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How to fix Australia’s embarrassing failure in electric vehicles

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Australian governments should “learn from the successes of other countries” and introduce policy incentives to support electric vehicle adoption, a new report from The Australia Institute has recommended.

This would not only align governments with popular voter opinion – 64 per cent of all Australians, as the chart below illustrates – but provide a quick, low-cost way to vastly improve air quality, slash national carbon emissions, and cut household spending on transport.

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That is the key message from The Australia Institute’s new report, released this week, titled If you build it, they will charge: Sparking Australia’s electric vehicle boom.

The report, authored by Dan Cass and Matt Grudnoff, reaffirms what we already know: that Australia lags embarrassingly – and inexplicably – far behind the rest of the world in the transition to electric vehicles.

This is illustrated in the chart below, which readers should note represents a comparatively “bumper year” for EV sales in Australia, with total sales actually falling, year-on-year, since 2015.

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The global automotive transition – which is well underway in countries like Norway, India, the UK and China, thanks to strong policy levers and clear transport emissions targets – is widely considered to be as inevitable as the current shift from fossil fuel based electricity networks to 100 per cent renewables.

That is because it is part of the global solution to limiting global warming. But as with renewables, electric vehicles are also highly popular among consumers, because they are smart, clean, easier to maintain, and will ultimately cost consumers less, particularly as costs of batteries continue to fall.

The report cites Bloomberg New Energy Finance projections that in some markets electric vehicles will be cheaper than conventional fuel vehicles by 2022, even without subsidies or a global carbon price.

But that doesn’t let Australia’s politicians off the hook.

“Polling shows almost two thirds of people (64 per cent) want government incentives to encourage people to purchase electric cars, including a majority of supporters of all the major parties,” said Grudnoff, who is a TAI senior economist. (See chart below)

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“Half of all people agree that people purchasing electric vehicles should pay less tax than those purchasing vehicles that run on petroleum.”

But while data shows that Australian consumers are just as keen as their international peers to embrace electric vehicles, governments appear to have stalled on the grid, failing to use policy to clear the three main barriers to uptake: cost, range anxiety and lack of a decent market.

So what should they do?

The TAI paper recommends four policies to help Australia transition to electric vehicles: Exempt all electric vehicles from Luxury Car Tax; a benchmark for vehicle emissions with penalties paid by vehicles depending on how far above the benchmark they are and subsidies for vehicles depending on how far below the benchmark they are; targeted incentives to encourage the development of EV charging stations in strategic locations; and, for a limited time, to allow electric vehicles to use bus and car pool lanes.

And if adopted, the benefits will go well beyond boosted poll ratings, says the report.

“If governments act now to support the development of the market, financial and environmental benefits will flow,” it says. “Besides saving consumers money, electric vehicles offer great societal benefits: cleaning up air in cities, reducing greenhouse emissions and providing economic stimulus in manufacturing.

But one of the biggest pay-offs would be for Australia’s carbon budget.

“Emissions from vehicles are on the rise and Australia currently has no serious policy measures to curb their growth,” said Grudnoff. “If we have any chance of meeting our Paris targets then the government needs to look at a board range of policies that impact on lots of different sectors.

“Transport is the third largest sector contributing to Australia’s greenhouse gas emissions and there are currently no serious policies to curb these emissions.

According to the report, a fully-electric passenger car fleet would see tailpipe emissions from light vehicles, which produce considerable local pollution and represent 10 per cent of Australia’s
total carbon emissions, fall to zero.

Even in a worst case scenario, the report adds, where EVs used coal-fired power from the grid, this would be less emissions intensive than the average efficient light vehicle.

“All up, with their potential to reduce air pollution in urban areas, curb carbon emissions from electricity and the transport fleet, save consumers money and improve vehicle safety standards, electric vehicles should be an easy sell in Australia,” the report says.  

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  • Roger Franklin

    Sophie – a great article with 64% of people already at destination #Peaklogic, however the political bus with related media on board is stuck at #PeakStupidity with delays expected to continue for the foreseeable future.

  • Chris Fraser

    It’s meant well, but in spite of rational popularity, why hasn’t it happened ?Exhibit A is this awful neoliberal government that considers support for manufacturing and creation of jobs to be an intrusion into market forces. Though they are quite happy to hive off skilled workers to other industries at huge cost.Exhibit B is fuel tax excise. What a rort. If EVs take off we’ll need to charge Google a profits tax to make up for loss of income.Exhibit C is the right wing luddite rump of the Coalition, standing right near the EV works and armed with lots of spanners.

  • Ian

    I’d love to see buses changed to electric as a top priority. Inner city streets and transit stations will be much quieter.

    • Kevfromspace

      Sydney Airport has a trial running with a few electric buses, made by Chinese EV giant BYD. I drove past one today and they are extremely impressive. Definitely the future of mobility.

      • ray johnson

        the stupid part is this that skybus in melbourne does not look likely to change so why should the transit buses is the way it is being received

    • David Osmond

      love to see electric garbage trucks too – their frequent stopping and starting seems perfectly suited to electrification.

      • Miles Harding

        I’d like to see an electric garbage truck. Sadly, none in WA. This is a perfect application for electric drives.

