Car owners in Australia generally upgrade their cars every 10.6 years on average. In the year to December 2022, Australians bought 993,509 new vehicles, with sales in November up 17.9 per cent on November the previous year. In contrast, electric vehicle purchases grew from 2.05 per cent in 2021 to 3.39 per cent in 2022. Now, new research reveals the annual purchase rate for electric vehicles may be set to rise to the hundreds of thousands, with 42 per cent of Aussies revealing it will be their next car purchase.
The findings were derived from a survey of an independent panel of 1010 Australians, commissioned by leading finance platform Money.com.au. The survey respondent pool included the general population and 11 per cent indicated they do not drive.
Respondents were asked if, or when, they will buy an electric vehicle. Just 1 per cent already own an electric vehicle. A third (34 per cent) revealed they will buy one when they are ready to upgrade their existing car, while 8 per cent would purchase one before they are ready for an upgrade. Nearly half (46 per cent) revealed their next car will not be an electric vehicle.
The survey found that the appetite for electric vehicles is stronger among younger Australians: half (50 per cent) of under-30s indicated they will purchase an electric vehicle either before or when they are ready to upgrade their car, compared with 45 per cent of 31-50-year-olds and 34 per cent of over-50s.
The take-up of electric vehicles even among the business sector is likely to increase after the Australian Government recently passed The Electric Car Discount Bill. Under the new law, the bill removes import tariffs and exempts employers from incurring fringe benefits tax on zero- or low-emissions vehicles that are beneath the Luxury Car Tax threshold (up to $84,916) – including battery electric, hydrogen fuel cell and plug-in electric vehicles – that were first held and used from 1 July 2022.
Money.com.au sought to uncover reasons why a segment of the population will not upgrade to an electric car. Respondents were asked to identify the top deterrent from a list of five. For 41 per cent, the high electric vehicle prices are the main barrier, while 17 per cent believe an electric vehicle isn’t suitable for their needs. Fifteen (15) per cent won’t upgrade mostly because they are worried high energy prices will lead to an increase in charging costs. Just 7 per cent fear the charge on their vehicle won’t last the duration of a trip, potentially leaving them stranded.
One fifth (21 per cent) won’t upgrade to an electric vehicle because of a relatively low number of charging stations. Australia has half the amount of electric vehicle charging stations (just over 3000) than petrol stations (6500). However, State Governments are planning to roll out more charging stations to close the gap. In NSW alone, the Government plans to roll out more than 500 fast-charging stations to recharge vehicles in 15 minutes, while the ACT Government anticipates it will need 600-1000 chargers installed by 2030 to support its renewable energy transition.
Licenced financial adviser and Money.com.au spokesperson Helen Baker says that electric vehicles are expensive like any new technologies at the start. “However, as more brands begin to produce electric models and the market becomes more competitive, prices will come down. Drivers could also take into account running costs when assessing overall price. Similar to other products, such as solar panels, while the upfront cost is high, the running cost can be significantly lower.”
As an example, the average monthly cost to run a sedan that travels 20,000 km per year is approximately $393, while an electric vehicle equivalent can cost just $161 to run.
Baker said that if Australia undergoes an economic downturn in 2023, new car purchases may slow down significantly. “With an economic downturn comes tightened spending and a pause on large discretionary purchases as consumers prioritise essential expenses and loan repayments.
“Despite this, the desire by the public to switch to electric vehicles is growing. If State Governments stay on track to remove the purchasing barriers by delivering more charging infrastructure, and if more electric vehicle models enter the market, we will see a stronger take-up over the next few years, particularly on the other side of an anticipated economic downturn.”
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