our AssessmentThe EV transition is happening but at a slower pace than predicted. If you look at the US, often seen as a predictor for the Australian market ( Source: Axious News)
- General Motors scrapped its target to produce a cumulative 400,000 EVs from 2022 through the first half 2024.
- CEO Mary Barra told analysts GM is "taking immediate steps to enhance the profitability of our EV portfolio and adjust to slowing near-term growth."
- Tesla CEO Elon Musk told analysts last week that he's worried about the effects of interest rates.