There are currently almost 4 million electric vehicles on road around the world, with more than one in four of them sold in 2017. In Australia however, take-up is well behind many other countries, with one in three vehicles sold here still powered by diesel.
Range anxiety (including access to refuelling infrastructure) is a significant reason for this. Looking at what would increase take-up, a recent ACA Research consumer automotive study revealed that range is the motivation behind two of the top five factors. However, as shown in the chart below, the other three all relate to cost, with four in five consumers viewing this as a barrier to purchase.
Looking at the market, it's no surprise that cost emerges as a barrier to mass adoption. Excluding utes, the top-selling cars in Australia are the Toyota Corolla, and Mazda 3, both of which start at a little over $20,000. Following them is the Mazda CX-5, with starts just under $30,000. Compared to this, the cheapest EV currently available in Australia is the Renault Zoe, which will set you back close to $50,000. While Australian pricing for the Tesla 3 base model hasn't yet been released, estimates again place it between $50,000 and $60,000. If you need more space for the family, you're looking at the Jaguar i-Pace or Tesla Model X, both of which take you well into six figures.
These numbers obviously don't line up with current spend, so what would consumers like to be spending on an EV? In our study, we looked into this, identifying the ideal sweet spot for mass adoption. For us, this gives an indication of the ideal entry point to the range, with higher spec models going up from there.
As shown in the chart below, this sweet spot sits between $20,000 and $35,000. While we might expect to see variations by lifestage, the numbers are also remarkably consistent across generations.
We do however see differences when we look at the results by automotive spending. Using the cost of their current vehicle, we see a $20,000 jump from those buying cheaper vehicles to those shopping at the premium end of the range.
The simple takeaway here is that consumers don't expect to pay a substantial premium for an EV. They're lining them up against equivalent petrol or diesel-powered vehicles, and are therefore most likely to be interested once the EV hits price equivalence.
Where to from here? While we're waiting for pricing to be announced on the next crop of EVs coming into the Australian market, and costs will come down as battery technology improves, we might need to look beyond traditional manufacturers to find a solution. Uniti, a Swedish automotive start-up recently announced its plans to bring a $20,000 electric vehicle to market by 2020, which would definitely hit the 'sweet spot'.
For now, watch this space.
For more information about the current state of EVs in Australia, you can contact Ben Selwyn directly.