Electric vehicle prices are dropping as car dealerships have more models in stock while consumer interest declines. This results in some EV prices coming close to those of gas-powered cars after factoring in federal tax credits.
In May, the average price of a new EV was $56,648, which is about 15% lower than two years ago when it was $65,000, according to Kelley Blue Book. Similarly, used EV prices fell to $28,767 last month, marking a 42% decline from $40,783 a year earlier, as reported by iSeeCars.
One of the factors contributing to the decline in prices is the plateauing of EV sales in the past year, as per Jenni Newman, the editor-in-chief of Cars.com. Despite this, the prices of EVs still tend to be higher than those of gas-powered cars, although this gap is narrowing as dealers reduce prices.
Jenni Newman mentioned, “We’re seeing inventory build up, both for new and used EVs, meaning there are deals available.”
While a record 1.2 million EVs were sold in the US last year, experts anticipate that 2024’s sales will remain at a similar level according to Cox data.
Federal tax credits of up to $7,500 for new EVs and up to $4,000 for qualifying used EVs are helping persuade some Americans to choose electric. With these credits, EV prices are even closer to those of gas-powered cars, with new gas-powered models selling for an average price of about $45,000, as noted by Newman.
Dealership inventory
Three years ago, there were limited EVs available for sale as automakers grappled with a shortage of semiconductor chips. However, once these supply chain issues disappeared, automakers increased their production to meet the growing demand for EVs in the US
Presently, dealerships have around 117 EVs available on their lots for an average 45-day supply, compared to 78 gas-powered vehicles and 54 hybrids, based on data from CarGurus.
The auto industry is heavily investing in EVs, with automakers spending billions of dollars to restructure their factories for producing electric vehicles. As the options for EVs expand, automakers are resorting to price reductions to entice customers into buying these eco-friendly vehicles.
Over its lifetime, an EV emits 50% less CO2 compared to a gas-powered vehicle, while a hybrid reduces these emissions by 25%, based on data from the National Renewable Energy Laboratory. If consumers choose hybrids over EVs, it would take longer to decarbonize the nation’s fleet of gas automobiles.
Prices are dropping at a time when Americans seem to be losing interest in EVs. According to a survey by consulting firm McKinsey, nearly half of US drivers who bought an EV intend to switch back to a gas-powered vehicle.
Another survey by AAA found declining interest in purchasing electric vehicles, with only 18% of US adults indicating they are likely to buy an EV, down from 23% last year. The survey concluded that consumers’ main concerns are the high costs of EVs, limited charging infrastructure, and range anxiety.
Newman highlighted that the scarcity of charging locations is still a major concern for EV drivers, but automakers and local governments have initiated programs to increase the number of charging stations.
Traditionally, new technology is expensive initially and becomes more affordable over time. This is one of the reasons why being an early adopter of new and exciting products is risky, as you pay more to be among the first to own the latest gadget, while those who come later are likely to get a better deal.
When electric cars first entered the market, they were typical examples of new technology with a higher price tag, surpassing that of comparable gas-powered cars.
However, the outcomes have been diverse in recent times, with some electric cars becoming pricier while others becoming more affordable.
Tesla, for instance, raised prices seemingly haphazardly through 2022 and early 2023, but later in 2023, the automaker implemented significant price reductions on some models to stimulate waning demand.
In 2022, EV startup Rivian made headlines by announcing a price hike across their range, including vehicles customers had already ordered. However, a few days later, the company reversed course and confirmed that agreed-upon pricing for existing orders would be honored.
Chevrolet, Hyundai, and Nissan have lowered prices on entry-level EV models over the past few years. For instance, the base 2023 Chevy Bolt now costs approximately $10,000 less than the 2017 Bolt did when it was launched.
Furthermore, the Hyundai Kona EV subcompact crossover saw a reduction in price, mainly to remain competitive as newer and more advanced Hyundai EVs joined the lineup.
It is important to note that certain electric vehicle models saw price reductions during a summer when new car inventory reached record lows. This not only reduced the availability of sales and incentives but also prompted dealers nationwide to add “market adjustment” surcharges to maximize profits.
Although adding market adjustment surcharges is common practice for high-profile, limited edition cars, it is not something most shoppers would expect when purchasing a car like a Subaru Outback. For example, while a newcomer like Rivian tried to raise prices despite being relatively new , buyers of established models like the Chevy Bolt are enjoying lower prices than ever before.
The unconventional behavior of the electric car market raises the question: why are electric cars still so expensive? The simple answer is that batteries, the most significant component of an EV, are expensive.
The cost of EV batteries has dropped by an average of 80% over the last decade. However, while it was predicted that electric cars would become cheaper as batteries did, the opposite has been true for most models. Despite the plummeting cost of batteries, new electric car prices have increased by 80%.
Even when battery technology becomes more affordable, the continuous investment required to improve these batteries and the complexity of improving an EV’s battery present ongoing challenges. Additionally, setbacks such as the pandemic-induced semiconductor chip shortage and rare mineral shortage have further increased the price of batteries.
