The EV market is set to boom over the mid-term despite the Tesla backlash from Elon Musk’s controversial role in the Trump administration, and Australian consumers will be the first to benefit from its lack of tariff restrictions and the latest technology from China.
When it comes to EV news in Australia, there’s still a big gap between the stuff that makes headlines and what’s actually happening on the roads here.
It’s my job to stay across all the nitty gritty in the industry: shifting trends, sales, and driver preferences. Through doing so, we get a clear picture of what lies ahead – and the outlook for the Australian EV market in 2025 is positive.
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With government incentives, expanding charging networks, and more models hitting the road, EV sales will account for 11 per cent of new cars sold in 2025, up from 9 per cent in 2024. That’s 130,000 EVs sold, up from 115,000. In the next five years, this will grow exponentially, with 50 per cent of all new car sales expected to be electric by 2030.
These projections reflect both state government EV targets and, more significantly, the new national vehicle efficiency standard. This standard requires manufacturers to meet an overall efficiency standard for all the vehicles they sell, meaning they need to sell more low emissions vehicles to offset sales of higher emitting vehicles. This translates to more and cheaper electric vehicle options, which should spill over into purchasing behaviour.
The market is seeing a drop off in consumer sentiment toward the Tesla brand in Australia. While this seems likely to continue with Elon Musk’s controversial role in the Trump administration, the new vehicle efficiency standard is ensuring that EV buyers can look at other options.
And regardless of anyone’s opinion of Musk, the EV market needs to diversify if it is to scale – Tesla’s EV market share was still 33 per cent in 2024, compared to the overall vehicle sales leader Toyota with 20 per cent of the market.
Australians love an SUV, and because the efficiency standard is sales weighted, this should see a lot of growth in this segment of the EV market. Buyers will be able to choose from potentially 41 different medium SUV electric options in 2025, including the updated Tesla Model Y and the BYD Sealion 6 and 7. On this basis, we are forecasting that around 50,000 medium electric SUVs will be sold in 2025, corresponding to around one quarter of all EVs sold.
Small SUVs are also a hugely popular segment, so in 2025, OEMs will offer potentially 26 electric options in this segment, up from 19 in 2024. Sales in this segment are more evenly shared between lower priced options like MG eZS and Mitsubishi Eclipse PHEV and prestige alternatives like BMW X1 and Volvo EX30. We are forecasting around 22,000 small electric SUVs will be sold in 2025, corresponding to around 15 per cent of all EV sales.
The small passenger vehicle segment is the entry point for many new car buyers, and increasingly, they will go electric. This is largely being driven by Chinese manufacturers who, in 2025, have cracked the $30,000 new EV price barrier with the BYD Dolphin. And because we don’t have tariff restrictions that apply elsewhere, Australian buyers will continue to get the full benefit of whatever China makes in right-hand drive.
As a result of this influx, EV models will soon hit price parity with comparable combustion engine models. Money talks, and soon buyers will have the choice between two cars that cost the same, one of which is much cheaper to run. As fleets become increasingly aware of this financial reality, they will follow leaders such as IAG and AusPost in transitioning to electric.
This operating cost advantage is why the fastest rates of EV adoption are now in outer suburbs, where people drive longer distances. So, while EVs started with a reputation as a plaything of the well off, the highest rates of EV ownership are actually in places like Werribee and Point Cook – middle class households that are a 40 minute drive west of Melbourne’s CBD.
Households that cannot afford a new EV will increasingly take advantage of this operating cost saving via the growing stock of second hand EVs.
Historically, the Australian EV market was based on Tesla sales, which had a 59 per cent share of new EV sales as recently as 2022. With many of these vehicles now being turned over, increased supply is driving down used Tesla prices. And thanks to the ATO’s Fringe Benefits Tax exemption for EVs, vehicles coming off novated leases will continue to drive supply and used vehicle bargains for those seeking to go electric.
The final frontier for EVs in the Australian car market is often considered the ute. Why would tradies and boat owners swap out their favoured diesel options for an EV? In 2025, we’ll see this orthodoxy begin to shift. With the arrival of the BYD Shark and other electric ute options, we predict that 12,000 EV utes will be sold in Australia this year – up from zero in 2024.
And it won’t take long for buyers to figure out the advantages of going electric beyond great performance and low operating costs. The next generation of electric utes will see the electric motor torque – or pulling power – advantage put to use as towing capacity. Once at the destination, electric utes can then power a builder’s tools or an entire camping setup, where an owner can convince doubters with a fresh coffee from the machine plugged into their vehicle.
The future for EVs in Australia is big and bright.
Kristian Handberg is the Head of Future Business at JET Charge.