Is it time to pull the plug on electric vehicles?
Electric vehicles (EVs) have been hailed as the future of transportation – promising a cleaner and greener alternative to traditional internal combustion engine (ICE) vehicles. Governments worldwide have pushed EV adoption through subsidies, tax credits, and ambitious targets, while car manufacturers have invested billions to electrify their fleets. However, announcements from major automakers, as well as recent data and surveys in the U.S., Australia, and Europe, suggest EVs may not be the wisest purchase for consumers today.
From production pullbacks and the downstream impacts of consumer hesitancy and infrastructure woes, here’s why the EV revolution is hitting a speed bump.
Major carmakers are hitting the breaks on EV ambitions
One of the most telling signs that EVs may not be the golden ticket they were once thought to be comes from the very companies building them. Large car manufacturers are rethinking their all-in approach to EV production, citing weaker-than-expected demand and staggering financial losses.
In the U.S., Ford and General Motors (GM) have made headlines with their retreats from aggressive EV plans. Ford, which has been transparent about its EV financials, reported losing US$18 billion on EV production over three years, equating to a jaw-dropping US$50,000 loss per EV sold. In response, Ford announced in 2024 that it’s scaling back EV production and shifting focus to hybrids, delaying plans for an all-electric SUV (sport utility vehicle). GM followed suit, cutting its 2024 EV production targets by an estimated 50,000 units, acknowledging that consumers aren’t transitioning to fully electric models as quickly as anticipated.
While Tesla is still an EV market leader, it has faced its own challenges, with price cuts and slower sales growth signalling a cooling market. In Australia, Tesla’s sales slide continued in February, with the brand recording a significant reduction in sales compared to the previous year. The nation’s best-selling electric vehicle brand recorded 1,592 sales in February, more than double the disastrous 739 deliveries notched in January. However, that was down 70 per cent from the 5,665 sales of February 2024.
The picture in Europe is similar. Volkswagen, a key player in the European market, has tempered its EV targets. According to the European Automobile Manufacturers’ Association (ACEA), Volkswagen recorded a 27 per cent year-to-date drop in battery-electric vehicle (BEV) sales in Germany.
Volvo, which once pledged to go fully electric by 2030, has adjusted its timeline, admitting that market infrastructure and consumer acceptance aren’t quite there yet. European manufacturers are increasingly pivoting to hybrids as a bridge technology, reflecting a pragmatic response to sluggish EV uptake.
Meanwhile, back in Australia, EV adoption remains in its infancy, with the pure electric market share declining precipitously. The latest data from the Federal Chamber of Automotive Industries (FCAI) and the Electric Vehicle Council (EVC) reveals a total of 5,684 full battery-electric vehicle were sold in Australia in February, compared to 10,111 in the same month last year.
A total of 96,710 new vehicles were sold in Australia during February, including cheap Chinese EVs, meaning EVs make up just 5.8 per cent of sales. A year ago, EVs made up 9.6 per cent of the market even when cheaper Chinese models were unavailable in significant quantities.
Major manufacturers like Toyota, dominant in the Australian market, have doubled down on hybrids rather than pushing EVs aggressively, citing the country’s vast distances and limited charging infrastructure. Even Tesla’s Model 3, which led EV sales in 2019, faces competition from more affordable internal combustion engine and hybrid options, dampening enthusiasm for a full electric switch.
Consumer sentiment: cost and convenience concerns
Surveys across all regions reveal a growing scepticism among consumers. This is driven by high costs, range anxiety, and inadequate infrastructure. In the US, a 2023 Pew Research Centre survey found that only 38 per cent of Americans were likely to consider an EV for their next purchase, down from 42 per cent in 2022. The same survey in 2024 revealed just 29 per cent of Americans say they would consider an EV for their next purchase. And globally, 29 per cent of current EV owners told McKinsey in 2024 that they plan to switch back to gasoline or diesel vehicles, with that figure rising to 38 per cent in the US – highlighting dissatisfaction with the ownership experience.
Key concerns include the high upfront cost (EVs remain 10-50 per cent more expensive than internal combustion engine equivalents) and concern about charging availability.
In Europe, despite a 62 per cent surge in EV sales from mid-2022 to mid-2023 (Bloomberg), mass adoption is stalling. The Ernst & Young (EY) report notes that while subsidies have boosted sales, the average EV still costs over 25 per cent more than an internal combustion engine vehicle, and consumers are often unaware of the long-term ownership costs. A 2024 S&P Global forecast slashed its 2025 EU battery-electric vehicle market share prediction from 27 per cent to 21 per cent, reflecting economic pressures and a lack of affordable models. Posts on X (Twitter) echo this sentiment, with users pointing to the steep losses manufacturers and owners face as evidence that EVs aren’t yet viable for the masses.
In Australia, range anxiety is a major hurdle, especially outside urban centres. With EVs like the Tesla Model 3 commanding a premium price – around A$60,000 compared to A$40,000 for a comparable hybrid – the cost-benefit equation doesn’t add up for many.
Infrastructure and market realities
The EV charging infrastructure – or lack thereof – remains a critical bottleneck. In the U.S., despite US$5 billion allocated in 2022 to build EV charging stations, only 17 per cent of Americans in the Pew Research Centre survey were confident this would materialise effectively. In Europe, the ACEA warns that the EU’s charging network isn’t keeping pace with demand, with gaps in rural areas undermining EV practicality. Australia fares worse, with just 3,000 public chargers nationwide as of 2023, compared to over 12,000 in Norway, a country with a similar population.
The hybrid hedge and the bigger picture
Meanwhile, as we have reported previously, hybrids are emerging as a compromise, offering fuel efficiency without the full commitment to electric. Toyota’s success with the Prius and Ford’s pivot to hybrid F-150s suggest that consumers will accept greener options without the risks and inconveniences of EVs. Meanwhile, manufacturers face regulatory pressure – like the EU’s 2035 zero-emission target or California’s 2035 internal combustion engine ban – but recent data shows these goals may be out of sync with market realities. The International Energy Agency’s (IEA) 2024 Global EV Outlook predicts EVs could hit 45 per cent of global sales by 2030, yet this falls short of net-zero targets, and regional disparities mean progress is uneven.
Why EVs might not be the smartest buy today
For the average consumer in the U.S., Australia, or Europe, EVs come with too many caveats in 2025. They’re expensive, lose resale value quickly, and depend on an insufficient and unreliable charging grid. Manufacturers are losing billions, signalling an unsustainable model without massive subsidies – subsidies that are shrinking, as seen with the U.S.’s tightened Inflation Reduction Act (IRA) credits and Europe’s shifting policies. Hybrids, by contrast, offer a practical middle ground, while internal combustion engine vehicles remain cheaper and more versatile for now.
The EV dream isn’t dead, but it’s clear the hype has outpaced reality. Until prices drop, infrastructure catches up, and manufacturers stop bleeding cash, putting your money into an EV might be more of a gamble than a smart investment. And by then, alternative technologies may supersede lithium battery-electric vehicles. For now, the road ahead looks bumpier than the glossy electric vehicle advertisements suggest.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
