If you’re thinking about buying an electric car, you’re in good company.
In 2021, nearly 10 per cent of new cars sold globally were electric. In some countries, that figure surpassed 70 per cent.
But in Australia, EV sales represented just two per cent of new car sales.
The difference between Australia and other countries isn’t down to demand. Polling shows 54 per cent of Australians are considering an EV as their next car.
The problem is supply — there simply aren’t the EVs in Australia to sell.
How do you expand supply?
The most efficient way is by setting fuel efficiency standards.
Climateworks analysis as far back as 2014 shows such standards would significantly increase the number of EVs on the roads.
But conversations about standards have languished without political will. As a result Australia is one of the only OECD countries without them.
In 2017, Climateworks recommended Australia adopt standards of 95g CO2/km. That number is still relevant today as a jumping off point for the conversation about fuel efficiency standards that would make Australia a globally competitive market for EVs.
What difference would fuel efficiency standards make in Australia?
Car manufacturers have pushed Australia down their priority list when deciding where to ship their new EVs.
Currently, when making these decisions, manufacturers prioritise countries that will penalise them if their product doesn’t meet certain fuel efficiency standards.
Former managing director of Volkswagen Australia, Michael Bartsch, said that despite Australian demand for electric VWs, the company will prioritise selling their EVs in Europe, America and China so long as ‘there’s no legislative environment that makes it imperative to bring the vehicles to Australia’.
As a result of this lack of supply, Australians miss out on the savings benefits of EV technology.
The purchase price of EVs is falling globally, opening up EVs as an option to more buyers. In many countries EVs from Nissan, Ford and others are on par with the cost of new petrol or diesel vehicles.
But the cost of a car doesn’t end with its purchase price. As fuel prices rise so too does the cost of owning and operating a petrol or diesel vehicle.
An Australian who purchases a petrol or diesel vehicle today because there are no EVs available, will pay an extra $19,500 in fuel and maintenance over a15-year span.
Put another way, someone who buys an EV instead of a petrol or diesel car will save more than $1,300 per year in running costs.
What else can be done to increase Australia’s supply of EVs?
Fuel efficiency standards are the most direct way of increasing supply — but there are others.
Government and corporate fleets, which represent a large portion of car sales in Australia each year, could accelerate efforts to incorporate EVs. These vehicles enter the second-hand market after just a few years.
Easing restrictions on the ‘parallel’ import of EVs would also get more second-hand vehicles into the country.
As with many new technologies, governments can play a key role in shepherding a market through its nascent stages. Standards and financial incentives bolstered household solar panel uptake and are being slowly phased out to allow the market to operate independently.
Most Australian states and territories offer upfront incentives or waive stamp duty for EVs. The Australian Capital Territory was the first Australian jurisdiction to establish EV incentives and now boasts the highest uptake in the country, at 5 per cent of new vehicle sales. The federal government has so far focused on awareness raising and charging infrastructure, but it has not yet set a clear national pathway for the EV transition.
In our latest report, Accelerating EV uptake: Policies to realise Australia’s electric vehicle potential, Climateworks sets out a comprehensive policy package that would support the EV market transition through its early stages into a well-established marketplace.
The opportunities for both cost and emissions savings for Australians are substantial. By getting the right policies in place, governments can support a smooth transition to a zero-emissions future.