Electric Car Sales Hit Two-Year Low in Australia Despite New Rules
In a surprising development, sales of fully electric cars in Australia have dropped to their lowest point in two years, according to a new report from the Australian Automobile Association (AAA). This decline comes right after the government introduced new rules to encourage people to buy cleaner vehicles.
The Numbers Tell an Unexpected Story
During the first three months of 2025, only 17,914 new battery electric vehicles (cars that run completely on electricity) were sold in Australia. This means electric cars made up just 6.3% of all new car sales, down from 7.42% at the end of 2024. Traditional petrol and diesel cars still dominate the market, accounting for nearly 73% of all new vehicles sold.
At the same time, hybrid vehicles (which combine a petrol engine with an electric motor) are becoming more popular. Sales of conventional hybrids increased from 42,618 to 46,115, while plug-in hybrids nearly doubled to 13,698 vehicles.
Understanding the Government’s New Rules
On January 1, 2025, the Albanese government introduced a national vehicle efficiency standard. This new rule penalizes car manufacturers who sell too many vehicles that produce high levels of pollution. The goal is to reduce greenhouse gas emissions from new passenger vehicles by more than 60% by 2030.
The standard works by setting limits on how much pollution car companies’ vehicles can produce on average. Companies selling mostly electric or low-emission cars earn credits, while those selling mainly petrol or diesel vehicles face penalties.
Why Are Australians Choosing Hybrids Instead of Electric Cars?
- Affordability concerns: Many Australians find fully electric cars too expensive compared to hybrid alternatives, which offer some fuel savings at a lower purchase price.
- Reduced government support: All states have now ended their electric vehicle purchase incentives, with Western Australia being the last to remove its rebate on May 10, making electric cars less financially attractive.
- Early adopter market saturation: According to the Federal Chamber of Automotive Industries (FCAI), most enthusiastic early buyers have already purchased their electric vehicles, while the general public remains hesitant.
The Bigger Picture for Australia’s Climate Goals
This declining interest in electric vehicles creates a challenge for Australia’s broader climate goals. The government aims to reduce overall greenhouse gas emissions by 43% below 2005 levels by 2030, with a target of net-zero emissions by 2050.
WhichCar noted that the electric vehicle sales drop happened alongside a small decline (0.96%) in total national vehicle sales during the first quarter of 2025. However, this overall market dip doesn’t fully explain the more significant drop in electric vehicle popularity.
As reported by GoAutoNews Premium, many Australians still prefer hybrid technology as a middle ground, suggesting that the country’s transition to fully electric transportation may take longer than government planners anticipated.
