Battery electric vehicle sales in Australia have flattened in recent months. The latest data reveal a sharp (overall new vehicle sales were down 9.7%) in September. Tesla Model Y and Model 3 cars had an even steeper drop of nearly 50%.
Authors
Milad Haghani
Senior Lecturer of Urban Analytics & Resilience, UNSW Sydney
Hadi Ghaderi
Professor in Supply Chain and Freight Innovation, Swinburne University of Technology
Sales also fell in August (by 18.5%) and July (1.5%). There’s a clear downward trend.
Before this downturn, electric vehicle sales had been rising steadily, supported by increased choices and government incentives. In early 2024, year-to-date compared to the same period in 2023. Then, in April, electric vehicle for the first time in more than two years.
Australia isn’t simply mirroring a broader global trend. It’s true sales have slowed in parts of Europe and the United States – often due to reduced incentives. But continues in other regions, such as China and India.
A range of factors or combinations of them could help explain the trend in Australia. These include governments axing incentives, concerns about safety and depreciation, and misinformation.
Governments are cutting incentives
Electric vehicles typically cost more upfront. However, the is lowering the cost barrier.
Federal, state and territory governments also provide financial incentives to buy electric vehicles. These have been among the main drivers of sales in Australia.
³Ô¹ÏÍøÕ¾ly, incentives include a higher luxury car tax threshold and exemptions from fringe benefits tax and customs duty. But several states and territories have scaled back their rebate programs and tax exemptions in 2023 and 2024.
New South Wales and South Australia ended their on January 1 this year. At the same time, NSW for new and used zero-emission vehicles up to a value of $78,000. Both incentives had been offered since 2021.
Victoria ended its , also launched in 2021, in mid-2023.
In the ACT, the incentive of two years’ free registration closed on June 30 2024.
Queensland’s ended in September.
The market clearly responded to these changes. However, reduced financial incentives alone cannot explain the full picture. Despite , sales of popular .
Buyers are increasingly opting for hybrid vehicles instead. In September, sales of hybrid and plug-in hybrid vehicles were , respectively.
These sales trends reflect other consumer concerns beyond just the upfront cost.
Resale value worries buyers
One major issue for car buyers in Australia, and globally, is uncertainty about their resale value. Consumers are concerned electric vehicles .
These concerns are particularly tied to , which affects a car’s range and performance over time. And batteries account for much of the vehicle’s total cost. Potential buyers worry about the long-term value of a used electric vehicle with an ageing battery.
For example, a 2021 Tesla Model 3 Standard Range Plus with nearly 85,000km currently lists for . It has lost roughly half its value in just three years.
While Tesla offers transferable four-year warranties and software updates, the rapid evolution of EV technology also makes older second-hand models less desirable, further reducing their value.
Fires raise fears about safety
Electric vehicle fires have made headlines globally. This has created doubts among consumers about the risks of owning them.
In Korea, in August 2024 led to a from underground car parks. While similar bans are not common in Australia, . These could have harmed local consumer confidence.
Incidents of electric vehicle fires have increased along with vehicle numbers. Statistically, these vehicles are than conventional cars – in fact, .
For example, of publicly available statistics from South Korean government agencies, one of the early adopters of electric vehicles, show the number of fires per registered electric vehicle is steadily increasing. Fire risk remains lower than for traditional vehicles, although the gap is shrinking as the electric vehicle fleet ages. And the highly publicised nature of their fires is a source of growing buyer hesitancy.
Misinformation and politicisation are rampant
The full environmental benefits of electric vehicles depend on widespread adoption. However, there is between early adopters’ experiences and .
Persistent misconceptions include exaggerated concerns about battery life, charging infrastructure and safety. and often fuel these concerns. Traditional vehicle and oil companies in much like those used against .
In response, have formed to combat these false narratives and promote accurate information.
The politicisation of green initiatives adds to the challenge. When electric vehicles become , it can alienate large parts of the population. Adoption then becomes slower and more divisive.
Green transition is a work in progress
The electric vehicle market in Australia is facing challenges, despite the growing variety of models and price cuts.
The EV sales trend signals deeper issues in the market. Broader trends, such as the dominance of SUVs and utes, underscore the fact that while the transition to greener vehicles is progressing, it remains uneven.
Further efforts will be needed to reduce misconceptions and misinformation, and between owners’ experience and potential buyers’ perceptions. Only then can Australia enjoy the environmental benefits of widespread EV adoption.
