Electric power revives once popular auto segment

Once dominant on Australian roads, sedan sales have shrunk dramatically over the past decade, dropping from half of the car market to just one-sixth in 2023.

The days when small cars like the Toyota Corolla, Mazda 3, and Hyundai i30 were household favourites seem long gone, as SUVs and utes have become the preferred choice for many Australians.

However, the tide is turning again, this time in favour of electric sedans. With their low centre of gravity, rapid acceleration, and spacious interiors, these vehicles could capture the interest of a new generation of drivers.

According to the latest data released on the Australian Automobile Association’s EV Index, half of the sales in one popular car segment are already dominated by battery electric vehicles (BEVs).

While hybrid vehicles are currently more popular in Australia’s best-selling SUV segment, fully electric cars are taking the lead in the medium car category. 

In June, data sourced from the Federal Chamber of Automotive Industries (FCAI) Vfacts, showed that one-third of the 33,739 medium sedans sold in the first half of 2024 were Tesla Model 3s (10,600 sales).

According to the Electric Vehicle Council, which collects electric vehicle sales data for Tesla, Polestar and MG, 80 per cent (8,190 sales) of these were of the Rear-Wheel Drive variety, which starts at $55,900 before on-road costs and offers 455km range (based on WLTP testing).

Another 3,780 sales were Long Range variants which start at $69,900 before on-roads, and the remainder – 300 in total – were Performance variants, priced from $82,900 before on-roads.

The BYD Seal, an all-electric competitor to the Tesla Model 3, also made a notable impact with 4,092 sales. This vehicle is available in three variants, priced between $49,888 and $65,748 before on-road costs.

Another standout in the segment was the BMW i4, a premium all-electric gran coupé that sold 1,177 units, starting at $85,900 before on-road costs. Toyota Camry hybrids dominated the rest of the sales, just surpassing Tesla with 10,788 units sold.

A similar trend is also turning up in the (admittedly much smaller) large car segment, where all-electrics accounted for nearly one in three cars sold in the first half of 2024.

While the rapid electrification of the passenger car segment is encouraging, it’s by no means groundbreaking in the face of the tidal wave of new SUVs and utes that roll onto the road these days. 

These behemoths now claim almost 80 per cent of new vehicles sales, whereas in June, passenger cars accounted for less than 18 per cent of sales. 

Nevertheless, medium sedan sales are on the rise. In 2023, around 48,000 medium sedans were sold, but the first half of 2024 has already seen 33,739 units sold, projecting a 37.5 per cent increase for the year. 

The small car segment, which includes hatchbacks, once sold 250,000 units annually. It now represents less than seven per cent of the market. Yet, they still outsell medium-sized cars, with electric versions making up only 7.5 per cent of sales, mirroring the broader EV market share.  But economics could soon see legacy carmakers – which make the highest profits from selling large combustion engine SUVs and utes today – shifting to promote smaller vehicles. 

The looming threat of Chinese carmakers is undeniable, and it's shaking the foundations of established automotive giants. As Chinese brands like BYD, Nio, and Xpeng gain traction globally with their competitive pricing and advanced technology, legacy carmakers are feeling the pressure. This is particularly true in the EV market, where these newcomers are already making profits from innovative offerings. 

Ford CEO Jim Farley recently acknowledged this challenge, stating that Ford must focus on producing more profitable smaller EVs to stay competitive. This strategic pivot highlights the shifting landscape in the automotive industry, where smaller, more efficient vehicles are becoming increasingly essential. Farley's comments underscore a broader industry trend: the need to adapt quickly or risk being left behind. 

Cadillac, also, has publicly stated that sedans are far from dead and hinted that their future iterations could be electric.  

This shift will inevitably impact the Australian market, where consumers favour larger vehicles like SUVs and utes.  

However, the rise of affordable and efficient EVs, particularly from Chinese manufacturers, may eventually sway consumer preferences. The Australian market, like others, may see a resurgence in the popularity of smaller cars as they offer a compelling combination of affordability, efficiency, and advanced technology.