Finance for EVs and Hybrids – Closing the Information Gap

Finance for EVs and Hybrids – Closing the Information Gap

In my last article I focused on personal lending and the fact that we’ve seen an increase in demand for loans in the face of increasing consumer concerns over household finance. In this article, I want to continue the theme of car finance, specifically for electric and hybrid vehicles, a market in which there have been significant developments in the last 12 months.

Three things prompted me to think of this topic:


1. Firstly, RFI has just completed its fourth annual Auto Finance Study which looks at the attitudes and behaviours of 1,000 auto loan holders and 400 prospective borrowers.


2. Secondly, the news last week that global financial services group Macquarie is exiting the auto finance market and running down its book.


3. Thirdly, my daughter always wants to play spotto[1] and it’s forcing me to observe what cars are on the road and this in turn has made me aware of just how many hybrids and EVs there are.

Source: VFACTS data from FCAI – Federal Chamber of Automotive Industries

Sales of new vehicles in Australia have been recovering since the pandemic, with VFACTS reporting that March 2024 was  the strongest March sales month on record, coming as it did after a record year for new vehicle sales in 2023, when Australians bought 1.216m new cars. The pre-pandemic record was in 2017, when we bought 1.189m new vehicles.


The story is similar for electric vehicles (EVs) and hybrids, which according to VFACTS accounted for one in four (23.5%) new vehicles sold in March 2024. Every category of hybrid and EV car sales has grown relative to March 2023.

A growth in auto financing

Clearly there is demand for EV and hybrid cars as I showed last month. The demand for new personal loans is running at the highest level we’ve seen in recent times – currently 9% of all Australians are expecting to take out a non-mortgage credit product in 2024 (the long-term average is closer to 5%).


Source: RFI Global’s Australian Consumer Lending Survey

On top of this, when we look at loan purpose in our regular consumer lending survey, we can see that 40% of recent borrowers were borrowing to finance a new or used car purchase – the highest we’ve seen.


Pulling all of these data points together, it seems clear that the lending market for EV and hybrids must be a growing opportunity for lenders. This is backed up by the fact that we’re seeing an increasing number of lenders in the market with green financing offers, which typically involve lower rates or reduced/ no fees.

Growing the piece

The question is, are these offers cutting through and will that grow the pie?

Source: RFI Global’s Australian Auto Finance Study

RFI’s auto finance study shows that just one in four borrowers and prospective borrowers state that they’re aware of finance offers in the market relating to EVs or Hybrids. Among these ‘aware’ consumers, government rebates and subsidies (31%) and lender offers (41%) are the most cited offers.


This leaves three in four consumers unaware of any incentives and not tempted by a more planet-friendly vehicle financing option.


In addition, these incentives are all aimed at those considering an EV or hybrid vehicle, but what of the rest of the market? Is there an opportunity to increase the market by overcoming some of the barriers that prevent would-be consumers from purchasing a greener vehicle?


The barriers to greener purchasing

When we asked consumers what prevented them from purchasing an EV or hybrid, the most common response (38%) stated that EV’s were too expensive. This is despite the fact that when we asked those same consumers which type of car would be more economical to maintain, 66% said that the EV/ Hybrid option would be more affordable vs 24% for petrol.


The up-front price of electric vehicles is coming down relative to petrol vehicles, but consumers don’t seem to notice this.


Other significant barriers included:


  • Lack of charging stations (36%)
  • Lack of knowledge re EVs and Hybrids (31%)


On the flip side, when we asked consumers what would encourage them to purchase an EV/ Hybrid, the most popular responses were:


  • An affordable price (44%)
  • Available charging stations where I live (33%)
  • Government schemes and incentives (33%)


Source: RFI Global’s Australian Auto Finance Study

Clearly there is an information gap that holds back those who might potentially choose to purchase an EV/ Hybrid. In part, this will improve as more brands make EV/ Hybrid cars available in the market. Looking at the range of brands purchased by those using finance, it is clear there are already a large number of options out there and this is only likely to grow. Our respondents owned EV or hybrid vehicles from a total of 30 different car manufacturers.

However, beyond the manufacturers’ role in increasing awareness and availability, there is a part here for lenders to play if they want to see the market grow.


Beyond offering further incentives and increasing consumer awareness of these incentives through marketing and advertising, growing this market is going to require efforts to inform and educate consumers.


Based on the information above, this can be done most effectively by providing them with current information on:


  • Relative pricing of EVs
  • The availability of Government incentives
  • The growing availability of public charging stations
  • The increasing accessibility of at home chargers

Get in touch to get further insights from the studies.

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[1] Spotto is a sophisticated game where you shout “SPOTTO!” if you see a yellow vehicle.




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