A scarcity of electric utes and large SUVs was also preventing more regional motorists from making the transition, experts said, and the removal of hybrid vehicle tax concessions would give them little option but to buy diesel vehicles.
Representatives from the automotive and renewable energy industries appeared before the Transition to Electric Vehicles inquiry in Canberra on Friday in its seventh sitting.
Federal Chamber of Automotive Industries chief executive Tony Weber told MPs electric cars made up 7.6 per cent of all new vehicle sales in 2024, but represented only 3.1 per cent of large SUVs and .01 per cent of utes.
Many large vehicle types popular with motorists were simply not yet available as electric vehicles, he said.
"Clearly, we don't have in some categories – especially 4x4 technology in larger vehicles – we don't have the battery capacity at this point in time," he said.
"We haven't got to a stage in which we can have a battery that's light enough, that gives you the range and the energy density to drive larger 4x4 vehicles."
Ute and SUV drivers looking to cut transport emissions were instead opting for plug-in hybrid vehicles, he said, which had received a fringe benefits tax cut in 2022.
But Mr Weber said those motorists might return to high-polluting vehicles next April when the concession expired.
"People who need them, who live in regional rural areas who need (large vehicles) for their work, won't be allowed to access that FBT concession any more," he said.
"There is no substitute to move those people to an EV... all they can do is go back to diesel."
Australian Automotive Dealer Association chief executive James Voortman said some drivers would struggle to go electric without the launch of a more "affordable or capable" battery-powered ute.
He said Australia's luxury car tax, which applied to vehicles priced above $91,387, had prevented the import of large EVs to Australia and most consumers were no longer being offered subsidies to offset the higher price of new EV purchases.
"With the exception of maybe some of the incentives in Queensland that have recently been taken off, we just don't have the same universally accessible incentive regime that (other countries) have had," he said.
"I would be surprised if we keep growing faster than other countries under the existing system."
Nexa Advisory chief executive Stephanie Bashir said the removal of EV subsidies in Victoria, NSW, South Australia and Queensland had slowed their adoption in Australia.
She said the federal government should consider ways to financially support their take-up and to help consumers invest in low-emission technology, as they did with solar panels.
"At the moment they are still not at a price point that allows the average person to make that investment decision into electric vehicles," she said.
"That has been one of the key reasons why there's been a plateau."
Ms Bashir said EVs would need to represent 50 per cent of all new car sales by 2030 for Australia to reach net zero by 2050.
Sales of new electric vehicles fell to 5.99 per cent of new vehicle purchases in August, according to figures from the FCAI and Electric Vehicle Council, down by 15 per cent compared to August last year.
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