Furthermore, not only do car buyers want batteries with longer range and faster charging capabilities, but they also expect the batteries to deliver more power without infringing on passenger space or cargo capacity. This constant demand for improvement adds to the complexity of producing affordable EVs.
In addition to expensive batteries, luxury and performance are also contributing factors to electric cars’ high prices. As mainstream automakers and luxury automakers introduce more electric models, the pricing tends to be competitive within each category. Luxury automakers, in particular, are capitalizing on the ability to charge higher prices for their EVs by marketing superior performance, upscale design, and features.
Moreover, all-electric automakers like Tesla and Rivian have the ability to charge premium prices for their high-performance luxury EVs. This is exemplified by Rivian’s inclination to follow in Tesla’s footsteps by implementing price hikes outside of regular model year changes. Tesla has also adjusted its prices several times to optimize demand for higher-priced models and enable its entry-level models to qualify for incentives.
Many of these car manufacturers do not offer gas models for direct comparison, and as they differ significantly from traditional automakers, it is challenging to determine their competition.
The average cost of an electric vehicle in mid-2023 was roughly $12,000 higher than that of a gas-powered vehicle. While this price difference is notable, it’s important to note that gas cars are also expensive. Various factors contribute to this, with the primary one in 2023 being supply and demand. However, experts anticipate that by the end of 2023, this price gap may decrease or potentially disappear.
Some automakers, such as Tesla, have a history of experiencing significant delays between ordering and receiving a new vehicle due to the high demand in this segment compared to the supply, resulting in seemingly arbitrary price increases.
This issue isn’t exclusive to Tesla. In 2022, even Kia Tellurides and Hyundai Palisades were extremely difficult to purchase, and in 2023, shortages of certain desirable models persist.
However, until the cost of gas-powered cars decreases, it is unlikely that overall EV prices will drop significantly.
Electric cars have never been more affordable. Is it the right time to invest in an EV?
An increase in models, competition, and surplus stock has created a buyer’s market for electric vehicles.
Unprecedented discounts have made electric cars more accessible than ever as automakers compete for market share.
Low prices are also leading to great deals in the used car market for those who are unable to purchase a new electric vehicle.
More affordable than ever before
Leading the changes in the EV industry are price reductions across various segments of the market.
The GWM Ora hatchback is now the most affordable EV in Australia, priced at $35,990 following a price drop of approximately $4,000.
The competing MG4 (from $39,990) has also seen a significant reduction in price as part of the brand’s repositioning of its electric models aimed at budget-conscious consumers.
Peugeot recently cut the price of its 2023 e-2008 by around $26,000 (a 40% reduction), while Lotus lowered the cost of its Eletre SUV by up to $49,000, now priced at $189,990 before on-road costs.
Polestar, Audi, Renault, and even market leader Tesla have also made widespread discounts and price adjustments.
At the beginning of last year, the base model of the popular Model Y SUV from Tesla was priced at $69,300, and it is now available for $55,900 following another recent price reduction.
Despite years of inflation, Teslas are now more affordable than ever in Australia.
In response to the backlash regarding price reductions, Elon Musk, the CEO of Tesla, stated on X that “Tesla prices must be adjusted frequently to align with production and demand.”
Mike Costello, corporate affairs manager at Cox Automotive, a provider of vehicle data solutions and operator of Manheim auctions, mentions that “demand is not as high as it was during the peak of the market” in 2022 and 2023.
“Growth has increased this year, but at a slower pace,” he says. “While early adopters have embraced the technology, it’s proving to be challenging to attract the mass market to adopt EVs.”
Reducing prices is a simple way to stimulate demand, which, according to Costello, is at the core of these recent reductions.
“You wouldn’t reduce prices if the market was healthy.”
More models on the horizon
The major uncertainty is whether prices will continue to decline, as the upcoming influx of new brands competing for a share of the EV market appears poised to intensify competition.
Leapmotor, Lynk & Co, Zeekr, Xpeng, and Geely are among more than 10 brands planning to enter the Australian market, joining the already 60-plus car brands.
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In addition to these, companies such as BYD and Chery have announced their ambitious expansion plans. BYD, which exclusively sells EVs and plug-in hybrids, has set a goal to surpass Toyota and become Australia’s top-selling car brand by 2028.
Ross Booth, the general manager of valuation giant Redbook, believes there is only one way to achieve such an extraordinary feat: by providing better value.
“You need to distinguish yourself and establish a brand by creating a quality product at a competitive price that meets the demands of the market,” he explains.
“The Australian market has always prioritized value for money.”
Australia has consistently attracted new brands as it is considered a favorable testing ground.
The growing appeal of a medium-sized developed market in Australia is becoming more apparent.
Costello suggests that due to stricter trade barriers in the US and Europe, Chinese brands may view Australia as an ideal target because it lacks a domestic manufacturing industry to protect.
According to Costello, the increasing presence of Chinese brands also signifies the challenges faced by existing brands, with some expected to exit the market.
