The global shift to electric vehicles (EVs) is well underway, but Australia’s EV uptake lags behind this trend. In 2021, just two per cent of cars sold in Australia were EVs, despite half of all Australians seeing their next car purchase as an EV. The major barrier to uptake is low EV supply to Australia.

Without addressing supply, consumer demand cannot be met and EV uptake will be severely limited. There are also significant savings to be gained by increasing supply.

The first step to unlock supply is setting fuel efficiency standards. These standards need to be competitive in the global EV market where EVs are prioritised for markets with strong standards. Climateworks Centre suggests setting this in the order of 95g CO2/km by 2024, and reducing to 0g CO2/km by 2035.

While addressing supply is a crucial starting point, a comprehensive policy package is needed to ensure a fast and smooth transition for individuals and businesses. Coordinated and sustained policy support will help the EV market transition through its emergent stages into a well- established marketplace.

By getting the right policies in place, Australia can lift its ambition further, resulting in additional savings. Climateworks analysis shows that under a modelled decarbonisation scenario aligned with limiting global temperature rise to 1.5°C, EVs make up 76 per cent of new vehicle sales by 2030. The analysis presented in this report shows that raising national ambition to 76 per cent will unlock $20 billion in vehicle running cost savings and 24 mega tonnes of carbon equivalent (MtCO2e) emissions savings, compared to Australia’s current projected uptake. Globally, there is momentum for EVs to make up 100 per cent of new cars sold by 2035. This would allow 15 years for internal combustion engine (ICE) vehicles to transition out of the fleet in time to reach net zero emission in 2050. These goals, and their positive effects, are within reach with the right policies in place.

The three steps to accelerate EV uptake in Australia are:

  1. Unlock supply, which is currently the main barrier to EV uptake in Australia and critical to meet uptake targets. The best tool to address this is setting federal fuel efficiency standards. Climateworks suggests setting this in the order of 95g CO2/km by 2024, with a trajectory of reducing to 0g CO2/km by 2035, and regular reviews to ensure it is set at the right rate to increase supply and at the pace with global trends.
  2. Implement a comprehensive policy package that increases supply, sets strong uptake targets, stimulates demand and plans ahead for a smooth transition for individuals, businesses and fleets while maintaining a fair and efficient transport system throughout.
  3. Set ambitious EV sales targets to provide certainty for the market and gain additional savings. Raising Australia’s ambition to 76 per cent of new vehicles by 2030 and 100 per cent by 2035, will benefit consumers and the climate.

This report sets out steps to accelerate and support Australia’s EV transition, starting by addressing supply. Section one of the report outlines how Australia is tracking against EV uptake globally and against existing targets. Section two focuses on the critical component of supply and policies to increase the number of EVs coming into Australia. Finally, section three sets out how supply policies fit within a broader EV policy package designed to set up a smooth transition to a zero-emissions future.

Editor’s note: The report was updated on 18 August 2022 to clarify the government EV uptake projections, and to update a figure pertaining to emissions from a single ICE light vehicle.

Aligning to a 1.5 degree Celsius pathway will enable even greater cost and emissions savings for Australia. Note on aggregated target: NSW, VIC and QLD have targets of 50 per cent of new light vehicle sales to be zero emissions by 2030. The ACT has a target of 80-90 per cent by 2030. These official commitments cover 80 per cent of the national EV market, and are equivalent to Australia committing to achieve 46 per cent of new car sales by 2030. Other states and territories are seeking to make EVs the dominant vehicle type by 2030, without yet setting formal targets. For those without targets, the national projected EV uptake of 26 per cent by 2030 has been used as the default target.