The Shocking State Of The Electric Vehicle Market In Australia

Electric vehicles have been commercially available in one form or another for well over a decade, so why does Australia appear to lag behind comparable countries in the overall number of EVs on the road? Martin Hirst stirs the pot, looking for answers.

CEO of the Electric Vehicle Council, Behyad Jafari, says it’s because Australian governments at both state and federal level are sitting on their hands. “Overseas, many governments are creating some momentum within the market to get the ball rolling, and the worst thing that Australia is doing is doing nothing,” Jafari says.

According to industry figures, only a touch over 20,000 fully electric cars have been sold in Australia since 2011 and around 100,000 hybrids come on to the road each year, but that is a fraction of the 1.7 million Australian new car market.

Australia has one of the lowest rates of electric car ownership in the OECD. Only 0.7 percent of the Australian on-road fleet is electric. According to the IEA, the EV fleet is over one percent in at least 20 nations. Obviously the COVID-19 pandemic and associated global downturn has impacted car sales, but EVs are becoming more popular and affordable in bigger markets.

It’s when we compare Australia to other right-hand drive markets like the UK the gap cannot be ignored. In the affordable $30 to 60,000 range, the UK has around 32 models available; in Australia we have four or five vehicles in that price range.

Policy Roadblocks

The EV market is growing, just not as fast as it could. One roadblock to getting more electric vehicles on the road is government policy at both federal and state level. There is a lack of urgency on the part of many governments and therefore no policy of providing consumers or manufacturers with an incentive to switch from internal combustions motors. “We’ve been just doing nothing while other countries have been very aggressively attracting the electric vehicle market,” Mr Jafari says.

The local EV roll-out manager for Nissan has also recently made similar comments. Ben Warren told the ABC that his company and many others prioritise delivering EVs to markets that have “more progressive policies and objectives and targets” for electric vehicles.

In some markets there is a carrot and stick approach where failure to meet emissions targets attracts a penalty, and tax breaks and other incentives for EVs and hybrids. According to Behyad Jafari, Australia should be moving in the same direction more quickly than it currently is.

The downside of slow EV take-up

It is important to understand the potential downside consequences of Australia lagging behind the world in the uptake of electric vehicles. One that should motivate governments to encourage Australians into EVs and out of hydrocarbon fuel sources is that without such a shift it will be increasingly difficult for the nation to meet global emission standards. It stands to reason that any effort towards lowering CO2 emissions must be linked to encouraging consumers to switch to electric vehicles.

“Everywhere else in the world, manufacturers see that if they don’t bring these technologies and vehicles to market, they’ll be penalised through things like CO2 emissions standards; and then, if they do bring the vehicles, consumers will be incentivised to buy them by things like tax breaks and rebates,” says the EVC’s Jafari.

This is why the EVC was among the many vocal critics of the Victorian government’s recent decision to impose a 2.5 cent/km road user charge on electric vehicles (and 2 cents on PHEVs). Victorian Innovation Minister Jaala Pulford says the new tax will not slow down the take-up of electric vehicles in the state. However, Behyad Jafari says the problem with this is the timing and the signal it sends.

“Let’s be clear, it’s the doing it right now that is the problematic thing in this. Their argument has not been that this is the best policy for us to introduce, it’s that it’s the best political decision because there are so few people driving electric vehicles so there’ll be limited opposition to it. They’re wrong, there’s been a lot of opposition, but this has been their thinking.”

Investment and growth opportunities in the EV space

The electric vehicle is symbolic of a whole novel approach to road transportation – passenger vehicles, mass transit and freight hauling – and the electrification of the fleet also requires governments, investors and road users to rethink the ageing 20th century paradigm of the fossil fuel economy.

Unless you’re in complete denial, the need to move away from a carbon- fuelled transport system is clear and obvious. What’s not so clear and obvious is the timeline along which this change will move.

Some of the projected growth in electric vehicle sales will be taken up by existing brands who have already begun to shift production into EVs. However, there are also going to be new players doing laps of the block. This is why critics want to see government’s make positive changes that encourage growth and investment in the EV sector.

There are two big things that governments need to do to keep up momentum towards both zero emissions and redesigning the road transport ecosystem. “The first is that fuel efficiency standards and emission standards for internal combustion engines must be better and tighter,” Jafari says.

This is to show EV manufacturers that you’re serious and looking toward low emission or no emission vehicles. It sends an important signal to manufacturers that they should be bringing their latest technology into the car sales yards. “On top that, if they bring their very best low or zero emissions technology – such as EVs – then there’s go to be an incentive to the customer to encourage the take up of that technology,” Jafari adds. These incentives might be removing or reducing stamp duty on electric vehicles, lowering tariffs, or even removing the GST on EVs.

There’s also an opportunity to build electric vehicles in Australia and re-purpose the shuttered automotive plants in Victoria and South Australia. There would be a six to 18-month refit required because when Ford and GM sold up and moved off-shore, most of the equipment and assembly line infrastructure was left behind. This might seem like magical thinking, but it is worth considering as “brownfield” sites can reduce capital costs by up to 50 percent.

“Yeah, it is feasible. Also, a car plant today would look very different to the ones that were opened in the 1950s. For example, today you’ve got many more automated systems on the assembly track and you’re hiring skilled workers to operate the plant,” according to Jafari.

There are also opportunities across other links in the EV value chain such as technologies that feed into both design and production. A large secondary and tertiary value-add opportunity exists in the production of charging equipment, battery technology, drive-train development, re-engineering the electricity network to handle the load of domestic charging and rolling out the charging infrastructure itself.

Effective government policy is the key because for ancillary technologies and industries to reach sustainable mass there has to be a synergy with the domestic EV market. The bottom line is that Australia is potentially a world-leader in EV technologies, including batteries and charging infrastructure. However, the small domestic market for electric vehicles is holding us back. Despite this, Behyad Jafari puts himself in the camp of the optimists:

“I’m an absolute optimist. I think we’re seeing a lot of the right moves starting to occur, albeit a bit later than we’d like. The EVC spends a lot of time working with governments around the country and they recognise there’s a benefit to moving to EVs and also that they have to do something about it”, Jafari says.