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Four reasons why electric vehicles may take off in Australia

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A new report into the electric vehicle market in Australia suggests that the main barriers to adoption in the mass market will be quickly overcome, and by 2035 all new light vehicles sales in Australia will be electric, or at least not petrol or diesel.

The paper from Advisian, a subsidiary of Worley Parsons, to be released in full on Wednesday, says there are four key barriers to EV adoption in Australia – the cost of the vehicle, the infrastructure, the cost of charging, and the fate of fuel refineries. But all are likely to be overcome.

The biggest barrier of course, is whether people can afford it. A lot of debate goes into whether purchases of EVs will be “economic”, but Phil O’Neil, a senior associate, new energy, at Advisian, points out that the purchase of motor cars is already, and has long been, the biggest emotional purchase cost of any consumer good.

“How do you calculate the pay-back time of a full leather interior,” he says. Or fancy wheels, for that matter. For many people, the economics of EVs is not as big a factor as some would suggest.

And, in any case, the economics are getting better. The upfront purchase price of EVs is falling and the running costs are already below those of petrol vehicles.

Advising estimates that using off-peak residential electricity to charge electric vehicles costs less than filling similar vehicles at the petrol pump, offering a saving of more than $30 for 500km of driving. Electric vehicles also need less maintenance than petrol or diesel cars, making them cheaper to own in the long term.

“Electric vehicles will become increasingly attractive from an economic perspective,” says O’Neil.

“We’re still looking at a couple of decades to change-over from full petrol to full electric, which reflects the normal turnover in the personal car fleet.  However, the rapid adoption of car sharing and autonomous vehicles has the potential to reduce this period dramatically.”

Another potential barrier is if the infrastructure for the EV market can scale quickly enough, and if there can be enough charging infrastructure in place to make it suitable for a country with a lot of long distance car travel.

Again, Advisian says this won’t be an issue. Australians, it notes, were early adopters of petrol vehicles before refuelling infrastructure was widespread, and why will follow the same pattern with electric vehicles.

“Early electric vehicle adopters will take home-charger cords with them to recharge en route,” says O’Neil.

“We also expect that electric vehicle charging stations will become common at workplaces and shopping centres, as employers and retailers take the opportunity to provide a perk for employees or attract shoppers.”

That takes us to the third issue, and the cost of recharging. Advisian suggests that new players in the production and distribution of transport energy are competing for customers with EV manufacturers, pushing down recharging prices for electric vehicles.

Tesla, it notes, is already offering owners of most vehicles in its range free recharging using its Supercharger network. Electricity retailer AGL has announced electric vehicle charging for A$1 per day.

On top of that, the convergence of technologies suggests that many consumers will also be using our electric cars to store energy from household solar panels for later use, or even to sell it on the National Energy Market.

The fourth potential barrier, which seems less of a issue, is the response of the oil industry to rising demand of EVs. Will, for instance, low demand lead to a fall in prices, making the economic case harder.

Again, Advisian sees not much of an issue. It suspects refineries will move to other products for use in plastics, risins and chemicals rather than petrol.  “Lower petrol prices could have some impact on electric vehicle uptake,” says O’Neil. “But it’s not a sure thing.”

But there are other issues to take into account. One is a change in electricity markets caused by the mass adoption of EVs, not just in demand from the grid but also in the potential use of EV batteries to participate in the grid.

Another issue in on tax revenue, and the fact that increasing numbers of electric vehicles will undermine the petrol excise model that currently prevails. O’Neil says that will likely result in a congestion or usage tax to offset those declining revenues.

   

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  • Charles

    I don’t think the third point, cost of charging, is going to make much of a difference. 90% of charging is done via slow charging, at home, overnight. Typically these are when the lowest rates are available. Fast chargers typically are more expensive, but these only account for 5% of the typical charging usage, and the cost is justified since a company needs to lease a site, buy and install dedicated charging hardware, supply a high capacity connectivity to the grid (or a battery) and maintain a billing system.

    • Peter Campbell

      I have been driving an electric car for over 7 years now. I used a fast charger once a few weeks ago just to try it out.

      • Charles

        That sounds about right! I only used a public charger for the first time after owning the car for about 3 months. Charging stations are as much about addressing people’s perceptions of EVs as they are about actually providing charging facilities.

        • Peter Campbell

          The only use I might make of a fast charger would be to enable intercity driving. Or just maybe stretch range for a day trip a little way out of town if there were a fast charger at the edge of town for on the way out or back.
          One time we did go quite a way out of town for a special lunch at a winery/restaurant and had lined up being able to plug in to an ordinary power point on the side of their shed for 3 hours of slow charging. That gave the extra bit of top up (about 7kWh, I suppose) that gave us confidence to do the round trip with a detour on the way home.
          Still 99% of charging is at home.

