When it comes to selling new cars, most automakers focus on performance, features, and the overall experience of the vehicle. However, when it comes to launching EVs in Australia, only one point seems to matter: price. It overtakes everything else, including any discussion on value, technology and range of the vehicle.
Australia is stuck in a game of “The Price is Right” when it comes to broader electric vehicle adoption.
Price has historically been a mitigating factor for adoption. It’s seen as the factor holding back that transition from early adoption to mass adoption. It’s a fair consideration especially when, less than a few years ago, the cheapest EV cost multiple times that of a combustion engine vehicle.
But as we enter into what will be the biggest year for EVs yet, where they hover around the range of affordability, I want to ask whether this should still be the focus, especially given the changing market dynamics around EVs.
Is there still a golden number?
What is the right price point for mass adoption in Australia? Even this figure has shifted over the years, with the only universal point of agreement being that EVs need to get cheaper.
A survey Carbar ran back in 2021 found that consumers were willing to pay up to $350 per week for an EV on subscription. If purchasing outright, they’d look at spending between $35,000 and $60,000 on a new vehicle — a range we’re currently in with new MG and BYD cars.
Contrast this to one of the latest predictions: Ampol chief executive Matt Haliday told investors during their earnings call that they only expect EVs to hit a crucial mass in this country when they fall under between $20,000 and $30,000 — a cost comparable to other city cars we see on the market.
The bar continues to creep lower for mass adoption, but even this idea that there is one price that will trigger broader EV uptake may be a moot point.
Prices are going to change
It’s apparent that automakers are not nearly as concerned with hitting the EV price “sweet spot” as we think they are.
Just as with every other product on the market, prices for EVs have shifted in the past 12 months. Australia’s cheapest EV, the 2023 MG ZS EV, rose by up to $4,000 driveaway in some parts of the country. BYD also raised the price of its cheapest EV, the 2023 Atto 3, by $3,630.
MG launched its new MG4 during the Fully Charged Show in March, revealing everything but the price — but promising it will be a bargain.
Elsewhere in the market, other automakers are also still charging a premium for EV products. The BWM iX3 and BMW X3 are essentially the same car in terms of features, its still roughly costs $20,000 more — even after a recent price drop.
Tesla has also dropped its prices globally in response to increasing competition in the market, but not to the point where it’s courting a budget buyers.
The reality is that all of these automakers are running their race in terms of finding their ideal price, one that allows them to operate with a profit in Australia. They are still catering to an early adopter market, one that is as much concerned with selling a quality experience for the customer as it is a new car.
Unlike the EU or other parts of the world, the competition among automakers simply does not exist to drive prices down. For instance, Australia is yet to see the full impact of some of the price cuts Tesla has made in other markets. But that may change over time.
Factors beyond their control
Even as more cars launch in Australia, we should also expect these prices to continue to fluctuate too. Tesla’s earnings last month also highlighted another key point in the adoption of EVs, which is access to lithium for battery creation.
Listening to the results, one could mistake Tesla for a mining company. Given that all of its products rely on the precious mineral, taking control of its supply chain and ensuring ample access to the mineral is as critical for its operations as stoking consumer appetite for battery tech.
We have yet to hear this point echoed from other traditional automakers pushing into the EV market, but it will undoubtedly affect global EV prices as adoption ramps up.
Why focusing on price is a problem
All of this attention on price distracts from some of the broader problems facing EV adoption, such as infrastructure, incentives for early adopters, and access to a broad range of vehicles. These present much broader challenges for the rollout of EVs in Australia.
There’s also much broader challenges for automakers about how they will redefine themselves in an EV-led market. What will premium look like when all car-makers are attempting to define every EV as a premium product?
The focus on price creates the idea that once a model becomes cheap enough, Australians will universally switch over from combustion engine to EV, which following the same trend of most changes in consumer technology, won’t be the case. The transition is ramping up, as we’ve seen in the latest sales figures.
But it will still be gradual. There’s also questions as to what percentage of the market will remain in combustion engine cars regardless of the rise in EV sales. This is especially the case in Australia, where drivers are particular about their cars and simply aren’t motivated by price alone.
Vehicle price is a factor, especially this year when the cost of living continues to creep up on Australians, but its importance has been overstated. By pulling away from this contest of “The Price is Right”, we’ll push the conversation on EV adoption to where it needs to be, tackling the broader adoption issues facing both automakers and society.
Des Hang is the CEO and co-founder of Carbar