Car expert Paul Maric said the EV market was entering a rough period as Aussies weigh up whether to jump on the bandwagon. (Source: Getty/YouTube)
Electric vehicle (EV) sales in Australia have fallen to a more than two-year low, with 2025 tipped to be a major watershed moment for the motoring industry. The popular new entry to the scene has enjoyed year-on-year growth throughout the early part of this decade.
However, new figures released by the Federal Chamber of Automotive Industries (FCAI) have revealed that the honeymoon period might be over. CarExpert.com.au founder Paul Maric told Yahoo Finance that this year would “really be the telltale sign” of whether the EV industry finds its footing or drops off.
He pointed to the Australian and American governments removing certain EV subsidies and targets, which helped make the cars more attractive to buyers.
“Manufacturers can get away with the pricing that they have based on generous government subsidies,” he said.
“You start removing those subsidies, and all of a sudden, the vehicle that was cost-effective for a consumer is no longer cost-effective, and they go back to internal combustion vehicles.”
From April 1, plug-in hybrid EVs (PHEVs) won’t be considered zero or low-emissions vehicles under the fringe benefits tax (FBT) law in Australia. Meanwhile, Donald Trump has ditched a Biden-era policy of having 50 per cent of cars sold by 2030 be an EV and wants to get rid of the current EV tax credit.
According to the Federal Chamber of Automotive Industries, EV sales in January were the lowest they’ve been since October 2022.
FCAI chief executive Tony Weber blamed this on “current economic conditions” facing consumers.
“Sales of battery electric vehicles were remarkably low and based on data from all sources, EVs accounted for just 4.4 per cent of sales,” he said.
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“This is a major concern because consumers are turning away from EVs at the time the Commonwealth Government has introduced the New Vehicle Efficiency Standard (NVES).
“The industry continues to increase the range of zero and low-emission vehicles providing consumers with an increased choice of models and varying price points. However, the Government needs to reconsider the steps it can take to build consumer confidence in EVs, otherwise their ambitious NVES targets will not be met.”
Tesla in particular suffered a horror result in 2024, with the EV car maker selling 1.79 million cars, which was the first drop in annual sales in more than a decade.
It was even worse this year for Elon Musk’s company as sales fell from 2,927 in January 2023 to just 739 last month, which was a 75 per cent plummet.
It wasn’t all bad news for the EV industry as hybrids and plug-in hybrid vehicles continued to grow.
They made up nearly one in five of new sales, representing 17.1 per cent and 2.2 per cent of sales respectively.
Price a main issue for the EV market
While the electric vehicle industry has battled against range anxiety by promising to have more chargers available across the country, price appears to be the number one issue for wannabe buyers.
The Australian Automotive Dealers Association and Zing! Insights looked into what was stopping people from jumping ship from an internal combustion engine (ICE) to an EV.
The survey found that 55 per cent of people surveyed said the cars cost too much money, according to the Australian Financial Review.
Other issues highlighted were related to the lack of chargers (49 per cent), not having the right setup to charge at home (44 per cent), and the range you’d get on a full charge (36 per cent).
But the study also found that interest in EVs had stagnated dramatically. Back in 2022, when the survey was last conducted, 38 per cent of people were interested in getting an electric car.
Fast forward to now, and that number has risen to just 39 per cent.
“It suggests that there are ongoing barriers to adoption or intention that need to be addressed in order for uptake to occur,” the study said.
The introduction of cheaper Chinese-made EVs could help encourage Aussies to make the switch, but the other barriers will be harder to overcome.
The NVES kicked into gear on January 1 and gives car companies a set CO2 target for the passenger and light commercial vehicles they produce.
Manufacturers have to meet or beat this number each year and it’s meant to encourage them to produce more low or no-emissions vehicles.
2025 is tipped to be a big year for electric vehicle and whether they can remain afloat in Australia. (Source: Getty)·Jackyenjoyphotography via Getty Images
FCAI figures showed that Toyota was the market leader in January, followed by Mazda and Ford.
But Maric told Yahoo Finance that the NVES scheme could drive up prices for consumers wanting to buy some of those brands.
“It’s going to be huge… Toyota sells a huge volume of HiLuxes, Prados, and Land Cruisers,” he said.
He pointed to Toyota’s new Prado, which comes with an additive called AdBlue, which gets mixed into the exhaust and is designed to reduce CO2 emissions.
“They’ve added it because it’s a high-volume seller for Toyota and because they don’t really sell many electric vehicles, it helps reduce their fleet averages,” he said.
“That Prado is now some $15,000 to $20,000 more expensive than the previous generation. And while it is a new model, a lot of that will come down to the costs that Toyota will have put on it this year from the government.”