Achieving lower emissions is an additional motivation for car manufacturers to sell more electric vehicles (EVs) due to mandated CO2 targets, which require a 60% reduction in new vehicle emissions by the end of the decade.
The government recently passed the new vehicle efficiency (NVES) standard, which will be effective in 2025, compelling carmakers to minimize the carbon dioxide emissions from their vehicles.
While hybrids will have a significant role, the NVES requirements will increasingly necessitate zero-emission vehicles, such as EVs, as a way to offset potential penalties for vehicles that exceed the CO2 limits.
Industry experts concur that the recent developments in the EV market have created an opportune time for purchasing a vehicle.
Costello states, “There has never been a better time to adopt this technology. Buyers currently have the upper hand. There is an ample supply of most vehicles, prices have significantly decreased, and there is a wider variety in the market.”
The question remains whether EV prices will decrease further highly in the near future. Considering the influx of competition and the development of smaller, more affordable models, a continued decline seems likely.
However, adverse factors such as exchange rates could also exert negative influence.
Nevertheless, for individuals open to considering pre-owned vehicles, the availability of competitively priced EVs extends to the used car market.
The rapid developments in the EV market, reduced prices of new cars, government incentives, and reluctance toward new technology have led to a drop in the prices of pre-owned EVs.
Most EV buyers still prefer purchasing new vehicles over compromising with a used one.
“Currently, there is not much demand for used EVs,” remarks Booth.
Booth notes that hybrids have become particularly popular in the pre-owned car market, while the demand for electric cars is relatively low, with Tesla being the exception.
“People are still interested in purchasing a Tesla,” says Booth. “Tesla continues to maintain high residual values for EVs due to the demand in the pre-owned market.”
Nevertheless, Booth suggests that the pre-owned EV market is now a favorable place for prospective buyers.
“If you can find an EV that meets your range and charging time requirements within your budget, there are many good deals available.”
On average, pre-owned EVs are now selling for thousands of dollars less than comparable gasoline-powered vehicles.
In February, the average prices for pre-owned electric vehicles fell below those of pre-owned gasoline-powered vehicles for the first time, and the price difference continues to widen as consumers reject the previous “premium” associated with EVs.
The decline over the past year has been substantial. In June 2023, the average prices of pre-owned EVs were over 25% higher than those of pre-owned gasoline-powered cars, but by May, the average price of pre-owned EVs was 8% lower than that of pre-owned gasoline-powered cars in the US. In dollar terms, the gap increased from $265 in February to $2,657 in May, according to an analysis of 2.2 million one to five-year-old used cars conducted by iSeeCars. During the past year, the prices of pre-owned gasoline-powered vehicles decreased by 3-7%, while the prices of pre-owned EVs declined by 30-39%.
iSeeCars executive analyst Karl Brauer noted, “It’s evident that used car shoppers are no longer willing to pay more for electric vehicles.” According to an iSeeCars report published last week, electric power is now viewed negatively by consumers, making EVs “less desirable” and consequently less valuable than traditional cars.
The divide between pre-owned luxury brands and electric vehicles (EVs) has also widened. According to iSeeCars, the prices of used BMWs now surpass those of comparable Tesla EVs by a significant margin. In May 2023, a Tesla Model 3 cost $2,635 more than a BMW 3 Series, but by May of this year, it was priced over $4,800 less than the 3 Series.
There is currently a higher number of used EVs being sold, partly due to the expanding market. In 2022, 176,918 used EVs were bought in the US, and this number increased to over 45,000 in May alone. The used car market is significantly larger than the new car market, and used vehicle values tend to depreciate rapidly.
On average, a one-year-old used car is priced at 80% of the same new car. As more EVs enter the used market at lower prices, it becomes more accessible to a broader range of potential first-time EV owners.
There are factors contributing to the likely decline in EV premiums in the used market despite recent shifts in consumer perception. These include continual advancements in battery technology, leading to increased range in new models, as well as consumer concerns about battery degradation over time.
Newer models come with extended ranges, improved battery life with charging temperature control, and significant value tied to the battery, which makes up 30-50% of an EV’s worth. However, this is balanced by the lower overall ownership costs of EVs, covering fuel to maintenance, and the possibility of federal tax credits for owners of used EVs.
Tesla CEO Elon Musk’s decision to initiate a price war in 2023, along with decreasing demand, has played a key role in the recent drop in used EV prices. This move led to price cuts on various Tesla models, with continued reductions in 2024. Scott Case, CEO of Recurrent, noted that declining used Tesla prices led to price drops in new Tesla models, followed by decreases in prices of used EV rivals.
In January, Hertz adjusted its aggressive EV strategy by selling 20,000 EVs at Hertz Car Sales locations, roughly one-third of its EV fleet, with used Teslas priced at an average of $25,000 without negotiation nationwide.
The decreasing demand for EVs and infrastructure limitations have many auto companies to scale back on aggressive EV rollouts and focus more on promoting hybrid models, which are experiencing a surge. General Motors reduced its expected EV sales and production from 200,000–300,000 to 200,000- 250,000. EVs accounted for less than 3% of GM’s Q1 sales. Ford encountered losses from its Model E electric vehicle launch, combined hybrid and EV sales increased in May. Ford also decided to rescind a program that required dealers to make substantial investments in EV infrastructure during the initial EV boom.
