Average Australian Mortgage Size in 2023
29 Nov 2023
Electric cars have cemented themselves an aspirational reputation in the Australian marketplace as one of the coolest pieces of technology. If you are looking to buy on, here are the pros and cons of electric cars you need to know.
Electric cars have, in recent years, cemented themselves an aspirational reputation in the Australian marketplace as one of the coolest pieces of technology, offering a clear vision into the future of the automotive industry.
Just think of it. No more visits to petrol stations, no more "regular servicing" (they don't need oil changes), super-fast acceleration, and some are even self-driving technologies make EVs the cutting-edge of automotive technology.
It is no wonder that many Australians want one; in a recent Roy Morgan survey, the number of Australians who said they intended to buy an electric car increased by 200,000 in just one year.
Roy Morgan CEO Michele Levine said the numbers make it clear electric vehicles will continue to grow in popularity.
"Over the past twelve months, we've seen nearly a doubling in the number of Australians looking to purchase both electric and hybrid vehicles as their next car purchase. These increasing numbers send a clear signal to car manufacturers that Australians are interested in greener technologies," Ms Levine said.
"The strong growth in popularity of electric and hybrid vehicles suggests the number of Australians driving these cars will occupy an increasing proportion of the future car industry."
While all the world's big car manufacturers get busy electrifying their model ranges, buying an electric car remains a big leap. Despite their benefits, the price tag remains a big deterrent. In fact, 73% of people who are interested in buying an electric vehicle said they would be more likely to buy one if they were cheaper, according to ACA Research.
Mike Sinclair, editor of carsales.com.au, says prices are improving (there are now a few models below $50,000) and prices are likely to keep falling in the coming years.
"Just by critical mass, the cost of vehicles will moderate but they won't become cheap," Mr Sinclair said. "And there will be more choice, which will inevitably make the market a bit more competitive."
But Australia still lags behind the rest of the developed world when it comes to the number of electric vehicles on the road - around 6,000 at last count. In Norway (which is 24 times smaller than Australia) more than 62,000 electric vehicles were sold in 2017 alone.
So why are Australians so slow to jump on the electric vehicle bandwagon?
There a few reasons, but price is probably the most prohibitive factor. Until Nissan launched the Leaf and Hyundai the Ioniq Electric, and more recently cars like the MG ZS EV, it was almost impossible to find an electric car under $50,000. Tack on the luxury car tax, stamp duty and import duties, and suddenly the cost of saving the planet is huge.
There's also range anxiety (concerns about not being able to drive long distances on a single charge), and the charging infrastructure still has a way to go.
As the electric car market matures, a number of the concerning growing-pains that were obvious upon the introduction of electric vehicles have now been sorted by manufacturers and governments. As a result, there are a growing number of advantages when making the switch to electric vehicles, which we’ll briefly run through here.
One of the most immediate benefits of owning an electric vehicle are the substantial savings on offer when making the transition from a petrol or diesel-powered vehicle to an electric vehicle. While you’re still paying for the engine’s ‘fuel’, in this case, electricity, on a per-kilometre basis, the price you’re paying for recharging your vehicle is significantly less when compared to the price of driving an internal combustion engine.
While the arrival of electric motors into the automotive world was met with some degree of skepticism, it’s clear to see that great things come in small packages. Electric motors not only deliver their power immediately, they also offer a heap of torque, which helps you push you off the line far faster than a conventional passenger car engine. This means that even the most family-friendly and previously mundane vehicles are set to receive perky, instantly-responsive electric motors that add a whole lot of power to the equation and make driving significantly more entertaining.
While electric vehicles are no doubt a high-tech exercise in design and engineering, during day-to-day driving, there are far, far less moving parts inside the engine than an internal combustion unit, which translates to less servicing over the lifetime of the car. A normal car engine has hundreds, if not thousands of components, with a lot of moving parts that need to be lubricated with fresh oil, with some parts requiring regular replacements. Electric vehicles, while they do require maintenance over time, have far less moving parts, meaning relatively trouble-free motoring, increased reliability and less servicing costs.
It’s clear that in order to curb global warming rates, the automotive sector needed to play its part, too. A typical passenger car releases more than 4-tonnes of carbon dioxide, and estimates are that there are around 1 billion vehicles on the road today, releasing monumental amounts of CO2 into the atmosphere. While there are environmental concerns about the impact of mining rare metals and constructing battery packs, the overall benefit of mass CO2 reductions seemingly outweighs the negatives.
While Federal and State governments here in Australia were slow to get the ball rolling with subsidies and incentives for Aussies looking to move to an electric car, recent months have shown clear momentum in a positive direction. Now, as we move into the future, the majority of Australian states now offer financial incentives for customers to make the switch to an EV, including thousands of potential savings with stamp duty reductions and cheaper registration costs.
If you’ve had the opportunity to get behind the wheel of an EV, you’ve no doubt noticed just how comfortable and relaxing they can be to drive. Electric motors are whisper quiet, offering no more than a low frequency hum in the background, which makes them a lovely place to sit on a daily commute in rush-hour traffic. To make things even better, those heavy battery packs need to be supported by serious suspension components, which often gives them a soft, forgiving and cushioned driving dynamic.
