Australia’s electric vehicles growth momentum challenged by the urban–rural divide

A new study into Australia’s electric vehicle landscape by L.E.K. Consulting concludes that the market has now reached an inflection point, with cost parity achieved while other concerns persist.

Now into its tenth edition, the annual global mobility study of L.E.K. Consulting surveyed over 5,000 diverse consumers in Australia, the UK, Europe, Canada, and US on their sentiments toward electrical vehicles (EVs), with local uptake on the rise but still lagging other markets.

According to the analysis, the share of electrical vehicles and hybrids on Australian roads has climbed from around 1.5 percent in 2021 to 6 percent last year, with hybrids still dominant but electrical vehicles growing three times faster as total ownership costs square up with traditional options.

Together, electrical vehicles and hybrids accounted for 30 percent of new vehicle sales in Australia last year, in part driven by rising fuel costs. Nevertheless, Australia still sits a long way behind the other markets studied bar the US (which appears to have taken a sharp dive since 2024 due to negative political influence), including the UK, where electrical vehicles alone now command a 7 percent road share.

The urban versus rural divide

Still, the US, along with Canada, might provide for a better comparison than the UK, due to closer similarities in landscapes and lifestyles, with L.E.K. Consulting’s survey demonstrating a clear divide in Australia between metropolitan and rural respondents. All up, around 40 percent of local non-EV owners said they were unlikely to purchase one, with almost a quarter ruling it out entirely.

Yet, broken down by region, the number of those ‘not’ or ‘not at all’ interested in purchasing an electrical vehicle rose to more than half of the rural respondents, whereas the equivalent figure for their urban counterparts was less than one quarter – with almost 60 percent of the city-dwellers stating they were ‘interested’ or ‘very’ interested and suburbanites sitting somewhere in between.

But before dismissing all country folk as simply conservative, their attitudes toward hybrid vehicles were far more willing, with interest jumping from 28 percent to 42 percent. Here, L.E.K. Consulting notes that one third of rural drivers, who are also challenged by poorer infrastructure, report traveling more than 500 kilometers per week, with EVs typically providing a range of 200-600 kilometers.

“Regionality is the clearest constraint on mass electrical vehicles adoption,” the report states. “Longer trips, lower charging density, and greater dependence on range makes penetration much harder to achieve outside of urban markets. In regional areas, only around one third of towns have a charger within 20 kilometres, and until charging access improves, rural range anxiety will remain a barrier.”

With EVs having long been politicised in Australia, it’s easy to conclude entrenched positions have and will continue to stall progress. But zooming back out, with these genuine range concerns in mind and while noting the local market has only recently reached cost parity, it’s interesting to re-examine Australian consumer sentiment against global peers, especially Canada and Europe.

Europe, which here covers Germany, France and Spain, currently has the second highest ratio of EVs among the markets studied, with Canada next. Yet, while quite similar across the board, Australian non-EV owners who say they will definitely purchase one now outnumber those in both Europe and Canada, while the undecided pool is also slightly greater than in Europe and growing.

Growth for everyone?

“For years, the story of electric vehicles in Australia has been one of catching up,” writes L.E.K. Consulting senior partner Mark Streeting. “We have trailed on adoption, watched policy debates get bogged down in culture-war framing, and worried aloud about whether a sprawling, car-dependent country could ever make the transition. I would suggest that the basis of this conversation needs to change.”

“The question is no longer whether Australia’s electrical vehicles transition will happen, it’s whether it will happen for everyone,” he continues. “If governments and industry want the next phase of EV growth to be broad-based rather than concentrated in cities, the policy conversation needs to shift from purchase subsidies toward regional infrastructure, which increasingly looks like the actual constraint.”