Charging infrastructure is still in its early stages, and the lack of it makes switching to electric vehicles a challenge for many Americans. However, access to EV chargers is expanding, with over 64,000 publicly accessible electric vehicle charging stations in the US, totaling over 176,000 EV charging ports, as reported by the Department of Energy. EV charging infrastructure has increased by 29% since the Inflation Reduction Act of 2022, which included tax incentives for EV adoption. There are around 145,000 gas stations in the US
According to a Pew Research analysis using Department of Energy data, approximately 60% of Americans now live within two miles of a public charger, yet only 7% of those within the vicinity would consider buying an EV. The majority of EV charging still occurs at home, but there are also underserved rural areas.
A Gallup poll in April revealed a 3% annual increase in EV ownership among Americans but an equivalent decrease in serious interest in buying an EV, decreasing from 12% to 9%. Overall, 35% of Americans indicated they might consider purchasing an EV in the future, down from 43% the previous year.
As the electric vehicle industry copes with multiple notable setbacks, several startups that have emerged in recent years underestimated their capital needs by billions of dollars, according to industry insiders.
Several companies attempting to launch products or go public, especially through Special Purpose Acquisition Companies (SPACs), are encountering challenges. According to AutoForecast Solutions, at least 30 electric vehicle (EV) companies have either halted operations, gone silent, or faced the risk of bankruptcy in the past decade.
Mark Wakefield, managing director at AlixPartners, mentioned that apart from Chinese automakers, Tesla was the first to emerge in fifty years. Rivian and Lucid are considered the next two prominent Western automakers, but both have used up $10 billion. This situation contrasts with smaller startups that believe that raising $1 billion or $2 billion is sufficient.
The EV market has thrived due to government support for climate goals and has attracted Wall Street’s attention. Tesla’s success with investors led many skeptics to label it a “cult stock.”
In 2023, Tesla dominated over 50% of the US EV market, sold more than 650,000 vehicles in the country, and generated over $82 billion in global vehicle sales.
Despite slower-than-expected adoption, EVs accounted for 8% of US new car sales that year. It is anticipated that EVs will represent 46% of new vehicle sales by 2030, approximately 8 million units.
Pavel Molchanov, managing director at Raymond James, noted that startups are attracted to extensive addressable markets. However, the reality is that the automotive industry is highly capital-intensive and competitive, with less attractive capital returns.
Even well-funded companies from other industries that planned to enter the automotive sector have discontinued their projects. Apple and British appliance maker Dyson both halted their car projects.
In many ways, the current EV industry resembles the early days of the American auto industry. At the beginning of the 20th century, there were numerous small automakers and parts firms in Detroit and the surrounding region. However, after a decade of consolidation and numerous failures, only a handful of US companies such as Ford, GM, and Chrysler (now part of Stellantis) remained.
John Paul MacDuffie, a professor at the University of Pennsylvania’s Wharton School of Business, suggested that successful EV companies, like Tesla and China’s BYD, are highly vertically integrated, similar to GM during its rise to the top.
MacDuffie also pointed out that despite the current influx of new firms in the EV industry, historical patterns indicate that it may not be sustainable in the long run.
The cost of certain electric vehicles (EVs) in Australia has dropped by up to $20,000 “almost instantly” due to heightened competition as manufacturers compete for every customer. With government incentives and growing concerns about climate change, EVs are now more popular than ever.
In 2023, the number of purchases more than doubled compared to 2022, continuing the trend of doubling sales every year since 2020 in Australia. Despite the increased demand, automotive expert Paul Maric told Yahoo Finance that prices may still have further to fall.
According to Maric, increased competition among manufacturers is driving the price war. He mentioned that Chinese brands introducing more affordable electric vehicles have been a significant factor.
The prices of electric vehicles vary widely based on the brand. For example, the GWM Ora Standard is priced at $35,990, while the Porsche Taycan Turbo S will cost you $345,800.
Some mid-range electric cars have experienced significant price reductions. The Nissan Leaf dropped from $50,990 to $39,990, the Polestar 2 2024 Long Range Single Motor fell from $71,400 to $58,990, and the Tesla Model Y decreased from $72,000 to $55,000.
Polestar seems to be the most impacted by price drops, with four out of its eight cars available in Australia experiencing decreases between $10,000 and $15,000, as reported by Gizmodo.
Maric also mentioned that Tesla has been a surprising participant in the price reduction trend. He pointed out that the Model Y, for instance, saw a significant drop from $72,000 to $55,000.
According to Maric, Tesla has had an excess of vehicles in Australia with no buyers, leading to substantial price reductions in order to move the stock.
The CarExpert.com founder suggested that Australians might be tempted to wait for better deals as the price war continues. However, he also stated that it’s a bit of a gamble and buyers should be prepared to live with their decision.
