Financing Your Electrical Vehicle Purchase Improving Slowly In Australia (Needs To Improve More)
A recent survey of 1,001 Australians by Savvy has revealed that 73% of respondents agree that moving to electric vehicles (EVs) is an important move to reduce CO2 emissions and keep global temperature rises to 1.5°C. The biggest obstacle to going electric is price, according to the survey. Almost 80% say that affordability would need to improve before considering an EV as their next vehicle.
My thoughts are that the affordability gap should not be bridged by government subsidies alone. Hence, I contacted Savvy Managing Director Bill Tsouvalas and asked for his opinion on what the finance industry could do. This was his response: “Firstly, financiers can offer a discount of 0.5% to 1% on loans for Electric Vehicles, which amounts to a significant saving across the life of the loan. As for your query about receiving a higher borrowing limit due to reduced expenses — this is possible if the lender can verify potentially lower general living expenses due to savings on EV running costs.”
It is this last point that is the key. Some states in Australia will give a small subsidy and some rebates. Over the next 12 months, with cheaper imports from China and perhaps Europe, prices will come down. However, I think that competitive financing that takes into account reduced total cost of ownership and hence living expenses for the borrower will be a significant factor.
Results from the survey are positive for the shift to EVs by Australian motorists — 73% of Australians agree moving to electric vehicles us important in order to curb climate change. Furthermore:
- 40% may purchase EVs in the future.
- 7% are already signalling intent to buy one in the next 12 months.
- Younger Australians skew favourably toward buying EVs.
- 79% say that affordability needs to improve before buying.
- 59% says that Australia should be “all in” on EVs.
The Price Gap
The biggest concern about buying is price. Thirty percent say they can’t afford one. With 37% of respondents saying they’d spend $25,000–$40,000 on their next car, most models would be well out of their price range.
As for brands, 24% said they’d most prefer a Hyundai, followed by Tesla (20%) and Mazda (12%). This is an interesting statistic when you consider that 75% of EVs sold in Australia are Teslas.
Australia has doubled the penetration of EVs in its new car market already in 2021. I am expecting that if we can achieve the three goals of: cheaper cars, competitive financing, and government subsidies, we may make it 10% in 2022.
Only 8% said that the federal government’s $250 million Future Fuels and Vehicles Strategy, which is targeted at increasing EV home charging stations to 50,000 around the country, will “get the job done.”
“There needs to be a push from industry and government to really make the case that EV is the future in terms of the environment and the hip-pocket.”
I would expect that the finance industry can also help.
Additional notes about Savvy: “Savvy is one of Australia’s largest online financial brokers, focusing on personal and commercial financial products. Founded in 2010, the firm has seen rapid growth, a testament to their provision of market leading rates and reaching customers with the latest in media and technology. Savvy is a proud supporter of Kids Under Cover, a charity assisting homeless and at-risk youth to strengthen their bonds to community and education. Savvy was named one of BRW’s fastest growing companies in 2015.”
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