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Is It Too Early to Buy an Electric Car?

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As the end-of-year total vehicle sales numbers start to flow in, one might notice that electric vehicle (EV) manufacturers are still struggling to gain a foothold in Australia, and it begs the question; is it too early to buy an electric car? 

Despite significant growth in the number of electric cars purchased by Australians this year, the share of total vehicle sales is noticeably small. The first 6 months of 2021 saw more battery electric, hybrid and plug-in hybrid vehicles sold than the whole of 2020. Final year results suggest around 16,000 new EVs have been purchased, which is about double the amount sold last year, but that only represents a market share of just 1.6%. For reference, 40,000 new Ford Rangers were sold in 2020. When we compare these numbers to other developed regions of the world, it’s clear that Australia is a slow market for EVs. In Europe, the market share of EVs jumped from 12.4% last year to 18% in 2021.

At present, there are 13 manufacturers now selling 23 different battery electric vehicles in Australia. This is alongside 12 manufacturers selling 22 plug-in Hybrid models. By contrast there are a claimed 130 models to opt for in the UK. Tesla dominates our market, landing almost 12,000 Model 3’s this year, the next best being MG who sold around 1,200 of their ZS EV models. 

too early to buy an electric car
Just a few of the new electric vehicles expected to hit Australian Shores in 2022

There is certainly a fleet of issues that are driving the low-uptake of electric vehicles in Australia. Ranging from the price tags to the carbon credit system in the EU, there is a lot to overcome for manufacturers, buyers and policy makers. The list of shortcomings have even electric vehicle enthusiasts hesitating to invest in an EV wondering if it is too early to buy an electric car.

For this article, and the purpose of better understanding consumer sentiment we conducted some research through LinkedIn polls. The goal of the polls was to gain a grasp on wider attitudes towards electric vehicle ownership. Firstly we wanted simply to know if people were open to the idea of driving an electric car as their daily driver in the foreseeable future, then we wanted to unpack the overarching concerns that consumers hold around ownership in Australia. From our initial research into the topic we decided that the key complications that deter EV uptake centred around; the driving range of current batteries; the purchase price and ongoing costs; existence and capability of supporting infrastructure; and reliability and safety. In quantifying the opinions of respondents around each of those factors and then presenting further information on each, we hope to provide a comprehensive report that can advise whether it is too early to buy an electric car. 

too early to buy an electric car
Toyota recently announced their new fleet of Electric Vehicles

What did the Poll results tell us?

The first question we put to the LinkedIn community was ‘when do you think you’ll be driving an electric vehicle?’. From 325 respondents, 10% said they already were, 22% said within the next 2 years, with 45% saying in between 3-5 years. The remaining 23% who said ‘other’ were encouraged to comment – this revealed a number of people claiming they would either never drive one, or they would wait even longer than 5 years before making the switch to electric. These results tell us that there exists a willingness to adopt an electric car in the near future among three quarters of the sample. The higher share of people in the ‘3-5 year’ category, however, suggests that most are still not convinced or able to buy an EV at this point. Given the fact that the current offering of electric vehicles, especially Teslas, have lofty price tags – consumers are biding their time before making the significant investment, presumably awaiting wider infrastructure,  better technology and proven longer term performance.

The second poll we conducted asked ‘in your opinion, what is currently the most significant shortcoming of Electric Vehicles?’. The options given were derived from the comments on the first poll and were; range, cost, recharging time and other (please comment). We received 111 votes on this poll and numerous comments highlighting different shortcomings. The most common answer was ‘Cost’ with 43% of the vote. Range and recharging time came out with 23% and 25% respectively. As noted by the general manager of the Volkswagen Group Australia, Michael Bartsch; “most of the intelligence says that an average person would pay a 10 per cent premium for an electric version of an equivalent [petrol] vehicle”. At the prices we currently are seeing, we are well beyond a 10% premium, with Teslas ranging from around $70k to $140k and the base model electric Hyundai Kona retailing for nearly double what the petrol version sells for. Living in a large country such as Australia means ‘range anxiety’ and prevalence of charging facilities are considerable barriers to adoption too. The majority of electric vehicles on the market have a range of 300km at the low end, and 500km at the higher end with Teslas boasting higher ranges (600-700km) to match their price tags. Whilst these ranges are more than enough for the daily drive to and from work in metropolitan areas, people still want something that can take them on longer weekend and holiday trips without the fear of running out of power or needing to stop for 45 minutes or more to re-charge along the way. 

too early to buy an electric car

Finally, we posed the question; ‘if you were choosing an electric car, excluding the price, which feature would be of greatest importance to you? This was asked to establish what key selling points people would look for if price was not part of the decision. Reliability and Serviceability came about on top of the answers with 40% closely followed by Range with 37%. Performance was not of great importance to most, with 20% of the 93 responders selecting this option. Preferences for vehicles with proven reliability and adequate servicing support can in-part explain the slow uptake of EVs as a whole and account for Tesla’s dominance over the EV market. With the concept of mass electric vehicle usage still comparatively new to our market, there remains uncertainties about the longevity of the vehicles and their parts as well as the availability of replacement parts and specialised EV mechanics and technicians. With Tesla at the forefront of EV innovation, there is more faith in their capabilities and support network as a manufacturer.  