Maric explained that it might be best to purchase an EV now, as they are currently reasonably priced. However, he cautioned that buyers should be comfortable with the possibility of depreciated value at the end of the purchase or lease term.
Maric also recommended that EV owners consider upgrading their vehicles every two to three years to take advantage of new car and battery warranties, as well as updated technology.
Additionally, Maric highlighted that the second-hand EV market can be harsh, with electric vehicles selling for a fraction of their original purchase prices. He emphasized that EVs are especially susceptible to depreciation.
For regular used cars, sales data from 2023 show a 14.1 percent depreciation between two to four years after their manufacture date, whereas for EVs, the depreciation during the same period is 42.4 percent.
Maric attributed this steep depreciation to owners attempting to sell their cars quickly to avoid being stuck with an expensive asset they can’t sell.
Lastly, it was noted that electric vehicle sales more than doubled in 2023, accounting for 7.2 percent of all new cars sold.
The move towards electric vehicles (EVs) is imminent, regardless of our preparedness, and Australians are on the brink of experiencing significant changes in the realm of automobiles.
The Australian government recently introduced its proposed New Vehicle Efficiency Standards (NVES) and aims to compel car manufacturers to supply more fuel-efficient vehicles by January 1, 2025, with the goal of hastening its efforts to reduce carbon emissions by 369 million tonnes by 2050.
As per the government’s strategy, by 2028, Australian drivers have the potential to save $1,000 annually on fuel and over $17,000 over the lifespan of the vehicle.
The sale of EVs more than doubled in 2023. According to data from the Federal Chamber of Automotive Industries (FCAI), electric vehicles accounted for 7.2% of total new-car sales, a marked increase from 3.1% in 2022.
Alborz Fallah, the founder of CarExpert, informed Yahoo Finance that “Demand for electric cars in Australia is at an all-time high and, if we look back to last year, 87,217 EVs were sold – more than double that of 2022 (33,410).”
He added, “Although this represents just over 7% of all cars sold in 2023 (a total of 1,216,780), the growth in electric vehicle sales is likely to continue as more and more affordable models reach our market.”
What’s fueling the growth of EVs?
The increasing interest in EVs in Australia is driven by various factors. While one might assume that soaring fuel prices are the primary driver, there are myriad other considerations.
Fallah mentioned, “With the significant decrease in the price of EVs – for instance, the fully electric MG4 starting at around $40,000, and offering excellent safety, driving dynamics, and over 400km of range – more buyers are realizing that they can opt for electric vehicles without incurring substantial costs.”
He also emphasized the impact of government incentives, stating, “There is a higher level of social awareness regarding the environmental impact of internal-combustion-engine (ICE) vehicles than ever before. Many buyers are willing to make a choice that aligns with their moral values.”
However, a spokesperson from the Department of Infrastructure, Transport, Regional Development, Communications, and the Arts (DITRDCA) informed Yahoo Finance that despite this growth, Australia still trails behind other countries in EV sales.
Earlier this month, FCAI chief executive Tony Webber attributed this lag to Australia’s strong preference for utes and SUVs, which made up 78.4% of all new-vehicle sales in 2023.
What impedes Australians from transitioning to EVs?
The adoption of EVs in Australia significantly lags behind other nations, with only 3% of vehicle owners currently utilizing them. Several factors contribute to this slow uptake.
High upfront costs of EVs
Recent research from global data and insights company Pureprofile revealed that close to 39% of Australians were hesitant to purchase an EV due to the substantial initial investment, with almost 65% stating that the rising cost of living was hindering their ability to do so.
While it’s true that the charging and maintenance of an EV are more cost-effective, their purchase price generally exceeds that of petrol and diesel vehicles. However, the Electric Vehicle Council (EVC) noted that there are now numerous models available in Australia for under $45,000.
The EVC also highlighted the incentives available to Australians looking to buy EVs, including the nationwide Electric Car Discount, which provides an exemption from Fringe Benefits Tax for novated leases and company cars.
Most Australian states and territories offer their own set of incentives:
- In Queensland, there is a leading rebate of $6,000
- Western Australia follows closely with a maximum of $3,500 in rebates available
- Tasmania provides $2,000 in rebates for new and used EVs
- Canberra residents have access to stamp duty exemptions, a registration discount, and zero-interest loans
- In the Northern Territory, incentives include stamp duty and EV registration fee waivers, along with an EV charger grant scheme for owners who purchase and install chargers
- Victorian EV owners are now only eligible for a registration discount after the closure of the Zero Emissions Vehicle Subsidy
- Unfortunately, there are no available rebate programs for residents of South Australia and New South Wales, as the programs were closed in 2023.
Lack of charging infrastructure
Data from Pureprofile also revealed that 36% of Australians feel that there are insufficient EV charging stations throughout the country.
As of December 2022, the EVC stated that there were 2,392 public charging stations in the country.
Trevor Long, the host of the Two Blokes Talking Electric Cars podcast and an EV owner, highlighted this issue to Yahoo Finance after testing the country’s charging network during a road trip across New South Wales. Long discovered that not only were charging stations scarce, but some of them also did not function.
