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Transition to Electric Cars

Released 11/06/2017

Are Australian drivers lagging behind developed markets in their transition to green vehicles.

Two leading automotive executives this week called out Australian politicians over the issue, saying the slow take-up of electric cars is directly linked to a lack of government incentives or infrastructure investment.

Renault Nissan Alliance chairman Carlos Ghosn told reports in Sydney that  "consumer demand is very limited for electric cars", while BMW Australia boss Marc Werner says the Federal Government is "crazy" not to introduce "legislation that will assist with the purchase of these vehicles". 

An independent review of Australia's energy security released this week also found that local laws are holding back the development of electric cars in Australia.

 

Why the big deal?

An NTC report into the carbon dioxide emissions of Australian vehicles released in May found that the average CO2 emissions of Australian new vehicles increased by 2.3 per cent between 2015 and 2016, bucking global trends. The bulky Toyota HiLux ute replaced the compact Corolla as the best-selling car in the nation, contributing to a local emissions average of 175g/km, 46 per cent higher than Europe.

The NTC says Australian consumer preferences "for heavier vehicles with larger and more powerful engines" are problematic, and that "if all Australians who purchased new vehicles in 2016 had purchased vehicles with best-in-class emissions, the national average carbon dioxide emissions intensity would have been reduced to 75 g/km, a 59 per cent reduction".

It blames consumer trends, low fuel prices, a swing away from diesel passenger vehicles and a lack of government incentives for Australia's comparatively poor emissions performance.

 

The last point resonates with Ghosn, the global head of Renault-Nissan, who says motorists will not willingly switch to electric or plug-in hybrid cars in large numbers until significant government incentives and subsidies are in place.

Unsurprisingly, electric cars are most popular in regions with financial incentives.

Electric car sales are negligible in Australia, representing less than 0.05 per cent of Australian new vehicle sales, according to the FCAI. But the industry body's figures are not strictly accurate as electric car specialist Tesla does not publicly report Australian sales data.

NSW data updated by the RMS each quarter shows that the number of Teslas registered in the state increased from 119 in March 2015 to 363 in March 2016 and 618 in March 2017. The 255 Teslas added to NSW roads in a 12 month period in that state alone make Tesla the most successful electric car provider in Australia by some margin.  

Who cares?

Car companies do, for one. BMW has a long history of complaining that governments need to do more to encourage the take-up of electric cars such as its compact i3.

Consumers no doubt do, as heavy subsidies for electric cars would make zero emission vehicles accessible to a wider range of motorists, and environmental groups are keen to see electric cars adopted in greater numbers to improve air quality and emissions levels.

Energy providers care, as the adoption of electric cars would lead to increased electricity usage, and the government is starting to care as zero emission vehicles could make it easier to reduce the nation's carbon emissions.

The Finkel report into energy security released this week found that "the right mix of incentives for the uptake of electric vehicles along with a decarbonised electricity grid could help to achieve significant emissions reductions in Australia's transport sector, which in 2015 accounted for about 18 per cent of Australia's emissions", and that "electric vehicle uptake could significantly change electricity usage patterns in Australia. Electricity consumption by electric vehicles is estimated to reach nearly 4 per cent of total electricity consumed by 2036".

What next?

Electric cars are coming.

Mercedes is building its "EQ" sub-brand with a range of models to join existing plug-in hybrid models, Porsche's Mission E is around the corner, Volvo is preparing its first all-electric model and Volkswagen is also working on a range of electric vehicles.

Almost every car maker is working on electric vehicles, hoping to launch products with mass appeal. Naturally, that should lead to further sales of electric cars as part of the problem has been a lack of interest by customers.

Models like the Nissan Leaf and Mitsubishi i-Miev failed to gain traction with buyers because of poor perceived value, limited practicality and – let's be honest – less-than-attractive looks.

 

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