Sales of electric vehicles jumped 50 per cent in the month after the war against Iran began as motorists, scarred by soaring fuel prices, sought ways to escape pain at the petrol pump.
As signs grow that the surge in petrol and diesel prices is hurting the broader economy, figures from the Federal Chamber of Automotive Industries reveal that almost one-in-seven cars sold across the country in March was an EV.
A record 14.6 per cent – or 15,839 – of the 108,000 vehicles sold last month were EVs, according to the chamber. In February, EVs accounted for 11.8 per cent – or 10,700 – of the 90,700 cars that were bought.
EVs accounted for 7.5 per cent of the new car market in March last year.
Outside the Tesla Y (which is not included in the chamber’s count), the biggest-selling EV was the BYD Sealion 7, with purchases jumping 48.5 per cent over the past month. Over the year, sales of the Sealion were up 244 per cent.
Other large monthly increases were recorded for the Omoda Jaecoo J5 (up 54 per cent), the Kia EV5 (110 per cent) and the BYD Atto 2 (65 per cent).
Chamber chief executive Tony Weber warned that the sharp lift in EV sales through March may not endure.
“It is too early to determine whether this represents a structural shift in the market,” he said.
“A long-term shift to EVs will require Australian governments to sharpen their focus on public charging infrastructure, particularly in regional areas and locations where home charging is not practical.”
Despite the big lift in EV sales, purchases of large diesel and petrol-fuelled SUVs remained solid. While there was a 10 per cent drop in the nation’s most popular vehicle, the Ford Ranger, there was a 2.1 per cent lift in purchases of the second-largest selling vehicle, the Toyota HiLux.
BYD spokesman Paul Ellis said Australian customers had lodged 10,000 orders for cars with the company as customers buy electric vehicles to cut fuel costs.
The Chinese EV-maker now plans to double the allocation of vehicles for the Australian market from the second quarter.
“We are seeing two types of customer groups. One group is those who were already in the market for a car at this point in time, who are altering their fuel-type preference from petrol to either a plug-in hybrid or an EV,” Ellis said.
“We’ve also got those that were intent on buying an EV at some point, bringing forward their purchase decision.”
The lift in EV sales occurred before the federal government halved fuel excise last week.
The three-month move on fuel excise – a flat tax that adds 52.6¢ a litre to the cost of fuel – was boosted by an extra 5.7¢ per litre reduction funded by GST revenue.
Petrol has fallen more than 31¢ per litre in Sydney and Melbourne in the past week, down to $2.26 per litre in Sydney and $2.27 in Melbourne, according to Motormouth data.
Diesel prices, which are subject to increased demand from critical industries in farming, mining and transport, have not fallen as far – down 14.2¢ per litre in Melbourne and 13.4¢ in Sydney.
While fuel prices are down over the past week, they are still well above the $1.66 to $1.80 a litre average enjoyed earlier in the year.
That lift in price is expected to drive up economy-wide inflation. The Melbourne Institute monthly inflation gauge for March, released on Tuesday, recorded a 1.3 per cent jump last month, the largest in the gauge’s history.
It suggests underlying inflation is already at 4.4 per cent, well above the current official measure which, in February, was steady at 3.3 per cent.
S&P Global’s measure of economic activity in the services sector, also released on Tuesday, revealed a deep fall through March due to a sharp fall in new orders and a jump in prices.
“The impact on prices was also clear amid widespread reports of higher fuel costs, which pushed up inflation in the transport and storage sector in particular,” economics director Andrew Harker said.
“More positive was the sustained job creation seen during the month as firms remained optimistic around the future. Much will therefore depend on how long the war and its impacts endure.”
Separate data from the Australian Bureau of Statistics showed total household spending lifted by 0.3 per cent in February, led by a 0.5 per cent increase in discretionary spending.
But Oxford Economics Australia lead economist Ben Udy said this was before the steep rise in petrol prices and the Reserve Bank’s March interest rate increase.
“The key point is that Australian households are in for a tough few months ahead which is bound to manifest in softer consumer spending before long,” he said.
It’s not just an Australian problem, with the head of the International Monetary Fund, Kristalina Georgieva, warning global economic activity would be stunted by the war.
“All roads now lead to higher prices and slower growth,” she said.
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Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via X or email.
Mike Foley is the climate and energy correspondent for The Age and The Sydney Morning Herald.Connect via email.