This is a particularly pressing issue in rural Australia, where individuals often have to travel long distances.
However, the DITRDCA is currently working with the NRMA on a partnership to establish a national EV-charging network, which will serve as a “backbone.” A spokesperson mentioned that there will be 117 electric vehicle charging stations strategically positioned along key highway routes in Australia, with an average distance of 150 kilometres between each station, effectively linking all capital cities. The spokesperson also noted that the new sites will complement the existing and planned EV-charging infrastructure, with a specific focus on addressing known blackspots and prioritizing regional and remote communities.
Range anxiety is a concern for over three-quarters (78%) of Australians, representing the fear of running out of battery power during a journey. This fear is heightened when carrying a heavy load, such as a trailer or a caravan, and traveling long distances.
Electric vehicles (EVs) available in Australia generally have a battery range spanning from 250 to 650 kilometres, with many models capable of traveling over 400 kilometres before requiring a recharge. The EVC stated that this range typically meets the driving needs of numerous regional commuters. However, the organization emphasized the critical importance of public charging infrastructure being readily available along the country’s major road network.
Despite this, Fallah holds a differing perspective, stating that currently, electric vehicles are not well-suited for towing due to the significant reduction in battery range when carrying additional weight. He did note, however, that the emergence of the next generation of solid-state batteries, entering mass production, might alter this situation and make EVs suitable for towing purposes.
Australians considering purchasing an EV have various inquiries, including gaining basic knowledge about the available types of EVs.
There are four main types of EVs:
– Battery electric vehicles (BEVs), also referred to as plug-in or pure EV
– Hybrid electric vehicles (HEVs), operating on a combination of petrol or diesel and battery power
– Plug-in hybrid electric vehicles (PHEVs), similar to HEVs in terms of power source, but differing in the battery’s ability to be recharged using a standard power outlet at home or in a public charging station
– Hydrogen or fuel cell electric vehicles (FCEVs), which convert fuel into energy through an electrochemical reaction with hydrogen and oxygen. However, this technology is still emerging in Australia, and these vehicles are not yet available for everyday use.
With regard to the environmental friendliness of EV batteries, there is widespread belief that EVs are environmentally friendly. Nevertheless, concerns persist about the disposal of batteries in landfills.
Natalie Thompson, EVC senior manager for policy, stated that there has been misinformation about batteries and their recycling, where the challenges of collecting small batteries have been conflated with those related to massive car batteries. She mentioned that the issue of EV batteries ending up in landfills is not prevalent, as the global market for EV battery recycling remains relatively small due to low volumes of EV batteries reaching the “end of life.” This situation is expected to change over the next decade.
Fallah also articulated his viewpoint on this issue, referencing past iterations of EV batteries, particularly the initial first-generation of EVs, which had questionable battery-producing practices. However, he highlighted efforts made by brands like Tesla and BYD to make battery production as environmentally friendly as possible.
He emphasized that the environmental impact of an EV hinges on its longevity and the recycling process. When techniques for better stripping and reusing the rare-earth materials in EV batteries are developed, EVs will have a significantly lower environmental impact.
From traditional automotive manufacturers to emerging electric vehicle companies, a decline in EV demand has presented challenges. Factors such as higher pricing compared to gas vehicles, increased financing costs, and insufficient charging infrastructure have limited the growth of EVs in the US.
However, on the positive side, it is currently a highly favorable time for consumers interested in purchasing or leasing an EV. For instance, according to Kelley Blue Book, new EV prices decreased by 10.8% in January compared to the previous year, and in December, EV transaction prices dropped to $53,611, marking the lowest point in the past 12 months.
CarGurus, an online platform for car shopping, discovered that the length of time electric vehicles (EVs) are available for sale increased compared to the previous year, while the duration for internal combustion engine (ICE) cars decreased. In January, the average listing price for a new EV on the platform decreased by 9.1% year over year to approximately $60,000.
The used car market showed even more significant changes. In January, the average listing price for a used EV dropped by 20.6% to around $38.7K.
These trends indicate that this is an opportune time to shop for EVs before the market stabilizes and prices rise again. Here are some of the top deals we found for new EVs, utilizing incentives available in the New York City metro area and excluding destination charges, which vary by manufacturer and vehicle.
The cost of electric vehicles is poised to become more affordable due to increasing interest in bi-directional charging technology. This technology, also known as vehicle-to-grid (V2G) or vehicle-to-home (V2H) charging, enables EV owners to utilize their vehicle to power their home. By allowing electrical current to flow in both directions, cars can supply power back to the grid or power a home using energy from the EV battery.
A representative from RACV explained that this could transform homes into “the green petrol station of the future.” Essentially, the concept is that your car can function as both a home battery and a mode of transportation.
If you charge the car from a cost-effective source like rooftop solar, a free charger at a local shopping center, or at work, you can use the car’s battery to power your home economically. Jet Charge CEO Tim Washington believes that this dual functionality of EVs could lead to the complete replacement of stationary home batteries.
