Electric vehicles (EVs) were once the most sought-after cars in showrooms, with buyers eager to own vehicles promising lower running costs and environmental benefits. However, by 2024, the demand for EVs has largely plateaued. Sales of EVs rose by only 4.7%, while hybrid vehicles saw a significant 75% increase in sales. For every EV sold, Australians purchased 2.1 hybrids, including plug-in hybrids that can be recharged externally.
The shift in popularity can largely be attributed to the price and availability of EVs. Many of the most desirable EV models are priced around $60,000 and above, making them unaffordable for many buyers. On the other hand, hybrids tend to be priced lower, often below this price range, making them more accessible to average families. The high cost of manufacturing EV batteries, which are much larger than those in hybrids, contributes to the higher prices of EVs. Additionally, the lack of sufficient charging infrastructure remains a major barrier to widespread EV adoption.
Although EVs come with higher upfront costs, they tend to be cheaper to operate than hybrids. For example, a Tesla Model Y costs less to run compared to a Toyota RAV4 Hybrid, which consumes more fuel. EV owners can further lower their costs by charging their vehicles during off-peak times or by using special EV electricity plans. Even when using fast-charging stations on long road trips, the overall cost remains competitive. This cost efficiency, along with the convenience of charging at home, makes EVs an attractive option for many.
Tax Benefits and Leasing Incentives
Another reason EVs are gaining popularity is the tax benefits they offer. Electric cars priced below $91,387 are eligible for a fringe benefits tax (FBT) exemption, allowing employees to lease them out of their pre-tax income. This exemption can make EVs more affordable compared to traditional hybrids, even though EVs are typically more expensive. The tax benefits extend throughout the lease period, making EVs a cost-effective option for many buyers, particularly those who take advantage of the leasing structure.
One of the main concerns for potential EV buyers is the vehicle’s range, especially for long trips. However, the average Australian drives only about 33 km daily, meaning an EV would only need charging every 10 days. While people without off-street parking face greater challenges, those with the ability to charge at home are in a good position to make the most of an EV. Furthermore, the expansion of charging infrastructure, especially along major routes, has made long-distance travel in EVs increasingly feasible.
Charging Convenience and Rapid Infrastructure Growth
The convenience of charging at home, as opposed to visiting petrol stations, adds to the appeal of EVs. Additionally, improvements in charging infrastructure, particularly on major highways, have made it possible for EV owners to recharge their vehicles quickly. New charging stations can add several hundred kilometers of range in less than 20 minutes, which is perfect for a short break during long road trips. This rapid charging capability makes EVs more convenient for travelers, addressing previous concerns about slow charging times and range limitations.
Affordable EV options have contributed to the increasing demand for electric vehicles in Australia. The introduction of models like the MG4, priced at $30,990, has made EVs more accessible to a wider range of buyers. The MG4 became the top-selling EV in October 2024 and even outsold many popular petrol-powered vehicles. This success shows that when EVs are priced competitively and meet the needs of consumers, they can perform well in the market.
Electric vehicles have also seen success in the medium car market. In 2024, for the first time, EVs accounted for more than half of all medium car sales in Australia, a significant achievement. Out of 46,146 medium cars sold, 59% were fully electric. This success demonstrates that when electric cars offer compelling features and competitive prices, they can gain widespread acceptance, even in a market with only a limited number of available models. This shift suggests that the future of the Australian car market may be increasingly driven by electric vehicles.
