19th March 2021
Why Electric Vehicles Are Still Lagging Behind in Australia
Electric vehicles have been a major talking point in the US for some time now and while Tesla has quadrupled in value, we have yet to see the EV market take off in Australia.
Last year electric vehicles made up only 0.6% of total car sales in Australia compared to 2.5-5% in most other developed countries.
While some have previously blamed the lack of sales on a high price point, there’s evidence that the issue largely lies in a lack of policy to support the industry. Behyad Jafari, the chief executive of the Electric Vehicle Council, says ““We spend a lot of time here in Australia talking about how in future years the price of electric cars will fall. The reality is the price has fallen, they’re just not being brought here, because we don’t have the policy.”
He further adds ‘“A global car company looks around at every other market in the world and sees that consumers get financial support for buying an EV and that there are growing costs for running a petrol vehicle. Australia doesn’t have these, and that’s why we miss out.”
While several western countries have begun introducing financial incentives, such as tax rebates for owners of an electric vehicle, the Victorian state government is currently considering applying a road tax to them. If this happens it will make electric vehicles even more expensive to own, Moreover, there remains a lack of charging station infrastructure in the country which makes EV’s especially inconvenient to use for those who frequently travel long distances by road.
This lack of policy has resulted in EV manufacturers limiting their supply to the country. Case in point, the US has 43 base EV models for consumers to choose from whereas Australia stands at just 29 and is likely to miss out on many future models if policy developments aren’t made.
As electric vehicles begin to claim a larger market share over time, Australia could see itself become a primary target market for petrol car manufacturers that find it increasingly hard to sell their vehicles elsewhere. Ultimately, the EV industry will likely remain stagnant if policy developments aren’t made
The BNPL Battle: CBA and Afterpay launch respective credit payment and banking services
On Wednesday, The Commonwealth Bank of Australia launched an attack on 'buy now, pay later' companies, with its own version of the credit service. Afterpay, supporting a 3.4 million customer base, is preparing to introduce its own banking app, named Afterpay Money, which will compete with the big four banks, targeting their much larger and arguably more lucrative customer base.
It seems as if the biggest competitive battle for customers in the finance sector has begun, as CBA adds “pay-in-four” installments to its banking offering, a system widely popularised by Afterpay. Lee Hatton, an alumnus of Suncorp and NAB, is the executive driving Afterpay's banking play, promoting the different features that the Afterpay Money mobile app will offer compared to other major banks’ apps. She believes that Afterpay Money can replicate the success that Afterpay has achieved as it is free from legacy technology and strict regulation that other services have.
Hatton provided The Australian Financial Review with a first look at the Afterpay Money app. The target demographic is young females, one of Afterpay's Biggest demographics. Hatton explains that the front page of the app will be about things relevant to the user, and that “It doesn’t look like, here are your accounts and here are your balances. It’s more around things like, what are the things in my wish-list at the moment that I am saving for”.
The user experience is more like a shopping experience than it is a banking experience.
— Lee Hatton, Afterpay executive, on the Afterpay Money app
Hatton also explains that the new Afterpay Money is set to be integrated with its core buy now, pay later service and will be designed around customer experiences rather than transactions. Hatton believes that banks should be nervous because Afterpay has a deeply engaged and trusting consumer base that trusts them to find offers and help them navigate through financial life more effectively.
While the initial version of the App focuses on money management, Afterpay could become a loan broker and earn income from the referral of customers to Westpac and other trusted partners.
While Afterpay’s millennial demographic is growing, at CBA’s half-year results in February, it was revealed that the key 18-34 demographic is losing market share. This is a demographic CBA has dominated for decades and analysts are questioning whether CBA’s brand resonates as strongly as it once did.
The views expressed within this article are those of the authors and do not represent the views of the Finance Student's Association. All images and references in this article are for fair and educational purposes only. The content in this article is not intended as legal, financial or investment advice and should not be construed or relied on as such.