Cost-of-living crisis meets new era of electric cars

The cost-of-living crisis rear-ended new car sales at the end of 2024, with purchases 2.7 per cent softer in December compared with the same month the year before, while electric vehicle purchases were essentially flat, lagging behind hopes.

Instead, there was a boom in sales of vehicles with hybrid engines, which are powered by a petrol or diesel motor and a battery that charges while the engine is firing. More than 170,000 were sold in Australia last year.

While electric vehicle sales lifted slightly over the year, clean car sales still aren’t rising fast enough to achieve Australia’s international commitment to hit net zero emissions by 2050. Experts say EVs’ proportion of new car sales must rise sixfold by 2030 to put the target within reach.

Michael Basant bought a BYD electric vehicle in December, and enjoys the fuel savings.Credit: James Brickwood.

About 114,000 new EVs were sold in Australia last year, up from 98,000 in 2023, according to data from the Electric Vehicle Council and the Federal Chamber of Automotive Industries.

Hybrid vehicle sales jumped 76 per cent to 172,696 in 2024, from 98,105 the previous year.

“Customers are increasingly making choices regarding environmental outcomes and the associated total cost of ownership of moving to low emissions technologies,” said Federal Chamber of Automotive Industries chief executive Tony Weber.

“So, while the sales of battery electric vehicles are lower than expected, this is offset to a degree by an increasing number of buyers turning to hybrid … models.”

The chamber’s monthly VFACTS car sales report shows that in the 12 months to December 31, one in every four vehicles sold was a cleaner model compared with a petrol or diesel engine.

Hybrid vehicles comprised 14.1 per cent of new vehicle sales, while EVs were 9.65 per cent of the market. The EV figure includes cars powered only by a battery as well as plug-in hybrids, which have a petrol or diesel engine and a battery that can be recharged from the electricity grid.

The Electric Vehicle Council, the clean car industry’s peak body, said the EV sales growth had been achieved despite the tougher economic environment.

“The 2024 electric vehicle sales results are encouraging, especially in a year when Australians were smashed by high interest rates and the high cost of living,” said the council’s head of legal, policy and advocacy, Aman Gaur.

But the council has found that to reach net zero emissions by 2050, about 60 per cent of all new cars sold in 2030 must be EVs, up from around 10 per cent now.

Weber, who represents most carmakers that import vehicles into Australia, including those aiming to grow EV and hybrid sales, wants the federal government to extend support for all types of cleaner cars.

“I urge the Commonwealth government to support its emissions-reduction policies by considering ongoing consumer support such as a continuation of the fringe benefits tax exemption for plug-in hybrid vehicles, which is due to end on April 1, 2025,” Weber said.

While the fringe benefits tax exemption for hybrids ends this year, it continues for EVs valued at less than $90,000 and bought under a novated – or salary-packaged – lease. This could save a buyer more than $10,000 depending on the purchase price.

Weber’s comments follow the Federal Chamber of Automotive Industries’ guarded support for the introduction this year of the Albanese government’s new vehicle efficiency standard, which applies to new car sales and limits the average emissions of a carmaker’s overall fleet of vehicles sold each year.

Designed to boost clean car sales, companies must pay a penalty of $100 for each gram per kilometre the caps are exceeded. Every developed economy in the world, except Russia, has similar rules.

The council said the efficiency standard was a “promising step forward” but much more government support was needed to get the transport sector on track for net zero.

“Accelerating momentum will also require increased investment in infrastructure, more incentives, updated regulations, nationally consistent policies, and proactive efforts to combat misinformation,” Gaur said.

Michael Basant bought a BYD Seal Performance EV in December, motivated by fuel savings when commuting from his home in Liverpool in south-western Sydney to Macquarie Park, north-west of the CBD, for work.

Basant commutes with his EV four times a week and charges his vehicle once, near home at a commercial charging station, and gets about 500 kilometres’ driving distance from a full battery.

“It is pretty good for me. I think it’s about one-third of the cost of petrol for a normal car,” Basant said.

The navigation software and new vehicle technology mean Basant is aware of how much range he has left in his vehicle. He said he felt no stress when driving his EV for extended periods, even from just one charge a week. “The car’s maps give you your closest charging station and the availability.”

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