But what happens when the car is not at home? Most cars are idle in the garage, on the street, or at work most of the time. Considering that the average person drives only about 36 kilometers a day, there is plenty of charge in a 300-kilometer-range EV to use as a home battery.
Furthermore, as Tim Washington pointed out, when you are using energy at home, the car is likely at home as well. In cases when the car is not present, you can still access grid electricity unless you are completely off-grid.
Currently, not all electric vehicles support bi-directional charging, according to a representative from RACV. Only a few models such as the Nissan Leaf and the Mitsubishi Plug-in Hybrid have this capability. However, the spokesperson anticipates that this will change as newer EV models enter the market and the technology matures.
The high cost of bi-directional charges is another obstacle. Priced at around $10,000, they are not inexpensive, but Tim Washington believes that their cost will rapidly decrease. Additionally, it’s important to consider the impact of bi-directional charging on the battery life Although moving electricity back and forth would increase overall usage, Washington stated that the effect on EV batteries, which now have long lifespans, would be negligible.
In the future, another way to capitalize on your car could be to sell electricity back to the grid. Dr. Bjorn Sturmberg, a research leader at ANU, mentioned that EV owners may receive compensation for aiding the grid during peak demand periods. Essentially, when there is high energy demand, such as during hot days when air conditioners are running at full blast, energy providers may reward you for accessing the electricity stored in your vehicle’s battery, ensuring sufficient supply for everyone. Incentives are already being offered to homeowners to allow access to their household batteries, and it’s likely that EVs will be treated similarly.
Study Shows Major Price Drops On Used Electric Vehicles
It seems that almost every week brings forth some troubling statistical evidence highlighting the declining prospects of electric vehicles. For instance, this week, the annual EY Mobility Consumer Index revealed that only 34% of global participants plan to select an EV as their next vehicle, blaming costly battery replacements and insufficient public charging infrastructure as significant barriers.
On a positive note regarding the downturn in the EV market, the prices for new electric vehicles have begun to decrease to counteract the dip in demand, with car manufacturers providing cash incentives ranging from $7,500 to $10,000 this month to assist their dealers in reducing inventory.
However, the decreases in price have been particularly sharp in the used-car segment, where second-hand EVs are currently being sold for 11.4% less than traditional internal combustion vehicles. A year prior, they were fetching prices 12.1% higher than regular cars, trucks, and SUVs. This comes from a pricing trend analysis conducted by the online platform iSeeCars.com, based on more than 1.6 million transactions of used EVs aged 1-5 years in August 2023 and 2024.
The vehicle that has seen the most significant price drop over the past year is the Tesla Model 3, which has undergone an average decline of 24.8% due to an abundance of used models. Additionally, the study indicates that five of the six models experiencing the steepest losses in the past year are electric vehicles. Below is iSeeCars’ list of the 15 used cars with the most significant price drops.
Generally, used vehicle prices have been returning to normal after pandemic-induced supply and demand fluctuations led to significant increases. Nevertheless, iSeeCars’ research shows that pre-owned electric vehicle prices have decreased four times more rapidly than those of hybrid cars and six times more quickly than gasoline-powered used vehicles. Thanks to an average value drop of 25%, used electric vehicles are now selling at a much quicker pace than they were in 2023.
“Used electric cars have decreased from an average of 55.3 days to sell in September 2023 to 38.6 days in the current timeframe,” explains Karl Brauer, an executive analyst at iSeeCars. “This suggests strong demand for used EVs—provided they are priced 8% to 11% lower than hybrid or gasoline vehicles.”
Clearly, the conclusion is that those looking to purchase an affordable electric vehicle can find excellent deals that will save money both initially and in the long term regarding fuel and maintenance costs.
However, it is important to note that not all used car prices are plummeting. Some highly sought-after models, as shown in iSeeCars’ study, are actually increasing in value. This includes the Porsche 718 Cayman, which experienced a 21.4% price rise over the last year, the Volvo S90 (+16.3%), Chevrolet Camaro (+8.4%), BMW 2 Series (+6.6%), and the Mitsubishi Outlander Plug-In Hybrid (+6.4%), among others.
A recent report from iseecars.com indicates that used car prices have slightly declined, with the electric vehicle sector particularly impacted by the Tesla Model 3’s 24.8% depreciation compared to last September. Other entry-level EVs (Bolt, Niro, Leaf), which have recently transitioned to the used car market, have also undergone significant depreciation similar to luxury vehicles like the Maserati Levante and Mercedes-Benz AMG GT during the same timeframe.
While it may be easy to attribute the swift depreciation of electric vehicles to a cooled overall EV market, the rapid advancement of EV technology signifies that even electric cars 2 or 3 years old are no longer cutting-edge. Overall, this translates to a much lower price for buying a late-model electric vehicle, while the used car market overall continues to recover from pricing spikes during the Covid era.
Data from CarGurus indicates that this recovery is inconsistent rather than uniform. In the last month, CarGurus reported a slight increase of just under half a percent in used car prices, likely part of an ongoing general downward trend. While the overall trend is downward, some used vehicles are still appreciating, albeit by minor amounts.
