Australia’s EV sales boom falters

Is the honeymoon over for electric vehicles in Australia?

It’s clear the EV sales surge has lost some of its spark, with the latest statistics revealing buyer demand for battery-electric vehicles waning in Australia and abroad.

Although sales of electric cars, SUVs and light commercials remain up about 32 per cent so far this year, EV registrations were down about five per cent in April, making it the first month in more than three years that EV sales have dipped Down Under.

There are three primary factors affecting buyer trends here: recharging infrastructure, relatively high purchase prices as government rebates are wound down and, according to the CEO of Australia’s fourth-biggest auto brand, early-adopters have taken their fill.

“I think possibly the early-adopters have done all they can and now we’re looking at market realities and what’s occurring with cost,” said Kia Motors Australia CEO Damien Meredith of the EV sales stutter.

EVs sales started to flatten in the Aussie marketplace in the latter stages of 2023 following a significant growth spurt that kicked off in early 2021.

It’s also no coincidence that the first month of negative sales growth since late 2020 aligns with the ending of EV purchase incentives in NSW, Victoria, South Australia and other states and territories, leaving Queensland and Western Australia as the only big states continuing to subsidise EV buyers.

Plummeting resale values, particularly for luxury EVs, have also had an effect on EV buyer sentiment.

Meredith believes long-term government policies such as investments in EV charging infrastructure make more sense than rebates and tax incentives to spur EV sales.

“I've always said governments should have put money into infrastructure and time might prove me correct,” he said.

“The EV market is still growing but it’s just not going at the [initial] pace and there’s a lot of global nervousness about. And I think it’s had a lot to do with infrastructure.”

VFACTS sales figures show Tesla sales tanked by 44 per cent in April – despite recent price cuts – although year-to-date Tesla sales remain slightly up.

Some brands are heavily discounting their EVs to keep sales buoyant with temporary deals like $10,000 off the brand-new Renault Megane E-Tech, $15,000 off the Polestar 2, $15,000 off the Nissan LEAF, $25,000 off the Peugeot e-2008 and almost $50,000 off the new Lotus Eletre SUV.

And established brands like Toyota, Ford and Subaru are yet to make a dent in the market with their first battery-electric vehicles.

It remains to be seen whether the Aussie EV sales slump encountered in April will be an ongoing trend, as is the case in the US and Europe, forcing Ford to rethink its EV-only strategy in the EU by 2030.

“Norway is the star EV country and electric vehicle sales are down 14 per cent year-to-date over there,” observed the Kia Australia CEO.

“In saying that, I’ve got to be fair – the overall Norwegian market is back 22 per cent, but you would expect EV sales in a country like Norway to keep going up and up and up, but they’re not.”

EV sales in the US have slowed considerably, with data from Kelley Blue Book showing that in the first quarter of 2024 electric car sales growth had increased by 2.6 per cent year-on-year, down from more than 15 per cent in the fourth quarter of 2023 and much higher again in previous quarters.

Meantime, sales of hybrid vehicles are booming.

Year-to-date, sales of hybrid vehicles are up almost 140 per cent and Kia Australia chief operating officer Dennis Piccoli told carsales that hybrids are now a must-have in any auto brand’s portfolio.

“There is little doubt that the market seems to be moving towards hybrids through this transition, as well as to EVs,” he said.

Some brands have ditched diesel power for petrol-electric hybrid powertrains, but the Kia COO suggested that hybrids don’t appear to be replacing diesels en masse just yet.

“If you look at what we’re selling and what the network order rate is, diesel seems to be going OK at this point. But in time, ultimately, quite possibly [diesels sales will decline],” he said.

Sales of diesel vehicles have risen 14 per cent thus far in 2024 and were up 22 per cent for the month of April. Kia will launch its diesel-powered Tasman dual-cab ute in 2025, followed by an electric version in 2026.

But there are a couple of curve balls coming in 2025 and beyond that will affect the entire market, namely new federal emissions regulations for all new vehicles (NVES), which are designed to reward sales of low- and zero-emissions vehicles and penalise sales of high-emitting vehicles such as diesels.

The other variable that could have a big impact on new-car buyer intentions is the arrival of several new Chinese auto brands (many of them EV-focused) this year and next, which should also spur more EV sales and – more importantly – lower the price of new EVs by creating more competition.

For everything you auto know about EVs, listen to carsales' Watts Under the Bonnet: the electric car podcast

Join the conversation at our Facebook page
Or email us at editor@carsales.com.au