TL;DR: Global battery manufacturing capacity will exceed EV demand by 2.4 to 1 by 2028 because manufacturers built infrastructure based on aspirational surveys rather than actual buyer behaviour. Ford lost $12.8 billion over four years , GM is cutting battery plant staff , and China now controls 80% of global lithium battery production . For Australian buyers, the opportunity is in hybrids—not EVs—unless you have predictable urban driving and off-street charging.
What Caused the EV Battery Oversupply Crisis? The automotive industry built supply for a future that hasn't arrived.
Global battery manufacturing capacity will exceed demand by a ratio of 2.4 to 1 by 2028 , according to AlixPartners. In China, the oversupply is even more severe—battery capacity is 5.6 times greater than actual demand .
These aren't rounding errors. They're strategic miscalculations that reveal how manufacturers confused aspirational surveys with actual purchase decisions.
Bottom line: Manufacturers invested billions in battery factories based on optimistic demand projections that ignored real-world adoption barriers.
Why Did Manufacturers Get EV Demand Projections Wrong? Manufacturers confused what people said they'd do with what they actually do when handing over $70,000.
Everyone says they want an EV when you poll them. It sounds good. It's the "right" answer.
But when buyers discuss their actual usage patterns—the weekend trips to regional areas, the caravan up north twice a year, the street parking with no charger—the conversation shifts from aspiration to compromise.
The gap appears when buyers must change their behaviour. An EV requires you to plan trips differently, worry about charging, and accept resale uncertainty. That's a significant ask for someone who just wants a reliable work ute they can fill up in five minutes anywhere.
The Financial Cost of Miscalculation Ford lost $130,000 on every EV it sold in the first quarter of 2024Ford's Model e division has accumulated $12.8 billion in losses .
GM is cutting staff at battery plants . These aren't temporary setbacks because they're symptoms of building infrastructure for demand curves that don't exist yet.
Key insight: The industry made the classic mistake of confusing aspiration with intention—building projections on what people said they'd do, not what they actually do when the rubber hits the road.
What Happens to Battery Factories When Demand Doesn't Materialise? Battery factories are purpose-built. You can't retool them to make something else.
These facilities were constructed assuming steady, aggressive adoption—30% of new car sales being EVs by 2025, 50% by 2028. But if the actual adoption curve is five to ten years behind that timeline, you've got massive fixed costs with no revenue to justify them.
The timing mismatch creates stranded assets: billions invested in production capacity that's either sitting idle or running at a fraction of projected output.
The Technology Obsolescence Risk By the time demand catches up, the technology will have moved on. The batteries they're set up to produce now might be obsolete compared to whatever solid-state or next-gen chemistry is available in 2030.
Manufacturers face three options:
Keep factories running at a loss
Mothball them and write off billions
Retool again at enormous cost
The reality: Unlike dealerships that can pivot and sell different stock, battery factories are purpose-built infrastructure that becomes dead weight on the balance sheet when demand timelines shift by five to ten years.
Who Benefits from Western Manufacturers' Miscalculation? CATL and BYD control 54.5% of the global EV battery marketChina now controls more than 80% of global lithium battery production .
Chinese manufacturers built capacity efficiently and at scale, with government backing that allowed them to weather demand fluctuations. Whilst Ford and GM scramble to justify investments to shareholders, Chinese producers have the financial runway to sit on overcapacity without the same pressure.
The Geopolitical Implications Western manufacturers who've scaled back will be dependent on Chinese battery suppliers when demand eventually ramps up. This creates both commercial and geopolitical vulnerability because you're handing over the most critical component of the EV transition to a single region that can dictate terms.
For Australian buyers, this means:
Competitive pricing: Chinese scale drives costs down, making EVs more accessible
Supply chain risk: Any geopolitical tension or trade policy shift could impact availability and pricing
Limited leverage: Even buying from Western brands means relying on Chinese battery supply
Strategic takeaway: China didn't just build battery capacity—they built it efficiently at scale whilst Western manufacturers are now dependent on them for the core component of their EV strategy.
Did Toyota Read the Market Correctly? Toyota copped enormous criticism for being cautious about pure EVs. Everyone called them dinosaurs.
But they looked at the same data and came to a different conclusion: the infrastructure isn't there, the consumer behaviour change is massive, and the technology still has a way to go.
Therefore, they doubled down on hybrids—which give you most of the efficiency benefits without requiring any behaviour change. You fill up like normal, drive like normal, but use less fuel.
