23 September, 2020 By: Ruth Callaghan
While many countries are finding smart ways of getting more people into electric cars, in Australia, electric cars are still prohibitively expensive.
Electric vehicles (EV) are cleaner, quieter and cheaper to maintain, and while the number on our roads remains low, the range of electric cars on offer for Australian motorists is slowly increasing as their prices are slowly decreasing.
Today one in every 1400 vehicles is either an electric (EV) or battery electric vehicle (BEV), according to the latest Australian Motor Vehicle Census, an improvement on previous years but still barely a blip on the highway.
And while the number of new electric cars registered in Australia more than doubled last year, figures from the WA Department of Transport show there were still only 1100 electric cars registered in WA as of March.
Across the globe, however, the demand for electric cars continues to rise.
Is it time for Australian government incentives to spark up the local EV market, and how could those incentives be applied?
“Low and zero emission vehicles such as electric cars have a clear role to play in helping Australia transition to cleaner transport and reducing our everyday emissions,” says RAC general manager Public Policy and Mobility, Anne Still.
“Governments in Australia should be exploring a range of incentives and tax breaks that reflect electric cars' reduced level of emissions, as well as the comparatively higher cost to purchase, to accelerate uptake of these vehicles.”
Still says the shift to reducing harmful transport emissions continues to be a challenge for Australia, with our cars on average twice as dirty as those required by new European emissions standards.
And while many countries have set dates to phase out the sale of internal combustion engine (ICE) vehicles, there’s little clarity around how such a target could be achieved in Australia.
At the same time, the interest in electric cars continues to grow, Still says, but is being held back by inconsistent policy and measures.
“A recent RAC survey revealed that one in two Western Australians would consider buying an electric or hybrid vehicle for their next vehicle purchase,” she says.
“The appetite is there — we just need to provide the right regulatory environment that supports and even encourages that purchase.”
EV interest continues to climb
After decades of steady growth in passenger car sales, 2017 appears to have been the year purchasing peaked.
Since then we’ve seen a steady decline in global sales and, due to COVID-19, this year’s sales figures are tipped to be slashed again.
But electric cars have powered on.
The International Energy Agency points to strong EV sales in Europe in early 2020 to support its forecast that electric car sales could actually do better this year than last and achieve a record share of the car market of more than three per cent.
The strong sales rely not just on interest in electric cars, but also on the incentives and regulation governments have introduced.
A little incentive goes a long way
Around the world, many countries have engaged in either push or pull incentives — pushing people towards electric cars and other low-emission vehicles by making it less attractive to own higher-emitting cars, or pulling people into the market with price subsidies, reduced on-road costs and tax breaks.
When those incentives are wound back, however, sales can slump.
China is a good example, as the country that makes up about half of the world’s EV sales, and where electric cars represent about one in every 20 cars sold.
Chinese sales have been fuelled by a range of incentives that exempt electric cars from the rules applied to many other vehicles, such as restrictions on registration and driving bans that apply on certain days or in certain megacities.
The country is pushing for electric cars to be a quarter of new car sales by 2025 but its bid to phase out subsidies last year nearly derailed that goal, with the local market suddenly contracting.
In April this year, the decision was reversed, not only to keep sales moving but to address China’s wider economic downturn from coronavirus, and incentives will now continue in some form until 2022.
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Similar issues have been seen in other countries that have tried to pare back EV incentives. Germany’s incentives had been due to end this year but were extended last year after the country failed to meet its target of one million electric cars.
The German government’s response to coronavirus has seen the subsidy doubled — it’s now equivalent to a A$15,000 incentive on a car costing A$60,000.
In the Netherlands, a new discount of EUR4000 has been launched to support local sales, although for a capped number of private cars.
Often, when it comes to EV incentives, subsidies also go hand in hand with a range of supporting measures.