For prospective EV buyers, knowing whether it is too early to buy an electric car essentially comes down to the individual’s own circumstances and intended use of the vehicle. Making the decision therefore relies on having an understanding of the capabilities of EVs in-market and the potential future improvements of the technology.   

Range  

As shown in the results of the LinkedIn polls, the range of the current available models is proving to be an issue for Australians. In order to fulfill more than their daily driving requirements it appears people will be open to the investment when the battery range can better compete with internal combustion engines. Improvements to battery technology have seen the median range improve from around 100km to upwards of 350km in the last 10 years. At that rate, the best electric cars are not far off achieving competitive distances. The difficulty then transfers to the speed of charging – where regular cars can be filled up with fuel within a few minutes, electric vehicles still need at least half an hour on the very fastest of charging stations, of which there are few in the regional and rural parts of Australia. Although as with the increasingly advancing batteries, charging stations too are getting faster and faster. 

Purchase Price and Ongoing Costs

Since last year, six more models under $65,000 have been launched in the Australian market, bringing the total available under that price to 14. As noted by Michael Bartsch “If somebody in Australia could buy a really good electric vehicle for $52,000 or thereabouts, which is completely doable, then you open up a completely different [segment] of the Australian market”. Bringing the cost of EVs down would undoubtedly be a goal for the manufacturers in order to achieve wider sales and most expect to achieve this as technology improves and becomes more widely available. In regards to ongoing costs, the primary concern arises with battery life. Replacing batteries can prove expensive and they do lose capacity over time. At this point, manufacturers are guaranteeing the life of their batteries up to around 8 years. Of course, these costs are offset in part by the savings achieved on fuel, which are estimated at about $1,500 per year, and that number will only go up as fuel prices continue to rise and renewable energy sources expand and cheapen. In Europe, the larger adoption of EVs can be understood when you look at the incentives established by the member nations. There are a suite of monetary incentives for both manufacturers and consumers, the likes of which aren’t being employed by the Government in Australia at this time. 

Chargefox are working to install charging stations all over the country

Supporting Infrastructure

Before buying an electric car, the average consumer will want assurance that they can have both convenient access to public charging stations and be able to efficiently charge their vehicle at home. Some EV owners have set out on the ‘Big Lap’ of Australia to prove that the cars in their current state can handle the long distances between charging locations. It does, however, leave no room for towing trailers or taking detours – planning and considered driving are necessary. More investment and innovation in public EV facilities is needed before consumers can feel fully confident that they don’t need a second ICE vehicle for their trips away. In regards to at-home charging – this has proved an issue in places like California, which has achieved strong integration of electric cars. Despite a wealth of public charging infrastructure, a report found that 20% of surveyed EV owners had reverted to, or planned to revert to a gas-powered vehicle. The primary reason for this was home charging, specifically a lack of 240-volt power outlets at their homes. Those living in rentals, apartment complexes or without garages cannot easily access home charging. 

Reliability and Safety

Our third poll found that a considerable percentage of respondents were most concerned with the reliability and serviceability of the vehicles. Electric vehicle manufacturers simply don’t have the luxury of decades of proven reliability that the established fuel-powered car makers have. However there is little to say that the EVs hitting the market are any less reliable and safe than existing ICE vehicles. In fact, with fewer moving parts required and less brake-wear, electric cars may very well prove to be more reliable. The highly rational buyer will likely wait for the popularity of electric cars on roads to increase to strengthen the existence of replacement parts and certified technicians. From a safety standpoint, the primary concerns exist around the lithium-ion battery. Whilst heavily tested and approved before installation, short-circuiting can occur with a battery cell puncture or in an accident and this can result in extremely dangerous fires. Work is being done to solve this issue, scientists at Deakin University in Australia, for example, are developing a lithium metal battery prototype that is flame resistant. Time is needed to provide better assurances of the reliability and safety of electric vehicles but there are no glaring shortcomings with the highly capable EVs that are already on roads. 

To wrap up, the answer to the burning question of whether it is too early to buy an electric car completely depends on the potential buyers’ circumstances and intended use of the vehicle. There is little question that the cars on the market today are highly capable, technologically advanced machines that will suit the needs of a metropolitan-based user who wants to save on fuel costs and lower their carbon footprint with their daily driving and weekend run-abouts. Prices are high but dropping quickly and the drivable range and reliability is improving all the time. A buyer simply needs to give full consideration to all aspects of ownership with regards to charging, maintenance and costs with respect to their own personal situation and requirements. 

Related Article: Australia Should Lead the Energy Revolution

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