Electric vehicles and “robo-taxis” could deliver $92bn boost to Australia economy

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New analysis finds shift to EVs and driverless autonomous vehicles could boost Australia’s GDP by up to $92bn by 2050, by boosting productivity and cutting insurance costs.

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The shift to electric and autonomous vehicles in Australia could deliver a nearly $100 billion boost to Australia’s economy, a new report has found, as innovative technologies and mobility options like “robo-taxis” drive productivity, and slash the costs of pollution and road accidents.

The analysis, by L.E.K. Consulting, based modelling from Cadence Economics, finds that uptake of EVs could see the internal combustion engine fall to as little as 17 per cent of Australia’s car market by 2050, compared with 99 per cent in 2017.

In their place, cars powered by electricity, driverless cars and personalised transport accessed via smartphone apps would become the norm.

These sort of numbers gel with other forecasts of EV uptake in Australia, including the federal government-backed report from last year that saw EVs accounting for massive 90 per cent of all cars and commercial light vehicles by 2050.

That report – commissioned by the Clean Energy Finance Corporation and ARENA, and based on modelling by independent research group Energeia – forecasts this major transport sector disruption starting as early as 2021.

But the eye-catching takeaway from the L.E.K. report is that even such a “dramatic shift” to EVs and personalised transport could be a big win for the economy, delivering an estimated $A62-$A92 billion boost to gross domestic product (GDP).

The report expects about half of this increase in GDP – between $32-44 billion – to come from improved work-force participation, simply by making it easier and quicker for people to get to work.

The report notes that new technologies and business models such as car sharing and ride sharing/pooling are already changing the way Australians travel and use traditional transport modes such as taxis and private cars.

And it says further innovations, such as autonomous vehicles (AVs), electric vehicles (EVs) and on-demand transport are likely to bring even more dramatic shifts.

Chief among these innovations, the report says, would be so-called robo-taxis, which according to the report could account for between 25-45 per cent of all autonomous vehicles in Australia by 2050, the largest part of the AV sector.

Such a big fleet of driverless cars in Australia – which has so far only managed to distinguished itself as a laggard in terms of global EV uptake – might seem far-fetched to some, but certainly not to Tesla founder and CEO Elon Musk.

Earlier this year, Musk told shareholders and analysts that, within 12 months, his California-based company alone wouls have “over a million cars with full self driving computer, hardware, everything.”

A major part of Musk’s plan is to have a fleet of self-driving electric “robo-taxis” that it wants to have operational by 2020.

And while Tesla claims to be well ahead of the pack on AV technology, it is not alone in its believe that it will one day feature heavily in the mainstream of road transport.

Ride-sharing pioneer Uber is also working hard in the field, in June unveiling its third generation self-driving technology, as well as a collaboration with  Volvio on its XC90 SUV – the Swedish auto-maker’s first production vehicle to roll off the factory floor with autonomous technology ready to go.

Internet giant Google is also in the thick of the action, while its Chinese counterpart, Baidu, last year signed an agreement with major global carmakers, Volvo and Ford, to help put China at the centre of the massive autonomous electric car market push.

Meanwhile, the other big economic benefit from the shift to EVs and AVs in Australia would come from lower vehicle accident rates – and thus lower insurance costs – which the report estimates could increase GDP by between $30-46 billion by 2050.

“New mobility innovations promise a range of social and environmental advantages, making travel simpler and cheaper, reducing pollution, and cutting road accidents,” said Mark Streeting, a partner at L.E.K. and the author of the report.

“The analysis suggests there could be measurable economic benefits for Australia from consumers adopting new mobility trends and technologies.”

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