  • Ken Dyer

    The Government receives billions of dollars in excise tax, most of which does NOT go to improving roads but to make the government bottom line look better. No matter what happens, EV’s would reduce that tax.

    The lesson is this, never stand in the way of a Coalition Government (or a Labor one for that matter) and a dollar of taxation, particularly when Joe Bloggs in the street pays it and the big end of town can get fuel tax credits. That is the reality today.

    However, the eventual rise of EV’s cannot be denied.

    By 2023, battery costs will reduce from US$300 to US$100 at the same time increase range, new vehicle manufacturers will come into the market (eg Dyson), and these will be nimble unlike the Fords and GMs of the world. Prices will drop below the luxury car threshold (currently 33% over $75526), Brands such as Volkswagen will drive this, and autonomous vehicles will become a commercial reality.

    Each litre of fuel costs 40 cents in fuel excise plus GST. Therefore, every litre of fuel @$1.25 per litre includes 53 cents in excise tax. Do the sums for your own ICE vehicle. When this becomes well known (it is an issue that is kept very quiet in the media), and people understand they could, (similar to solar PV) save thousands of dollars in fuel and running costs, and given a reasonable and affordable EV choice, will quickly make the transition, and probably without government subsidies.

    • Ian

      Every litre of fuel landed in Australia costs about 60c to the country’s bottom line . This could be money spent on other goods and services in Australia. Considering government scoops 10% GST on everything and then gouges more tax on salaries and profits. So at the end of the lifecycle of the 60c not lost to importing fuel the government would stand more to gain than the excise it gets from that Litre of fuel. Maybe someone can put numbers to this idea because the tax on fuel has got to be an important barrier to government doing anthing about promoting EV.

      The motor car has changed urban planning to such an extent that the majority of people live in suburbs that cannot be serviced effectively by public transport and are reliant on cars. Whether this is a good thing or bad thing may need serious public debate. An advantage of suburban living is that distributed solar is viable – lots of roofs on suburban houses. Another advantage is the general happiness of people. The disadvantages include: the consumption of valuable land which could be used for conservation or agriculture , the widely distributed network of services such as sewage and water, and congested roads wasting everyone’s time. If petrol tax is lost to EV then revenue can be extracted from rates. Here are some ideas of variable rates. More expensive rates applied to 1. properties further from public transport hubs. 2. Properties closest to the beach or coast line. Cheaper rates for high density city properties – if that’s a desirable outcome. Or for rural towns. In other words tax on transport has always been about modifying people’s behaviour – fuel excise favours those that take a bus- why not change the source of revenue in a way described above to achieve similar outcomes?

      • Ken Dyer

        Ian, I will preface my reply with a reference to Tony Seba. What follows is gleaned from his Youtube presentations this year.

        Some points to consider regarding electric vehicles:
        There will be 12 li-lion battery megafactories by 2020. Batteries have reduced in price 20% each year since 2016.
        ICE cars are 17-21% fuel efficient;ev’s are 90-95% efficient
        ICE cars have 2000+ moving parts; EV’s have 20.
        ICE cars are now more expensive to run and maintain. In 2018, EV’s will overtake that and continue to decrease. Ask yourself, Do I want to spend $10000 over 5 years or $1000? I know your answer. In 2017, a Tesla cost US$35000 with a 350km range. It will only improve.

        The biggest technology disruption will come from autonomous vehicles. Over 33 companies are investing in this technology, and within the next 5 years full autonomy will be achieved. An engineer in the USA built his own fully autonomous car and loaded the software specs up to the Internet. Anybody can build their own now. The cost of computing power is about US$100.

        Currently, cars are used about 4% of the time and the rest of the time they are parked. Think of Transportation as a service (Self driving Uber is a reality now). Your cost of transportation drops as does your need to store cars, freeways, parking garages and so on. Transportation will be up to 10X cheaper. You will see the collapse of the used car market, and the new car market will shrink by 70%. They will be giving cars away!

        Tony Seba predicted that by 2030, 95% of all vehicles will be A-EV, and the US car fleet will shrink by 80%. The same will happen in Australia, and the Australian Governments and the oil companies and the new and used car dealers and all the other players in the ICE industry are shit scared. That is why they are staying very quiet, and also the reason why they are hedging on solar. Its cost is reaching a point where the cost of producing rooftop solar is less than the cost of transmitting it, and when that happens, all the coal fired power stations might as well close.

        All of this will happen in the next 12 years. I hope I live long enough to see it.

        • Ian

          Hard to predict the future, but your Tony Seba may be right. 12 megafactories by 2020. Megafactories are not going to cut it. We need battery factories 1000 times bigger, such as tesla’ s Gigafactory. Unless of course you ment 12 factories the size of Tesla’s gigafactory. If that’s the case, then whoever is building them better hurry up because it’s only 3 years to 2020. As for car sharing, that may be very useful in big cities where parking is at a premium. A variety of transport options in the city would be very useful ranging from trains, trams, light rail, busses, driverless cars, Uber and traditional taxis , bicycles, scooters etc etc.