The Results of Toyota's Strategy Whilst Ford and GM bleed money on EV programmes they're now scaling back, Toyota's hybrid sales have been strong and profitable.
Toyota avoided:
Stranded battery factory assets
Walking back bold predictions
Massive quarterly losses per vehicle
Staff cuts at manufacturing facilities
The pragmatic approach: Toyota is building the bridge to EVs rather than trying to leap the gap in one go—letting infrastructure mature, battery technology improve, and consumer confidence build before scaling up EV production when the market's genuinely ready.
Is Australia a Dumping Ground for EV Oversupply? Australia hit 100,000 EV sales in 2024, with EVs accounting for 9.5% of new car sales . In the first half of 2025, that grew to 12.1%.
But EVs still account for only 2% of all cars on Australian roads.
Twenty-one new EV models are planned for launch in 2026 whilst the US and Europe retreat. Is Australia being treated as a dumping ground for overcapacity, or is there something genuinely different about our market?
Both.
Why Australia Attracts EV Oversupply Australia is an attractive market for manufacturers with overcapacity because:
Relatively loose emissions standards compared to Europe
No domestic manufacturing to protect
Right-hand-drive market with limited alternative destinations (UK, Japan, smaller markets)
Geographically concentrated urban populations where EVs seem viable
The Genuine Market Potential There's also a genuine bet on potential. High vehicle prices mean the EV premium is less of a barrier. Urban populations have income levels and charging infrastructure—at least in cities—to make EVs work for certain segments.
However, the issue is whether that potential translates to volume. The buyers who can afford an EV and whose lifestyle suits one are a narrow band—inner-city professionals, early adopters, people with solar at home.
Once you've saturated that segment, you hit the same barriers: range anxiety, charging infrastructure in regional areas, upfront cost for the average tradie or family.
Market reality: Australia will see 21 new EV launches in 2026, but half will likely be gone or consolidated within three years because the volume isn't there to sustain that many models—the same overcapacity problem, just shifted to a different geography.
What Happens to Early EV Adopters When Models Are Discontinued? Early adopters of discontinued models get stuck with orphaned assets that are hard to service and impossible to sell.
With EVs, it's worse than traditional vehicles because you're not just talking about mechanical parts—you're talking about battery technology, software updates, and charging compatibility.
The Orphaned Asset Risk If a manufacturer pulls out of Australia or discontinues a model, you're left with a vehicle that:
Might not get critical software patches
Has battery degradation that can't be properly diagnosed or repaired
No one wants to buy secondhand because they're inheriting all that risk
The resale market for EVs is already thin because buyers are nervous about battery life and technology obsolescence. Add in the risk that the manufacturer might not be around to support it in three years, and you've created an unsellable asset.
The cruel irony: Early adopters are often the most enthusiastic believers in the transition—and they're the ones who'll wear the financial loss when manufacturers' optimistic projections don't pan out and they quietly exit the market.
Should Australian Buyers Choose EVs or Hybrids in 2025? Don't buy the industry's timeline. Buy for your actual life, right now.
All the projections about where the market's heading in 2030 or 2035 are irrelevant to the decision you're making today. What matters is whether the vehicle works for how you actually live, whether the manufacturer will be around to support it, and whether you can afford to wear the risk if it goes sideways.
When EVs Make Sense If you're in metro Brisbane or Sydney, you've got off-street parking with a charger, and your daily driving is predictable, there are genuine opportunities. You'll get better pricing and potentially solid run-out deals as manufacturers clear stock.
When EVs Are a Trap But if your usage pattern hasn't changed, if charging infrastructure in your area is still patchy, if you're buying a model from a manufacturer that's clearly retreating from the market—you're not getting a bargain. You're buying someone else's problem at a discount.
Check the manufacturer's commitment to the Australian market:
Are they opening new dealerships or quietly closing them?
Are they investing in charging infrastructure or just talking about it?
Do they have the financial strength to weather this oversupply period?
The Hybrid Advantage The real opportunity right now isn't in EVs—it's in hybrids. You get efficiency, you get lower running costs, but you don't inherit all the risk and uncertainty of a market that's still finding its feet.
The market will get there eventually. Infrastructure will improve, technology will mature, prices will come down.
But that might be 2032, not 2025.