From iseecars.com’s data, the highest year-over-year price increases in the used market have been recorded for the Porsche 718 (21.4%), Volvo S90 (16.3%), and Chevrolet Camaro (8.4%) respectively. The entire market is still gradually finding its way back to a previous normal, but the ongoing shift toward electrification is disrupting the values of outgoing internal combustion engine performance cars, given that the 718 will soon be migrating to a four-cylinder setup. The Camaro is another combustion enthusiast vehicle facing elimination, with widespread rumors of its eventual electric successor.
CarGurus’ monthly review of the limited selection of used cars increasing in value is also noteworthy, with a brand new electric vehicle among the top three. Alongside the 3.4% increase in price for the recently discontinued Chrysler 300 and the 2.2% increase for the updated Toyota Camry, the Honda Prologue has seen its used prices rise by 3.2%. This could potentially indicate scalpers trying to capitalize on unmet demand for a vehicle whose production has not yet caught up. As the market stabilizes, it appears that a vehicle’s circumstances matter as much as the type of propulsion it uses.
As electric vehicle (EV) manufacturers lower prices on new models, the cost of used EVs has dropped to 11% less than that of gasoline vehicles, based on data from iSeeCars.
An analysis of 1.6 million used vehicles (all aged one to five years) sold between August 2023 and 2024 revealed that the Tesla Model 3 experienced the most significant drop in value for any car over the past year, decreasing by 24.8%. Other electric vehicles also saw declines, although they were smaller but noteworthy.
The positive aspect is that the decline in used EV prices is not as severe as it was at the close of last year and the start of this one. This could indicate that we are nearing the end of a prolonged reduction.
Karl Brauer, executive analyst at iSeeCars, stated, “The 25 percent decrease in used electric vehicle prices over the last year is still significantly higher than for gasoline or hybrid cars. However, it’s lower than the 30 to 40 percent drops we observed at the end of 2023 and the first half of 2024, suggesting that average used EV prices may soon stabilize around $25,000.”
In August, the average cost of a used gasoline vehicle was $30,292, while the average price for a used EV was $26,839—an 11.4% difference. In comparison, last year, EVs were priced at 12.1% more than gasoline vehicles.
A decreased market share for battery-electric vehicles in 2025 is expected to complicate the EU’s ability to meet its carbon emission targets, as boosting BEV market share and sales is a crucial strategy for manufacturers to achieve these objectives.
Current data from S&P Global indicates a deteriorating outlook for battery-electric vehicles in the EU. It is now estimated that the share of battery-electric vehicles in 2025 will be 21%, a notable downward adjustment from the previously forecasted 27% in the first half of 2024.
This revision largely stems from changing market dynamics, as the global demand for electric vehicles declines.
A reduced market share for battery-electric vehicles in 2025 will also pose significant challenges in achieving the EU’s carbon emission objectives for that year, primarily as increasing BEV market share and sales are vital avenues for vehicle manufacturers to meet these targets.
Other measures include collaborations between high-emission manufacturers and those with lower emissions, as well as a shift in sales strategies to promote more efficient vehicle options. Additionally, mild-hybrid technology, which utilizes a small battery-powered electric motor to support a traditional diesel or petrol engine, could aid in reaching these targets.
Czech transport minister Martin Kupka remarked on the ACEA website: “Without a specific automotive industrial action plan, we risk lagging behind the US and China.”
“The reality check indicates that the EU must establish a more adaptable framework for automakers to achieve the ambitious CO2 reduction goals. We need to ensure that the industry invests profits into new solutions rather than merely paying fines.”
Sigrid de Vries, the director-general of ACEA, also noted in the press release: “The impending crisis demands immediate action. All signs point to a stagnating EU electric vehicle market at a time when acceleration is crucial. Besides the excessive compliance costs for EU manufacturers in 2025, the success of the overall road transport decarbonization policy is in jeopardy.
“We acknowledge that several European Commissioners have stressed the need for regulatory predictability and stability during their confirmation hearings, but stability alone cannot be an end goal. Manufacturers have invested significantly and will continue to do so. Europe must maintain its focus on the green transition by implementing a functional strategy.”
Higher tariffs imposed by the EU on Chinese electric vehicles are expected to further suppress the battery-electric vehicle market.
Recently, the EU has raised import tariffs on Chinese EV manufacturers such as Geely, BYD, and SAIC. This decision arose amid growing concerns about the Chinese government’s substantial subsidies for these companies, enabling them to offer their models at greatly reduced prices within the EU.
Consequently, this has seriously undermined other European automakers like Volkswagen, Audi, Mercedes-Benz, and BMW.
The EU has now set tariffs of 18.8% on Geely, 17% on BYD, and 35.3% on SAIC.
However, as these tariffs take effect, the prices of these electric vehicles are likely to rise significantly, which could deter sales, particularly as consumers continue to grapple with the cost of living crisis throughout Europe.
This situation is likely to make it even more challenging to meet carbon emission targets, both for 2025 and for the longer term in 2030.
