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The '3 major factors' holding back Australia's electric vehicle market

3D Illustration of an electric car charging
New Electric Vehicles now attract a $3,000 subsidy in most Australian states. (Source: Getty) (3alexd via Getty Images)

The market for electric vehicles (EVs) in Australia has been in the news in recent weeks, with Queensland becoming the latest state to offer subsidies for new purchases earlier this month.

A survey from Which Car recently suggested that sales in Australian EVs are continuing to gather momentum, with figures showing a 191 per cent increase in purchases through 2021 compared to the 12 months prior.

However, despite the significant growth, the same survey showed that EVs make up only 0.49 per cent of total sales in Australia (although the figures don’t include sales of Tesla vehicles, which surprisingly doesn't report its sales data).

By comparison, sales of EVs in the UK last month equated to 17.7 per cent of all new vehicles sold.

So what is it that is making Aussies reluctant to make the jump to a vehicle powered by renewable sources?

Infrastructure an issue

Yahoo Finance spoke to Laura Wright, general manager of Queensland automotive dealership Bartons for her thoughts on why, and whether the newly announced subsidies were having an impact.

“We have seen an increase in conversations [about EVs] since the announcement,” Wright said, although it wasn’t translating through to sales as yet.

Wright also weighed in on some of the reservations her customers had about transitioning to electrification, citing “range, infrastructure for charging, and cost” as the three major factors.

The question of infrastructure, which relates to enough charging stations around the country to power the vehicles, is a common theme in the discussion.

According to the Electric Vehicle Council, Australia has approximately 3,000 public charging stations across the country, with the bulk around the major cities (see the map here).

It’s a far cry from the estimated 73,000 charging stations currently in use in the US state of California alone, despite the second-largest global manufacturer of charging stations for EVs being an Australian firm.

Brisbane-based Tritium recently announced a partnership with US firm Wise EV to provide fast chargers for a new EV-charging network across America.

Given their success in the US, it’s perhaps not surprising that Tritium chose to list on the Nasdaq rather than the local ASX exchange.

Electric charge stations for electric cars
There are approximately 3,000 EV charging stations across Australia (Source: Getty) (tapui via Getty Images)

How far will electric vehicles go?

With charging stations still few and far between in Australia, another factor highlighted by Wright was the range current EVs could travel on a single charge.

According to Electric Car Guide, this can vary from 500km for the top-of-the-range Tesla, down to just 99km for Mitsubishi’s i-MiEV model.

Compare this to approximately 10-15km per litre for the average petrol vehicle, and it’s not difficult to see why Australians are hesitant to invest in an EV.

One of the country’s most popular vehicles – Toyota Corolla – will typically travel more than 800 kilometres on a full tank of fuel, although it will cost a significant amount of money to do so (especially in the current climate).

With cost being the third factor identified by Wright, it’s worth noting that charging an electric vehicle is significantly cheaper than a petrol alternative, with estimates being $20-$40 for a full charge, depending on the make and model.

But the challenge for the EV market in Australia is to reduce the initial outlay, with many electric models being priced above their conventional counterparts.

Government still has a role to play

The disparity in purchase prices between electric and petrol vehicles is clearly an issue government wants to address, with all states bar Western Australia currently offering some form of subsidy or rebate for customers keen to transition from a petrol vehicle to an electric model.

However, more could be done to make the transition more attractive, as Wright was keen to point out.

Referring to the recent Queensland subsidy announcement, she explained that, “whilst this is a move in the right direction, the cap they have put on the value of vehicles eligible for the rebate has limited the range of EVs that consumers can choose from”.

The cap in question is $58,000, meaning potential EV customers in Queensland are limited to vehicles below that purchase price if they wish to pocket the $3,000 rebate.

By comparison, New South Wales the cap is set at $68,750, with a similar figure in place in Victoria.

These incentives are undoubtedly useful, with Wright indicating that she expects “a significant rise in EV and Hybrid vehicle enquires and sales over the next 12 months”, due to the recent Queensland subsidy scheme.

However, the issue of charging infrastructure in particular is likely to require co-ordination at a national level, which is something the Federal Government has yet to undertake.

If Australia were to follow the lead of the US in implementing a national EV charging network, it will go a long way to convincing consumers their motoring future lies in electrification.

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