          The most criminal waste of oil by humanity up to this point has been using cars to commute. Cubic miles of oil every year just to get to a boring office job and back.

  • phred01

    Obvious reason for the Govn’t not being enthusiastic about EV’s……they loose fuel tax. They may have to go back to the pole tax to make up the short fall

  • Greg Seeney

    I’d have to say absolutely no to the suggestion of allowing electric cars in bus lanes, even in the short term. The reasons for getting people on to buses go beyond emissions reductions and allowing this would just encourage more car traffic into our already congested city centers, causing flow on congestion elsewhere, reducing bus performance and possibly encouraging other bus users into their non-electric cars as a result of the reduced bus performance.

  • Les Johnston

    The Federal Government has stalled for 10 years on bringing in tighter air pollution regulations for motor vehicles. If the Federal Government replaced regulations for Australian new vehicles with Euro ones, there would be an overnight drop in prices for hybrids, and EVs etc. Small model numbers do not get brought into Australia because of the special testing. No need for subsidies, just remove special regulations.

  • ray johnson

    best question is this can someone/group coordinate a campaign to get signatures of about 10% of total voting community to get a clean energy vehicle policy/law introduced because no matter how much big business throw their money at ads and governments to kill things off the government that is in power wants to stay there and it is up to us people to change the way that act by having them listen to us or they get ousted to a person/party that is willing to give the people what they want e.g. greens/inder/labour etc.

  • LAKIN

    Whether or not our government makes any responsible moves to support the use of EVs in Australia, the people will be forced to make the change anyway. We no longer have even a hint of an automotive industry and most global auto manufacturers (whether they like it or not) will soon HAVE to produce large numbers of EVs in order to to be able to sell their vehicles in the majority of more enlightened countries.

    This will force down the cost of producing EVs and ICE vehicles will eventually become unprofitable for them – the opposite of the current situation. What a pity Australia’s leaders are continuing to do everything in their power to go against the tide, thus making it much more difficult for Australian businesses to become part of the future.

  • George Darroch

    Some (*any*) emissions standards in Australia should be a minimum call. Beyond this, a sales requirement (eg. 10% of sales as EVs for any major importer by 2019, with a moving floor) would be an excellent instrument.

    Australia also has a nascent EV sector. These are commercial vehicles, but they should be supported as much as possible by our state and federal governments.

  • Faulco Pete

    A useful article and discussion. But I would suggest that one key aspect was not covered in either the article or the discussion (unless I missed it), viz fuel supply. We are fast approaching the point at which we will be entirely dependent on imported petroleum products. From then on, any disruption to the supply lines will render chaos in Australia, with disastrous consequences in every facet of our lives (mostly in transport, farming and petrochemicals). With an electric economy, all our power is locally sourced, giving us enormously improved security (on top of the balance of payments benefit).

    • Roger Brown

      Australia has only 2 weeks supply of fuel , if something happened to our IMPORTED FUEL supply. EV’s have their fuel supply on their house roofs .

    • lin

      This imported fuel does nothing to improve our balance of trade either. The move to EV will be great for our finances and our security.

  • Miles Harding

    Great lead, Sophie.

    I would like to extend this a little with my perspective as an EV owner and member of the Australian Electric Vehicle Association.

    We have definitely seen a change in consumer questions at public information events. We are getting a good number of ‘converts’ that are as knowledgable as we are these days, it’s just that they haven’t gone electric yet.

    We have observed a corner beint turned as public charging infrastructure is starting to appear in some volume, although home overnight charging remains the clear best option through sheer convenience and control over the energy source.

    Total lack of state and federal government incentives is only part of the problem. The biggest issue seems to have been the dealer network – the dealers hate electric vehicles and refuse to sell them. There are several reasons, principally because they are more expensive (the dealers gouging didn’t help), so a tougher sell in the first place and then there is virtually no after sales ‘service’ revenue.

    I see this changing and it’s likely the dealers will be forced off the fence within the next year as a few have already blinked. Tesla has disrupted the luxury car market outselling several up-market marques, even in Australia. I would expect Tesla’s model 3 will do the same in the middle market causing a panic in car dealer land as they see this upstart stealing their most profiable market segment.

    My experience is that most EV owners have also embraced rooftop solar and pride themselves on having very low CO2 emissions from their personal transport.

  • Brunel

    How to fix it? Get Tesla, Toyota, and VW to agree on a HVDC plug.

    • Miles Harding

      That may have already happened and its called “CCS type 2 Combo”.
      This plug combines the control pins of a type-2 AC socket and two big DC pins to allow 50kw charging. Most car makers are going this way now.

      The good thing about a type-2 connector is that the ‘AC’ part can charge from 3 phase sources. If your car is a Renault Zoe, it will be able to charge at 22kW from a 30 amp three phase outlet (the most common sort).
      This translates to between 150 and 200 km or range for each hour of chargng. While not as fast as a super charger, there are already 10,000’s of potential charge points around in both city and country areas.

      • Pixilico

        Thx for your clarifying reply.;-)

  • Roger Brown

    Could try spinning to the LNP , that EV’s would have people charging at night time and BURNING COAL ! to charge their batteries .