Rapid Value Depreciation a Hurdle for Australians Buying EVs: Peak Body

A parliamentary committee has been told that rapid value depreciation is a barrier that prevents Australian motorists from buying electric vehicles (EVs).
During a recent inquiry hearing into the EV transition, Australian Automotive Dealer Association (AADA) CEO James Voortman was questioned about what was blocking Australians from adopting the new car technology.
Apart from factors such as higher prices, insurance costs, and lack of charging facilities, Voortman said Australian consumers were reluctant to buy an EV because of how quickly it lost value.
“The other challenge both customers and dealers are facing right now is the rapid depreciation of EVs,” he told the Standing Committee on Climate Change, Energy, Environment, and Water.
“This is a perfectly normal phenomenon for a new vehicle technology, which will improve over time.
“But at the moment, it does add to poor customer experience and could put dealers in a difficult position with customers seeking to trade in a used car.”
In addition, the CEO said consumers had become more aware of EV depreciation in recent years and their behaviour towards it was difficult to change.
Voortman also noted that the problem was exacerbated by the steep discounting applied to the new product line by many EV manufacturers, who sold directly without a dealer network.
“You have the example of yourself buying a Tesla, driving at home, and then reading on the news the next day that that same vehicle has been discounted by $5,000 (US$3,300),” he said.
“That has an effect on used car value. And customers certainly are a little bit hesitant because of that.”
This is compared to an 11.9 percent depreciation of two to four years old petrol and diesel vehicles.
Gordon pointed out that there tended to be generous government incentives at the early stage of the transition, and it was difficult for people who were later to make the transition to access those benefits.
“Because they face bigger barriers, often economic or social or cultural, [which] means that they actually need more support to make that transition,” he said.
In comparison, he said those who had already adopted EVs in Australia were likely in a more accessible position to make the transition as they had the financial power to do that.
As such, the professor advised the government to consider later EV adopters when implementing policies.
“The science of behaviour change would tell you [that] you need to do a bit more and provide more support for the later adopters of technologies like EVs because they need more help and support to make the transition,” he said.
Gordon also advised the government not neglect people who could not afford a vehicle in its EV transition strategy.
“Irrespective of whether it is an EV or not, there are some Australians who do not have access to a car and who rely on walking public transport and active travel,” he said.
“I think we cannot forget about those that don’t have a car or won’t have an EV, and how are they going to get around, so that they can do what they need to do in their lives to make Australia a successful economy and a successful society.”