The Surge in Electric Vehicles: A Closer Look at Australia’s Market Dynamics

In 2023, the electric vehicle (EV) market witnessed a remarkable surge in interest, signalling a shift towards more sustainable modes of transport. Electric vehicles accounted for 8.4% of all new car sales last year, marking a significant 120% increase compared to the figures from 2022. However, this growth was not uniformly distributed across the market. In fact, a vast majority of these sales were concentrated in just three models: the Tesla Model Y, Tesla Model 3, and the BYD Atto 3, which together accounted for over 68% of the total EV market.

Despite the availability of 91 different models of electric cars, vans, and utes in Australia, the reality is that most of these are only supplied in limited quantities. This bottleneck in supply can be attributed to Australia’s lack of a standardised approach that would compel car manufacturers to increase EV supply and encourage competition among new manufacturers.

The recent report from the Institute of Transport and Logistics Studies (ITLS) at the University of Sydney Business School sheds further light on the consumer perspective. It reveals that while one in three Australians is considering purchasing an electric vehicle within the next five years, a significant 44% cited cost as a major barrier preventing them from making the switch.

Professor David Hensher, Director of ITLS, noted that although there is potential for electric vehicles to capture around 40% of the market, the adoption rate beyond this point is likely to be hampered by affordability issues.

Australia has a considerable challenge ahead in terms of bridging the gap with other electrified nations. Currently, only 3.8% of new car sales in Australia are electric — a figure significantly lower than that of countries like Norway, where 88% of new car sales are electric.

Promoting the benefits of electric vehicles to prospective buyers is crucial, but this alone will not suffice to drive demand sustainably. The financial barriers remain the largest hurdle to overcome. Reducing these costs could be effectively achieved through the introduction and successful marketing of more competing EV manufacturers, thereby broadening the range of affordable options available to consumers.

To dive deeper into the future challenges and opportunities facing the electric vehicle market, you can read more here.

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