Electric car sales are rising in Australia but the uptake is behind other markets. When will they be more affordable?
By Sourced Externally
April 11, 2022
Kobus Terblanche’s long daily commute becomes almost enjoyable when he calculates he is saving $25 a day on petrol.
He made the switch to an electric Nissan Leaf in September when he realised the cost of running it would outweigh the steep up-front price.
He has saved about $3,000 in fuel on his 200-kilometre round trip between Brisbane and the Sunshine Coast in the six months since.
“It costs me $7.20 to charge the car, in electricity costs, in a similar-sized 2-litre petrol car that drive would be costing me $32,” he said.
“I sort of dreamed about the day that they would create a car where we don’t hear that engine noise all the time, or feel the vibrations, and this is it.
“You feel like you’re in new technology.”
Only 0.16 per cent, or 6,000, of all cars registered in Queensland are electric, according to state government data.
Despite the slow uptake, the industry is about to undergo a significant shift, which could sway some consumers.
The total cost of ownership (TCO), which takes in up-front and running costs, will reach parity with the more affordable traditional cars for the first time in Australia within the next 12 to 24 months, Origin Energy’s general manager for corporate strategy and e-mobility Chau Le said.
She said the tipping point has been brought forward because of the recent high petrol prices.
Mrs Le said consumers who rack-up more than 25,000km per year are expected to reach that parity point first.
The Electric Vehicle Council estimated service and repair costs to be 70 per cent cheaper per kilometre than traditional cars.
That was factored in by MrTerblanche, who now only has to service his car every 30,000 kilometres.
“The only thing can go wrong, is that you forget to switch it on to charge,” he said.
“I reckon you could do a million kilometres in the car and it wouldn’t wear out, there’s very few parts that will wear out.”
The Boston Consulting Group (BCG), which analyses market trends, has identified that some luxury electric cars have already reached parity for TCO with similar traditional cars.
Smaller SUVs would also reach parity point soon, BCG’s climate specialist James Tilbury said.
When will up-front prices come down?
Despite long-term gains, the initial, up-front cost of an electric car has been hard to get past for many.
That is not about to change in the short term.
There are about 38 options available in Australia, compared to 400 worldwide, and just five of those are under $60,000, data from the BCG showed.
A small electric car was estimated to cost an extra $12,000 compared to petrol and diesel cars, and $25,000 more for SUVs, Mr Tilbury said.
Mrs Le agreed, she said it would take another five years for up-front costs to be the same for more affordable ranges.
“We expect the larger sedans and SUVs should reach parity sooner, because they cost more as a car.
“The proportion of the battery cost will be smaller in those cars, than small passenger vehicles.”
Why aren’t there more affordable electric cars in Australia?
Electric car sales have tripled in Australia since 2020, to 20,655 last year, and nationally electric cars now make up 2 per cent of all vehicles sold, the Electric Vehicle Council said.
Chief executive Behyad Jafari said demand was outstripping supply and consumers were waiting months or even years for some models.
For example, the wait time for the most popular model in Queensland, the Tesla 3, was between six and nine months, according to the company’s website.
Mr Jafari said car makers were prioritising other international markets, where strict emission targets were legislated.
While state governments have introduced incentives — like Queensland’s recently announced $3,000 subsidy and target to have all new car sales be electric by 2036 — Mr Jafari said a lack of mandates at a federal level was the key driver of the supply restriction.
“Australians are being denied access to the electric cars they now desperately want, especially at the more affordable end of the market,” Mr Jafari said.
“[Australia has] no measures like sales targets, phase-out dates for internal combustion engine cars, fuel efficiency standards for new cars and incentives.
“When car makers are making their global investment decisions, Australia is at the bottom of the list.