Australian electric vehicle (EV) owners could face a “wave of litigation” over battery degradation and unclear warranty terms, according to a recent report from the Australian Automotive Dealer Association (AADA). Released on July 17, 2026, the report highlights a significant concern for both current and prospective EV buyers: the potential for battery replacement costs to exceed a vehicle’s remaining value, leading to substantial financial losses and legal disputes.
The AADA’s findings underscore a growing apprehension within the automotive industry regarding the long-term value and ownership experience of EVs as their batteries age. With most EV batteries currently carrying an eight-year or 160,000-kilometre manufacturer warranty, the report argues that the specifics of what constitutes ‘acceptable’ battery performance or degradation within these terms are often ambiguous. This lack of clarity leaves consumers vulnerable and creates a grey area for dealers managing trade-ins and resale values.
“The report warns that buyers could face a ‘wave of litigation’ when EV batteries need replacement outside of warranty as their cost could exceed the vehicle’s remaining value.”
The core issue, as identified by the AADA, is that the rapid technological advancements in EV battery chemistry and capacity mean that older models, even those a few years old, can see their battery performance diminish in comparison to newer vehicles. While this is a natural progression, the financial implications for owners when a battery’s capacity drops below a usable threshold, but still technically within warranty parameters, are significant. The cost of a new EV battery pack can range from AUD$15,000 to over AUD$30,000 for many popular models, a figure that could easily eclipse the market value of an older EV.
The Call for Clearer Battery Thresholds
To mitigate this looming issue, the AADA report advocates for manufacturers to establish and publicly disclose clear, defined thresholds for acceptable battery performance. This would involve setting specific benchmarks, such as a minimum percentage of total capacity remaining after a certain number of years or kilometres, to clarify warranty obligations and provide consumers with transparent expectations. For example, the report suggests a battery could be considered acceptable if it retains at least 70 per cent of its total capacity after more than eight years.
Such a standard would not only empower consumers with better information at the point of sale and throughout ownership but also provide a clearer framework for dealers assessing used EV values. Without these definitions, the market for second-hand EVs could suffer from uncertainty, impacting depreciation rates and consumer confidence.
Impact on Depreciation and the Used EV Market
While new EV sales continue to break records in Australia—with battery electric vehicles (BEVs) and plug-in hybrids (PHEVs) accounting for 35.8% of new passenger car sales in June 2026, and EVs alone making up one in every four new car sales—the long-term health of the used EV market is crucial for sustained growth. Recent data from the Australian Automotive Dealer Association (AADA) and AutoGrab shows that used EV sales increased by 54.6 per cent in the first half of 2026, with used PHEV sales rising 468.4 per cent, even as the overall used car market saw a 6.6 per cent decline.
This robust growth in the second-hand market indicates strong consumer demand for more affordable electric options. However, the AADA’s warning suggests that this growth could be undermined if battery longevity and replacement costs become a significant and unpredictable burden for owners. The report highlights that used EVs are currently selling faster, with average time to sell falling from over 60 days in January to fewer than 40 days by June 2026.
Consumers are increasingly prioritising value, running costs, and long-term ownership when purchasing vehicles. The uncertainty surrounding battery life and potential high replacement costs directly contradicts these priorities, posing a risk to the ongoing transition to electric transport.
Current Warranty Landscape vs. Real-World Concerns
Manufacturers typically offer extensive warranties on EV batteries, often eight years or 160,000 kilometres, guaranteeing a certain percentage of original capacity (e.g., 70% or 75%). However, the AADA’s report suggests that these warranties may not adequately address the financial exposure of owners when degradation occurs, particularly if a battery falls just outside the warranty’s explicit terms but still requires costly intervention. This could lead to a situation where a battery replacement, if not fully covered, renders the vehicle uneconomical to repair.
This concern is particularly pertinent for Australian drivers, many of whom are looking to maximise the efficiency and cost savings of their EVs, including optimising charging with home solar. Optimise EV Charging with Solar This Winter 2026: Max Savings Guide The financial viability of EV ownership hinges on predictable running costs, which could be severely impacted by unforeseen battery expenses.
The Path Forward
The AADA’s report serves as a critical call to action for car manufacturers, policymakers, and industry bodies. Establishing clear, industry-wide standards for battery health disclosure and performance thresholds is essential to protect consumers and ensure the sustainable growth of Australia’s EV market. Without such measures, the promise of cheaper-to-run EVs could be overshadowed by the risk of significant, unexpected costs for owners.
This push for greater transparency aligns with broader efforts to mature the EV ecosystem in Australia, from expanding charging infrastructure to addressing apartment and strata charging challenges. EV Charging for Australian Apartments & Strata in 2026: Solutions & Costs from $1,000 Ultimately, confidence in battery longevity and predictable long-term costs will be paramount for widespread EV adoption across the country.