  • Rod

    There is a persistent misconception that Australians drive long distances. They don’t.
    Most trips are shopping, commuting, school drop offs etc. We may be a big country but most of us live in cities/suburbs and drive about 40km – 60km per day.
    Congestion or usage tax = WIN. The best way to reduce wasteful driving. Just ask Boris.

    To me the way forward is a small, efficient, no frills affordable EV. Maybe people will look at these as their second car and once they are comfortable would be happier to pay a bit more. I think the Tesla is US30k which is main car price (for me anyway)

  • suthnsun

    A sensible and wise strategy would be taxing petrol and diesel another $1 per litre and using proceeds to augment grid and interconnections and provide widespread charging infrastructure. Plus redesigning cities with decent long term bike transport infrastructure. If we have a viable electric transport system when the oil market collapses in a few years it will stand us in good stead. (The oil market will collapse because it is now devouring rather than augmenting the global system)

  • DJR96

    The refineries shouldn’t be too worried for some time yet. Fuel for aircraft will be needed for a loooong time yet. If you think the auto industry is slow to transition, the aeronautical industry is glacial by comparison.

  • Ian

    A country that mainly imports manufactured goods, especially EV, will just have to follow the trends in other countries that do have a little gumption to do something about the problem of expensive electric vehicles. EV are expensive because the battery packs are exceedingly expensive. We are all waiting with bated breath for Tesla to finish constructing their big factory and save the world. Lots of companies make fantastic ICE cars and it’s not a huge leap to make the lithium batteries to power electric versions of them. We already know that a family sedan would require roughly a 50 KWH battery pack and at a wholesale price of $150KwH this would cost $7500. Well within the goodwill price premium over ICE vehicles people would be prepared to pay. Why there isn’t a huge expansion in battery production beats my thinking.

    Many innovative methods of hobbling ICE vehicle production and usage and promoting EV production and uptake can help speed the transition.

    I would favour the development of Australian battery factories to cover our EV battery requirements.

  • Tony Goodchild

    Fuel cells, not a practical proposition yet, are a possible aternative power source based on renewable energy. They seem to allow longer distances between refuelling, which would always be rapid. The fuel could be methane, safer than a gaseous fuel, but still containing 25% hydrogen by weight. It can theoretically be synthesised from CO2 (e.g. from burning biomass fuels) and hydrogen produced from low-carbon electricity.
    But how soon will fuel cell cars be commercial? Some say 20 years–or can we wait before buying a battery-powered car?

    • Calamity_Jean

      “But how soon will fuel cell cars be commercial?”

      Never. The process of synthesizing the fuel and storing it in the fueling station and in the car introduces additional money and energy costs that make fuel cell cars much more expensive to buy and to run than battery cars. The very slight time saving of using synthetic fuel rather than batteries isn’t worth the additional cost.

      “The fuel could be methane, safer than a gaseous fuel….”

      Methane IS a gas. Were you thinking of methanol?

      • Tony Goodchild

        Embarassing substitution of methane for methanol–I blame the spellchecker 😉
        Thanks for your considered reply. I had been thinking that fluid fuels (including piped gas and methanol) contained about twice as much energy at the point of delivery than electicity sythesised from the same amount of fuel, because of generation and transmission losses. The availability of renewable electicity as a fuel (for either methanol production or battery-charging) may alter this ratio, perhaps, especially if the electicity is produced locally to reduce transmission losses. Also I thought the weight of fluid fuel plus tank for travelling 100 km would be less than the weight of a rechargeable battery needed for the same distance. I’m willing to be convinced.

        • Calamity_Jean

          I’m sorry it took me so long to get back to you, but my husband was hospitalized for a heart problem from Saturday through Tuesday, so I was a little distracted.

          You are absolutely correct on this point:

          “I thought the weight of fluid fuel plus tank for travelling 100 km would be less than the weight of a rechargeable battery needed for the same distance.”

          This is THE main reason why electric cars aren’t more common today.

          Unfortunately you are wrong on your other point:

          “I had been thinking that fluid fuels (including piped gas and methanol) contained about twice as much energy at the point of delivery than electicity sythesised from the same amount of fuel, because of generation and transmission losses.”

          If by “at the point of delivery” you mean “at the fueling / charging station”, sorry, no. Depending on how it was made, methanol might have somewhat more energy content that electricity from the same amount of fuel, but nowhere close to twice as much. Transmission losses just aren’t that large. And fuel cell cars are electric cars that generate the electricity on-board using the fuel cell, so you’d have generation loss there, just beyond the “point of delivery”.

