Car sales may be falling, but EVs are on the rise

Car sales may be falling, but EVs are on the rise

Australians are likely to buy fewer cars in 2019, but are expected to buy more new-generation models, according to new data.

Roy Morgan Research surveys in December 2018 found that the number of respondents who planned to buy a new vehicle in the next four years was 6.0 per cent lower than in December 2017.

The surveys also found that 8.0 per cent of those who do expect to buy a vehicle will choose a hybrid – a big increase on the 0.9 per cent of buyers who chose a hybrid in 2018.

Another 2.1 per cent of respondents will choose a fully electric vehicle, which would also be a big increase on the current EV market share of 0.1 per cent

Electric vehicle running costs

While electric vehicles are better for the environment than traditional vehicles, they have significantly higher running costs, according to the RACQ:

Vehicle category Cents / km Average cost per week
Small 55.2 cents $159.21
Medium 70.1 cents $202.16
Large 86.9 cents $250.73
Electric 118.2 cents $340.85
Large prestige 141.7 cents $408.68

The RACQ averages are based on typical vehicles in various sizes, and cover the likely areas of expense such as fuel consumption and maintenance.

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Electric vehicles in Australia

There are currently seven different types of new electric vehicle on sale in Australia, according to My Electric Car:

Model Starting price
Hyundai Ioniq $49,253
Renault Zoe $53,589
Renault Kangoo $55,007
BMW i3 $74,789
Tesla Model S $115,600
Tesla Model X $127,200
Jaguar I-Pace $171,152

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Electric vehicle car loans

Here’s how much a five-year car loan would cost if you borrowed 100 per cent of the purchase price and made monthly repayments:

Model Price/loan Total repayments at 6% Total repayments at 8% Total repayments at 10%
Hyundai Ioniq $49,253 $57,132 $59,920 $62,789
Renault Zoe $53,589 $62,162 $65,196 $68,316
Renault Kangoo $55,007 $63,806 $66,921 $70,124
BMW i3 $74,789 $86,753 $90,987 $95,343
Tesla Model S $115,600 $134,092 $140,637 $147,370
Tesla Model X $127,200 $147,548 $154,749 $162,157
Jaguar I-Pace $171,152 $198,531 $208,221 $218,188

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Learn more about car loans

What is equity?

The equity is the share of the car that you own. For example, if you take out a $15,000 loan to buy a $20,000 car, you have $5,000 of equity in the vehicle, or 25 per cent. (The lender has the other 75 per cent.) Equity changes over time as you pay off your loan and your car depreciates in value. For example, two years later you might now owe $10,000 on your car, which might now be worth $15,000. In that case, you would still have $5,000 of equity in the vehicle, but your share would be 33 per cent.

What is depreciation?

Depreciation is the reduction in the value of your car. Almost every car loses value each year, although at different rates. As a guide, cars depreciate on average by 14 per cent per year in the first three years and then eight per cent per year after that.

What is vehicle finance?

Vehicle finance, also known as a car loan, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Vehicle finance can be used for both new and used vehicles.

What is resale value?

The resale value is the price you could realistically charge if you were to sell your car. Almost every car loses value each year, although at different rates. As a guide, cars depreciate on average by 14 per cent per year in the first three years and then eight per cent per year after that.

What is a car loan?

A car loan, also known as vehicle finance, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Car loans can be used for both new and used vehicles.

What is an establishment fee?

Some lenders will charge you an establishment fee, or one-off upfront fee, to cover the cost of setting up your car loan.

What is a balloon payment?

Some lenders will offer borrowers reduced monthly repayments in return for a one-off lump sum – or balloon payment – that the borrower has to pay at the end of the loan. Generally, the total repayments on a loan with a balloon structure will be higher than a loan without.

What is a car loan calculator?

A car loan calculator is an online tool that helps consumers understand how much they would have to repay under different scenarios. Consumers can create these different scenarios by entering different borrowing amounts, interest rates, loan terms and repayment schedules into the car loan calculator.

What is trade-in value?

The trade-in value is the price you could realistically charge if you were to sell your car to a dealer while buying a replacement vehicle. Generally, a car’s trade-in value is less than its market value. That’s because the dealer has no interest in buying your car unless it can make a profit – which can only be done if the dealer has room to increase the price.

What is a refinance?

A refinance is when you swap one car loan with another. For example, you might take out a car loan with Lender X because it is the best on the market at the time – but two years later, you might switch to Lender Y because you discover that it now has the best loan. Conditions and fees often apply when you refinance.

What is a redraw facility?

A redraw facility allows you to re-borrow any funds you may have repaid ahead of schedule – although conditions and fees often apply. Not all car loans come with a redraw facility.

What is a loan-to-value ratio?

The loan-to-value ratio, or LVR, is a percentage that expresses the amount of money owed on the car compared to the value of the car. For example, if you take out a $15,000 loan to buy a $20,000 car, you have a loan-to-value ratio of 75 per cent. Loan-to-value ratios change over time as you pay off your loan and your car depreciates in value. For example, two years later you might now owe $10,000 on your car, which might now be worth $15,000. In that case, although there would still be a $5,000 difference between the size of the outstanding loan and the value of the car, the loan-to-value ratio would now be 67 per cent.

What is a pre-approval?

A pre-approval is a formal document that indicates how much a lender is willing to lend to a consumer – once that person has found the car they want to buy. A lender will assess a borrower’s credit history and financial circumstances before issuing a pre-approval. However, lenders are under no obligation to follow through on pre-approvals, so pre-approvals should be seen as statements of intent rather than rock-solid guarantees.

What is compulsory third-party insurance?

Compulsory third-party insurance, also known as CTP insurance or a green slip, is compulsory if you want to register a vehicle in Australia. If you’re responsible for a car accident, your compulsory third-party insurance will be used to pay any compensation due to anyone who might be injured or killed. However, compulsory third-party insurance doesn’t cover you for vehicle damage or theft.