Bottom line: There's no prize for being early to a party that hasn't started yet. Don't make an emotional decision with a $70,000 asset based on where the industry promised it would be rather than where it actually is.
Frequently Asked Questions
Why is there an EV battery oversupply crisis? Manufacturers built battery production capacity based on aspirational polling data rather than actual buyer behaviour. They assumed 30-50% of new car sales would be EVs by 2025-2028, but real-world adoption is 5-10 years behind those projections because buyers face practical barriers like range anxiety, charging infrastructure gaps, and high upfront costs.
How much money has Ford lost on EVs? Ford lost $130,000 on every EV sold in Q1 2024 . Over four years, Ford's Model e division accumulated $12.8 billion in total losses . These losses are symptoms of building manufacturing infrastructure for demand curves that don't exist yet.
Who controls the global EV battery market? China controls more than 80% of global lithium battery production . CATL and BYD specifically control 54.5% of the global EV battery market . Chinese manufacturers built capacity efficiently at scale with government backing, whilst Western manufacturers like Ford and GM are now dependent on Chinese suppliers for the core component of their EV strategy.
Was Toyota right to focus on hybrids instead of pure EVs? Yes. Toyota's hybrid-first strategy avoided stranded battery factory assets, massive quarterly losses per vehicle, and embarrassing walk-backs of bold predictions. Whilst Ford and GM bleed money on EV programmes they're now scaling back, Toyota's hybrid sales have been strong and profitable. They're building the bridge to EVs rather than trying to leap the gap in one go.
Should I buy an EV in Australia in 2025? Only if you have predictable urban driving, off-street parking with charging access, and you're buying from a manufacturer with genuine long-term commitment to the Australian market (deep pockets and expanding infrastructure). Otherwise, hybrids offer better value and lower risk because they provide efficiency benefits without behaviour change, resale uncertainty, or dependence on patchy charging infrastructure.
What happens if my EV manufacturer pulls out of Australia? You're left with an orphaned asset that's hard to service and impossible to sell. The vehicle might not get critical software patches, battery degradation can't be properly diagnosed or repaired, and no one wants to buy it secondhand because they're inheriting all that risk. This is worse than discontinued traditional vehicles because EVs depend on ongoing software support and specialised battery servicing.
Is Australia being used as a dumping ground for EV oversupply? Partially. Australia is attractive for manufacturers with overcapacity because of loose emissions standards, no domestic manufacturing to protect, and limited right-hand-drive market alternatives (UK, Japan, smaller markets). However, there's also genuine market potential in urban areas with high incomes and charging infrastructure. The issue is whether 21 new EV models launching in 2026 can be sustained when only a narrow segment (inner-city professionals, early adopters) can afford and practically use EVs.
When will the EV market actually be ready for mass adoption in Australia? Likely 2030-2032, not 2025. Infrastructure needs to mature, battery technology needs to improve, charging networks need to expand into regional areas, and consumer confidence needs to build. The industry's timeline was based on aspiration, not practical reality. Don't make a $70,000 purchase decision based on where manufacturers promised the market would be—buy based on where it actually is today.
Key Takeaways Manufacturers confused aspiration with intention: Battery capacity will exceed demand by 2.4 to 1 globally by 2028 because manufacturers built infrastructure based on what people said in surveys, not what they actually do when spending $70,000.
Stranded assets are inevitable: Ford lost $12.8 billion over four years ; GM is cutting battery factory staff . Purpose-built battery factories can't be retooled, creating billions in dead weight on balance sheets when demand timelines shift by 5-10 years.
China controls the supply chain: With 80% of global lithium battery production and 54.5% of the EV market , China has the financial runway to weather overcapacity whilst Western manufacturers become dependent on Chinese suppliers for their core EV component.
Toyota's pragmatism wins: Hybrids provide efficiency without behaviour change, avoiding stranded assets and massive losses. Toyota is building the bridge to EVs rather than leaping prematurely.
Australia faces consolidation: 21 new EV models launching in 2026, but half will likely disappear within three years because volume won't sustain that many models once the narrow early-adopter segment is saturated.
Early adopters wear the risk: Discontinued EV models become orphaned assets with no software support, unrepairable batteries, and no resale market—worse than traditional vehicles because of technology dependence.
Hybrids are the smart choice in 2025: Unless you have predictable urban driving and off-street charging, hybrids offer better value and lower risk. The EV market will mature by 2030-2032, not 2025—there's no prize for being early to a party that hasn't started yet.
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