But sales of hybrid and plug-in hybrid vehicles continued to accelerate over the last six months despite challenging economic conditions, according to analysis by the Australian Automobile Association.
The peak motoring body released a quarterly update to its online Electric Vehicle Index on Monday showing new vehicle sales dropping 7.6 per cent in the third quarter of the year, with almost 15,000 fewer cars sold.
Sales of internal combustion engine vehicles dropped further than the average, falling 9.1 per cent during the three-month period, but electric vehicles slid by 25 per cent.
Battery-powered cars made up 6.5 per cent of all new cars sold, down from 8.1 per cent last quarter, which is their lowest market share since 2022.
The results came after the removal of rebates for electric car sales in every state and territory except Western Australia, and Electric Vehicle Council legal, policy and advocacy head Aman Gaur said these decisions changed consumers' purchase intentions.
"The premature withdrawal of incentives for electric vehicles in several states, coupled with lingering concerns about EVs, is stifling rapid uptake," he said.
"Governments must continue implementing targeted programs that make it easier and more affordable for Australian households and businesses to transition to electric vehicles.
"At the same time, the industry must continue to address misconceptions about EVs to attract the next wave of adopters."
States including Victoria, NSW, Queensland and South Australia had offered rebates of up to $6000 on the purchase price of new electric vehicles to boost their adoption, but many schemes ended earlier than promised.
The price of some electric cars had already fallen but Mr Gaur said more affordable models would arrive in 2025 along with Australia's new vehicle emission rules.
"Affordable EVs are entering the Australian market - a trend that's expected to accelerate as the New Vehicle Efficiency Standard takes effect in 2025," he said.
Despite the fall in electric vehicle sales, lower-emission hybrid and plug-in hybrid vehicles have surged in Australia.
Hybrid vehicle sales increased by 3.3 per cent to more than 48,000 sales during the quarter, or a share of more than 16 per cent, while plug-in hybrid car sales jumped by 56.6 per cent from a lower base.
"Sales figures (since 2023) confirm confirm a clear trend of growth for hybrids, while the (battery electric vehicle) market share appears to have peaked for now," the association's report noted.
Some plug-in hybrid vehicles are eligible for fringe benefit tax cuts from the federal government, though these incentives are due to expire in April 2025.
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