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Electric Vehicles - 3 Key Factors to Help Determine Growth

The impending electric vehicle (EV) boom has been well documented in recent years - many studies have predicted that petrol and diesel powered vehicles will be consigned to the dust-bin of history before we know it. While there is no doubting the surge in popularity of EV’s across the world, the COVID-19 pandemic has put the brakes on any ground-breaking predictions, as consumers sought the familiarity and reliability of ICE vehicles.

Here are three factors we think will largely determine and drive the growth of EVs over the next 10 years.

Deloitte’s 2021 Global Automotive Consumer Study1 found that consumers still hold a sense of trepidation towards all battery powered electric vehicles. Driving range, lack of charging infrastructure, price premium and safety concerns, were the top four reservations amongst the Australian consumers surveyed.

The degree to which OEMs, Governments and Industry Bodies can allay these concerns will be one of the biggest factors shaping the outlook of the EV industry. While there is no doubt customers have opened their minds to change, satisfaction within our industry often comes from familiarity.

The role of Government in the adoption of electric vehicles cannot be underestimated. Governments in recent years have introduced a wide range of initiatives to accelerate the adoption of EV’s and help meet their various emissions targets. 

These have included measures such as city access restrictions (no combustion engine zones), issuing fines to OEMs who don’t meet CO2 emission targets, and providing financial incentives to consumers.

Germany, for example, have lowered the VAT from 19% to 16% on low emission vehicles and are providing a $7,000 subsidy to EV’s under $45,000 over the next 5 years. Closer to home, the Australian Labour Government have recently committed to taking an electric vehicle action plan to the next election.

Long term, the viability of these measures will be a key factor in the growth of EVs – will they stand the test of time, or will Governments become more wary of factors such as lost fuel tax revenue in the wake of COVID-19?

While individual customers are crucial, the role of corporates in the uptake of EVs is significant. Corporate sustainability and purpose have shot to the top of the priority list in boardrooms worldwide, and many companies now see EVs as an avenue to differentiate themselves and act as a catalyst for change. 

Investment in fleet vehicles was one of the first cost cutting measures made by corporates when the pandemic set in. The growth of EVs in the medium term will hinge largely on corporate decision making – will businesses continue their push into EV or could changes to how and where work is done spell the end of fleet expenditure as we know it?

What are your thoughts on the future of electric vehicles in Australia? We would love to hear from you to unpack the factors you think will drive their growth over the coming years.