          In addition, methanol in automobile-fueling quantities doesn’t exist today. Using it, or any other liquid fuel that isn’t gasoline/petrol or diesel, would require setting up a new industry to extract and refine or to synthesize it. It would have to be transported to the fueling station separately and dispensed in a way that would prevent it from being accidentally put into a gasoline or diesel burning car, and prevent gasoline or diesel from being put into the methanol (or other) fuel cell car. Simply not requiring the pressure vessel that hydrogen does isn’t enough of an advantage. By contrast, in advanced societies like Australia or the US, electricity is already available everywhere that isn’t extremely rural.

          • Tony Goodchild

            Jane, thanks for your reply, which I accept is relevant for the near future. On the other hand, fuel cells may not be available for many years yet.

            One hopes that renewable electricity will eventually become less expensive than fossil-fuel (e.g. gas) derived energy, quite apart from causing less greenhouse gas emission. I was also speculating that fuel for fuel cells can be synthesised using electricity, water and by-products.

            But (looking at things differently) I’m always surprised by the current cost of domestic electricity, which (per kWh) can be 4 or 5 times more expensive than domestic piped gas. Even if one generated electricity at home from piped natural gas with a modest efficiency of 30%, gas would still be the
            cheaper option–and there would be the bonus of “waste” heat to use during cold weather. Are we being overcharged for electricity, or is it more efficient to deliver energy as a gas (or liquid?) than as an electric current?

            Sorry to hear about the medical problems; I hope that your husband’s condition has improved.

          • Calamity_Jean

            Solar and wind electricity are already cheaper than electric power from burning gas, at the generators’ level. For reasons I don’t understand (and don’t really care about, since I’m in the US) the retail cost of electricity as paid by individual customers is much higher in Australia than almost everywhere else in the world. I suspect that the answer to your question

            “Are we being overcharged for electricity….?”

            might be “Yes”. Where I live in Chicago Illinois, electric power costs US $0.12 per kWh.

            It’s Jean not Jane; same letters, different order. My husband was born with a defective heart valve, so his condition won’t improve until he has surgery to replace the valve, scheduled for October 19. The best I can say is that he’s stable and not in immediate danger.

          • Tony Goodchild

            Thanks for your reply. The cost of electricity is, indeed, high here in the UK. Even if its cost reflected the quantity of greenhouse gas released it would still be expensive. At our house we pay the equivalent (including standing charge) of US$0.235 per kWh for electricity and per US$0.0443 per kWh for piped gas, a ratio of 5.3:1. This was the lowest market price last January for ordinary gas and partly-renewable electricity. I would like to know the experiences of other readers of this thread.

          • Calamity_Jean

            “I would like to know the experiences of other readers of this thread.”

            I’m afraid that you and I are the only ones left at this party.

      • Tony Goodchild

        About changing from a petrol-powered to a renewable-energy powered car:
        Every car requires considerable embodied energy and mined resources for manufacture. I don’t plan to travel more than a few thousand km a year. If I buy a second-hand petrol car (that would otherwise be scrapped) I can avoid the greenhouse gases (GHG) released during manufacture at the expense of increased GHG
        released during use. I there an annual travel distance above which electric cars are justified on a GHG basis? (Before considering urban pollution).

        • Calamity_Jean

          “I there an annual travel distance above which electric cars are justified on a GHG basis?”

          I’m sure there is, but I don’t know what that distance is.

        • neroden

          0 miles is the correct distance. However, if you’re going to travel a short distance, buy a used electric car which nobody wants like an early Nissan Leaf. 🙂

          Better yet, do a conversion of a gas car.

  • thecavedweller

    Love my electric car! I’ll never own anything else, mostly because they are brilliant to drive. There’s no going back once you’ve owned one.

  • neroden

    It’s basically impossible for oil prices to drop to the point where gasoline is cheaper than solar-generated electricity, particularly in a sunny place like Australia.

  • Carl Raymond S

    The bad assumption is that EVs cost more. It is true this year, and perhaps for one or two more, but the tipping point occurs when the Model 3 and the gigafactory hit max output. From that point on, it’s iPhones to Nokias. 2035 is a rediculous year to quote, the transition will be ancient history.
    The trick to visualising this is to imagine going the other way, from a world where all cars were battery powered, to this incredibly complex internal combustion engine. “No way”, people would say. “You’ll never get the cost of an engine under the cost of a simple battery”.

    Edit: Another way to gain insight is to look at how quickly electric buses are replacing diesel buses in China. For any bus operator owning a diesel bus, he/she can trade it in on an electric. The savings in diesel alone pay the lease cost. Reduced maintenance and a better ride for customers are bonus. It’s a no brainer.