Germany’s EV incentives include reduced road taxes and registration costs, free parking in some towns, a discount on VAT (the German equivalent of GST), subsidies for car manufacturers, support for service stations rolling out charging stations, and a cash bonus for employers or businesses that install fast-chargers on site.
In Norway, where around 70 per cent of new cars purchased are electric cars, the sale of ICEs will be banned by 2025.
Its incentives range from discounted ferry fares to reduced parking costs, special access to bus lanes and reduced road toll fees.
European countries also operate under increasingly tighter vehicle emissions regulations which encourage manufacturers to sell more lower emissions vehicles.
“Setting the right regulatory environment can help create an impetus to change, for manufacturers and consumers alike, increasing supply and demand for lower emission vehicles,” says Anne Still.
“There’s a range of possible options which could help incentivise uptake in Australia and WA, including those that provide direct and in-direct financial support such as stamp duty, registration and parking discounts.”
Australia lags on EV support
Yet despite the raft of policy measures elsewhere, Australia stands almost alone in offering no Federal EV targets, standards or incentives.
We lack the tough vehicle CO2 emission standards applied by other countries that make it less attractive to import high-emission vehicles into those countries, but also offer none of the financial enticements that could sway consumers to buy an electric car.
Thanks to action at the state level, that position could finally be changing.
The ACT has recently set a target to have 100 per cent of its government fleet as electric vehicles by 2021.
Queensland is developing its network of EV fast-charging stations and joins Victoria in reducing stamp duty for electric vehicles.
The NSW Government announced in March that it will triple its purchasing of electric cars and hybrid vehicles to around 900 a year and also incentivise fleet owners to purchase EVs, with the goal of these moving into the private market within a few years.
In WA, a long-awaited report released in March outlined ways that fast charging could be supported by the State Government, addressing a key concern for many drivers: range anxiety.
Anne Still says the fear of running out of charge acts as a disincentive for drivers but knowing there are enough fast charging stations along the way combats that concern.
“You need the charging infrastructure to help create the demand, but you also need electric cars on the road to demand the infrastructure, so it can be a bit of a chicken and egg dilemma,” she says
“It’s one reason why we developed the RAC Electric Highway®, which is a network of 11 publicly accessible EV fast-charging stations between Perth and the South West.
“Having a broader EV charging network is really important enabling infrastructure for EV drivers today and tomorrow.”
WA still weighing up options
Back in 2018, Main Roads commissioned researchers at the University of Western Australia (UWA) to look at how a state-wide electric charging network could be delivered to support EV expansion.
The researchers found that charging stations could be installed roughly every 200km, from Eucla to Kununurra, at 61 locations for an estimated cost of $23.6 million.
An extra $5 million would increase the coverage and make all the sites faster charging, while even a pared-back network with slower charging speeds could be developed for just over $18 million.
The State Government has not indicated whether it will take up the recommendations.
Lisa Harry from the Department of Water and Environmental Regulation said the group was still investigating how to support the uptake of electric cars.
“This work is informing the development of the draft state electric vehicle strategy for consideration by Government. It’s being progressed alongside the development of the State Climate Policy.”
RAC’s Anne Still says the development of the state and national electric vehicle strategies will be an important step forward in the Federal and State governments working together to accelerate EV take-up.
Besides infrastructure, addressing challenges like the cost of vehicle taxes could assist.
A luxury car tax of 33 per cent applies for every dollar a fuel-efficient vehicle costs above $77,565 - a threshold which captures more expensive models such as many Teslas. Stamp duty in WA jumps to 6.5 per cent of the price once a car costs more than $50,000.
There are also important policy changes that can support the willingness of automakers to see Australia as a viable market so they offer a range of low and zero emissions vehicles here, including improving slack rules around carbon emissions from vehicles, rules which already lag well behind the rest of the developed world.
“There’s a lot that can be done at the state and federal level — there really needs to be action at both,” Still says.
“Introducing a meaningful mandatory national CO2 standard for new light vehicles would encourage more vehicles into the market and give Australians more choice.”
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