NRMA Insurance’s latest research has suggested that improving Australians’ familiarity with electric vehicles (EVs) could play a pivotal role in increasing their adoption rates.
As awareness and understanding of EVs grow, the chances of Australians considering them for their next vehicle purchase rise, potentially accelerating the shift towards electric transportation across the country.
The report, "Changing Gears: The Road Ahead for EV Adoption in Australia", is part one of a two-part series commissioned by NRMA and conducted by Ipsos.
The research indicated that while 20% of Australians planning to purchase a vehicle within the next five years are considering an EV, this figure increases to 32% among those who are more knowledgeable about EVs.
The report also highlights that although only 26% of Australians currently feel informed about EVs, nearly half (47%) are interested in learning more.
Despite the growing interest, several factors are hindering broader adoption. Concerns about driving range (54%) and charging times (53%) are among the most common reasons Australians are hesitant to switch to EVs, even though most drivers travel fewer than 50 kilometres daily, well within the range of many EVs.
Safety is another concern, with 44% of respondents citing fears about battery fires, despite studies showing that EVs do not pose a greater fire risk than traditional petrol or diesel vehicles.
Julie Batch, CEO of NRMA Insurance, said the report sheds light on the need to correct misconceptions about EVs, particularly around driving range, safety, and costs.
“Even with the progress made to date, there are a significant number of Australians still hesitant about purchasing an EV due to worries about driving range and cost. To tackle these issues, more investment and effort are needed to encourage adoption,” she said.
She also advocated for the expansion of the second-hand EV market and the standardisation of battery health testing to build consumer trust.
Batch pointed out that the growing availability of more affordable EV models could help support the second-hand market, making EVs accessible to a wider audience.
The report revealed that 58% of Australians who are interested in EVs would consider buying a used vehicle, which presents a potential pathway to increasing EV adoption across different income levels.
Although current EV owners tend to be confident in their vehicles’ sustainability and savings, many Australians remain sceptical about the overall cost-effectiveness and environmental impact of EVs.
According to the report, only 30% of respondents view EVs as the most economical option, and 42% see them as the most environmentally friendly choice.
Price remains a significant barrier for many buyers, with only a few EV models available for under $40,000 and a relatively small second-hand market.
However, the report pointed out that lower running and maintenance costs can make EVs more economical over time. For example, a car driven 13,700 kilometres annually could save approximately $1,000 in fuel costs each year, or $1,200 with overnight off-peak charging.
As battery technology improves and economies of scale reduce manufacturing costs, the initial purchase price of EVs is expected to decrease, making them more competitive.
Commenting on the report, New South Wales Minister for Roads John Graham highlighted the importance of addressing the specific barriers to EV adoption in Australia.
“We need a laser-like focus on the specific barriers to EV take-up to properly understand what’s slowing us down,” he said.
He noted that some obstacles are technical, but many are related to consumer perceptions and the lack of clear information. Thus, tackling these issues will be key to accelerating EV uptake.
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The report also noted that EV sales have been growing rapidly in Australia. EVs accounted for less than 1% of new car sales in 2020 but rose to 8.5% of light vehicle sales by 2023, holding steady at 8.4% in 2024.
Growth has been most pronounced among higher-income households, particularly those earning over $200,000, as well as families with children and urban residents. These groups have cited lower running costs and environmental sustainability as primary reasons for choosing EVs.
To maintain this momentum, Batch called for the implementation of policies and incentives to support the development of the second-hand EV market. She also recommended the introduction of standardised battery health tests to boost consumer confidence in the longevity of EVs, comparing such tests to odometer checks for conventional cars.
The report sets out several recommendations aimed at promoting EV adoption in Australia:
Address gaps in understanding about EV safety, driving range, and costs through educational efforts.
Increased opportunities to experience EVs through test drives or public events could help build consumer confidence.
Provide clearer information about the locations and costs of charging stations. As Australia’s charging network continues to expand, simplifying the process and addressing range anxiety will be essential to improving user experience.
Invest in developing repair and service networks that are suited to EVs. This would involve training mechanics and modernising supply chains to ensure consumers can easily maintain their vehicles.
Support the growth of a second-hand EV market through policies and financial incentives. This would make EVs more accessible to budget-conscious buyers and contribute to faster market expansion.
Introduce mandatory battery health testing to build trust in the long-term viability of EVs. Clear and standardised assessments of battery health would help consumers feel more confident in purchasing both new and used EVs.
The second part of the Changing Gears report, expected later this year, will focus on comparing the costs, repairs, and environmental impacts of EVs and hybrid vehicles. It will also assess public policy measures such as government subsidies and their effects on the adoption of electric and hybrid vehicles.
The report ties into a broader global trend, with the hybrid and EV insurance market projected to grow at a compound annual growth rate (CAGR) of 16.88% by 2030, according to research by HTF Market Intelligence.
As EV adoption rises worldwide, demand for insurance tailored to these vehicles, covering risks like battery replacement costs and charging infrastructure, is expected to surge.
Insurers are adapting to this new market by developing specialised products, although challenges such as the high cost of EV repairs and the elevated premiums associated with these vehicles may still hinder rapid growth.
Nonetheless, the expansion of EV and hybrid markets globally presents opportunities for insurers to introduce new products that cater to the evolving landscape of transportation.