As with most things in life, the early stages of a new technological development are never perfect. As a result, there are some hurdles that electric car manufactures have to overcome to ensure they are as competitive as possible with current offerings on the market, to enable mass adoption in the fastest-possible time frame. Some of the disadvantages of electric vehicles, in their current form, include:
Electric vehicles are undoubtedly the future of motoring, but for now, at least, they remain out of the reach of most Australian motorists that don’t have premium-vehicle money to throw at their purchase. Early development cycles are the most costly for manufacturers, who have invested billions into research and development, so in the short-term, these price tags are one of the few ways they can recoup their losses. As we move into the future, though, prices will unquestionably drop, as the technology becomes more widespread, and as competition in the marketplace increases.
Range anxiety is perhaps the single-largest factor when it comes to the buying public shying away from the purchase of an electric vehicle. It’s difficult, as a consumer, to opt for a vehicle that offers less driving potential than the vehicle you’re upgrading from. Factor-in the lofty price tags that a number of electric vehicles command, and it’s easy to see why Aussies are hesitant to make the switch. Thankfully, as electric motor and battery technologies evolve, the range figures that we’re already seeing, that sit around the 400-500km mark look set to increase to a figure that supersedes what’s on offer in an internal combustion vehicle.
The final problem that electric vehicles face when it comes to increasing adoption rates in Australia, is the immediate lack of charging infrastructure. While private companies have announced massive investments into increasing the number of EV chargers available to the Australian public, until these numbers become comparable to petrol stations, the public looks likely to remain weary. When public DC fast-chargers become more available to the Australian public, adoption rates of electric vehicles will no doubt increase alongside.
Currently, there are nearly a dozen models of electric vehicles on the market in Australia from manufacturers including Hyundai, Renault, Mercedes-Benz, Kia, Nissan, Mitsubishi, and, of course, market pioneer Tesla which is due to roll out its latest model in the coming weeks.
The price tag of the Tesla Model 3 is on the high side - but it is possible to get a better deal on an eco-friendly car. You can bring costs down by funding your purchase with one of our unique green car loans which offers a 0.7% interest rate discount for purchasing a qualifying low-emissions vehicle. Let's say the Tesla Model 3 has been on your wish list for a while, and you're going to buy it when it rolls out. Assuming you're borrowing the full $66,000, if you take out our Green Car Loan over five years, your monthly car loan repayments for this "wow factor" car would be just $928.
If you're still mulling over the idea of purchasing an electric car, the Electric Vehicle Council (EVC) has created an online tool that allows you to compare your car to an electric car to see how much money you could potentially save.
According to EVC CEO Behyad Jafari, Australians are eager to adopt electric cars but affordability, variety, and government incentives are key.
"What we have in Australia is not a lack of consumer interest in electric vehicles, but a lack of suitable models to choose from," Mr Jafari said.
"The right level of support and standards provide manufacturers with an incentive to invest in Australia by bringing more choice to the market, providing lower cost alternatives.
"Government support is critical to encouraging the uptake of electric vehicles. Consumers indicated that a number of policies would be particularly important in their decision to purchase an electric vehicle, including subsidies to reduce the purchase cost of electric vehicles, subsidies for the installation of home charging infrastructure, and the provision of public charging infrastructure.
"In those states, such as the ACT, where there are stronger incentives for electric vehicles through stamp duty concessions which can reduce the cost of an electric vehicle by over $2,000, we have seen the greatest rate of electric vehicle uptake."
Meanwhile, in the absence of government policy aimed at boosting uptake, the number of electric vehicles on the road will increase only when they reach price parity. As for how long that will take, Mr Sinclair says there will be a bigger range of electric vehicles in the next three to five years for under $40,000 - which may be an indication to wait.
Marty Andrews, CEO of Chargefox (Australia's largest and fastest-growing EV charging station network) told loans.com.au that prices for electric vehicles will drop in the next few years, so it may be worth waiting before buying.
"One of the biggest portion of costs in an EV is the battery cost. Battery costs globally have been falling considerably for years, and will continue to do so. The total cost of ownership for EV's will be the same or lower than petrol cost by the early 2020s, and the sticker price will be cheaper by the mid 2020s.
"The Bureau of Infrastructure, Transport and Regional Economics published a report only two weeks ago modelling these costs in some detail, so even the Australian Government forecasts EV prices to drop significantly over time.
"For people interested in reducing emissions, looking for a better driving experience or the convenience of just charging at home all the time, some good EV options are already available. For those looking more at the bottom line, prices will come down over time. We'll also get more EV's entering the second hand market in a few years as fleets turnover their vehicles too."
Mr Andrews said that for those considering buying an electric vehicle, the benefits will far outweigh the initial sticker shock.
"EV's are basically more expensive to buy, but cheaper to run, than their petrol based equivalents. EV's have their maximum torque available when the car is at rest. For most people, that means they feel more powerful to drive when compared with similar sized petrol vehicles.
"Their responsiveness is also instant, rather than the slight delay in a petrol vehicle between pressing the accelerator and having the car move. Those combined characteristics generally mean that people have a far better driving experience in an EV than a petrol car."
As for the eco-friendliness of electric cars, Mr Andrews said it's worth purchasing one for this alone.
"Transport in Australia is responsible for roughly 18% of our carbon emissions. EV's allow you the opportunity to massively reduce your own personal emissions, by powering it through renewable energy sources. The chargers on the Chargefox network are 100% backed by renewable energy sources. At home, you can also buy green power from your energy company or even use electricity generated by rooftop solar to run your car. It's convenient, good for the environment and free!"
It's clear that lower purchase prices and government incentives will help overcome some of the barriers that are impeding the adoption of electric vehicles in Australia. But whether or not an electric vehicle is worthwhile for you is a decision that ultimately boils down to your personal situation and preferences.
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