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      Generation & Storage, Policy & Regulation, Transmission & Distribution — 6 mins read

      Is Australia’s EV boom about to start?

      The short answer is a cautious yes. The longer answer is that it will take a while to pick up speed!

      Between 2019 and 2021, global EV sales quadrupled to 9% of the new car market. The proportion was even higher in Europe, with EVs making up 11% of sales in 2021, and plug-in hybrids making up a further 8%.

      Australia’s EV uptake is less than a quarter of that. In 2020, just 0.75% of new car sales were EVs. In 2021 it was 1.8%.

      The pace of uptake has certainly picked up, and the outlook is positive. However, there are some key supply restraints.

      New government, new broom

      While other countries were encouraging EV uptake to reduce carbon emissions, the previous federal government was demonising the EV industry. Remember Prime Minister Scott Morrison’s quip that EVs would ruin the Aussie weekend?

      In the lead-up to this year’s federal election, Labor released its Powering Australia Plan, which included an ambitious target of 3.8 million EVs on the road by 2030.

      It hasn’t wasted time since coming to office, exempting EVs from the 47% fringe benefits tax and 5% import tariff from July 1. This came just weeks after the election, although the move is yet to be ratified by the Senate.

      Removing the FBT could save employers up to $8,700 a year on a $50,000 Nissan Leaf and $12,000 a year on a $70,000 Tesla Model 3. The tariff exemption could mean a $2,000 price cut.

      The Labor government has also promised to mandate a target for government fleets of 75% EVs by 2025 and to fund 1,800 charging stations at intervals of 150 kilometres on major roads across Australia.

      Federally-funded infrastructure projects will be required to incorporate EV charging facilities wherever possible, as will Commonwealth properties.

      Federal Energy Minister Chris Bowen says the changes will encourage more families to take up EVs, especially as fuel costs continue to rise. With more than 3 million Australian homes fitted with solar panels, many buyers will be able to charge their new EVs at home.

      The states and territories are also doing their bit, with most offering rebates of around $3,000 on EV purchases. The ACT has already announced a ban on the sale of new petrol cars from 2035, with other states likely to follow.

      The impact of EVs on the grid

      If EVs do boom by 2030, the impact on the grid could be substantial, adding another layer of complexity to take-up.

      The Reliable Affordable Clean Energy for 2030 Cooperative Research Centre released a report last year showing there would be a 3-4% increase in demand on the power grid if recharging of EVs was spread across the day.

      However, if everyone plugged in their EV when they got home from work, it could potentially double the evening peak demand for electricity. If each EV drew 7kW, the instantaneous load could hit 30GW.

      Of course there are variables in that. The change in work patterns forced by the pandemic could remain in years to come, for example. But as the report points out, it will be vital to find ways of charging EVs that won't have a detrimental impact on the performance of the grid.

      So what is the pace of change?

      Modelling of Labor’s Powering Australia Plan estimates almost 90% of new car sales will be electric by 2030: about 73% full EVs and the remainder plug-in hybrids. (The Coalition Government predicted a 29% EV share by 2030.)

      EV purchases are expected to increase exponentially as older cars reach their use-by date, with sales to peak at around 600,000 by 2030, by which time about 15% of the Australian fleet will be all-electric.

      EV sales are already starting to rise rapidly in Australia, though off a very low base.
      The latest sales figures from the Federal Chamber of Automotive Industries show EVs make up about 2% of the new sales market so far this year (An additional 7.6% of the market is hybrids and 0.6% is plug-in hybrid, making a total of 10%).

      High demand meets supply challenges

      Local demand is soaring – but prospective buyers often face a long wait for a suitable vehicle. Tesla, Honda, Kia, Volvo, Polestar and BMW all report long waiting lists and waiting times for buyers.

      And price remains a major constraint, with no models available in Australia under $40,000 and only five under $60,000. UK drivers, by comparison, have 26 models to choose from under A$60,000, including eight that are cheaper than Australia’s cheapest EV.

      Manufacturers and dealers blame the lack of choice and excessive cost on the fact that Australia remains one of two OECD countries (the other is Russia) that don’t have vehicle emissions standards that penalise petrol and diesel vehicles.

      Electric Vehicle Council chief executive Behyad Jafari said the former federal government’s refusal to move on fuel efficiency standards was a key driver of the supply restriction, impacting access to EVs, especially on the more affordable end of the market.

      "Carmakers look at Australia and see strong demand, which is encouraging. But they also realise that every time they sell an EV in America or Europe that will count toward meeting the fuel efficiency standards of those jurisdictions. So naturally they prefer to sell EVs there, instead of here."

      In August the federal Labor government promised that a forthcoming discussion paper on a national EV Strategy will include a proposal for emissions standards.

      Infrastructure Minister Catherine King said the strategy would explore options on how an Australian fuel efficiency standard could work and the benefits of a standard – “such as getting more affordable electric vehicles to market and reducing household transport costs from inefficient vehicles."

      So it's a case of watch this space - if emissions standards are set, it may just open the throttle on the EV boom.

      Catherine Watson, Article Writers Australia

      Energy Monthly

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      March 25, 2024 | Sheraton Grand Sydney Hyde Park

      Australian Domestic Gas Outlook 2024

      June 11, 2024 | Melbourne Convention and Exhibition Centre

      Australian Energy Week 2024

      New call-to-action