The ticking time bomb of the Australian EV market is set to explode, and it's not just a matter of supply and demand. The Albanese government's Electric Car Discount, introduced in 2022, has been a game-changer, allowing employees to lease EVs with a significant tax break. This has led to a surge in EV purchases, with 133,000 EVs acquired under leases with the FBT exemption over the past three years, accounting for 40% of all EV purchases during that period. But the real fireworks are yet to come.
As the discount phases out next year, a wave of second-hand EVs is expected to hit the market, creating a potential bargain hunters' paradise. The Barefoot Investor, Scott Pape, warns that drivers who took advantage of the discount will end up with cars "worth half what you paid for it at the end of the lease." This influx of supply, combined with rapid technological advancements, new Chinese models, and customer concerns over range and battery health, could drive prices down significantly.
Rob Leigh from car comparison website thebeep.com.au agrees, predicting that the depreciation on these leased EVs will be much higher than on petrol cars. He suggests that buyers who are happy with an EV that has been driven for three to five years could score great bargains. Jerry Kam, a car dealer, supports this view, noting that the Australian market is not yet convenient for longer-distance EV charging, which could prompt early traders to sell their EVs.
However, not everyone is so pessimistic. Brendon Green from Pickles, a car auction giant, argues that second-hand EV prices have actually surged this year due to higher petrol prices. He attributes the increased sales to the fuel crisis, with EV searches on their website up 160% from the previous month. Green expects leased EVs to enter the market gradually, rather than in a flood, and predicts that the used EV market will continue to grow.
The data supports Green's perspective, with a record 19.9% of new vehicles sold in May being EVs, and the Tesla Model Y becoming Australia's best-selling car for the first time. Soaring fuel prices, exacerbated by the Iran war, have driven an unprecedented number of Aussies into the EV market, with buyers registering 21,303 EVs in May, up 111.6% on the same month last year.
In conclusion, the Australian EV market is at a pivotal moment. While the discount phases out, a wave of second-hand EVs could create a buyer's dream, but the market dynamics are complex. The future of EV prices in Australia remains uncertain, but one thing is clear: the EV revolution is here, and it's changing the car market faster than anyone anticipated.
