Australians want to buy electric cars, but car makers say government policy blocks supply

Key points:

  • Australia’s rate of EV car sales is rapidly falling behind that of other developed countries
  • Consumer interest is high, but there are problems with the supply of affordable models
  • Manufacturers say they’re not shipping EVs to Australia due to government policy

Surveys show Australians want to buy electric vehicles (EVs), but they continue to languish at less than 1 per cent of new car sales. What’s going on?

The answer is complex and takes us down a twisting path of carbon targets, “super credits” and other matters that people outside the auto industry generally don’t pay much attention to.

At the end of this path, however, is an obvious fact: EVs that sell well in Europe, the US and UK are simply not available in Australia.

Volkswagen, which is on track to become the world’s largest EV maker, sold 212,000 EVs worldwide in 2020.

Not one of those was in Australia.

The top-selling electric car in Europe in 2020, the Volkswagen ID.3, won’t be launched in Australia until at least 2023, its maker says.

Car makers have begun skipping Australia when releasing their latest models and some are publicly saying the country is becoming a “Third World dumping ground” for outdated petrol-engine technology.

Meanwhile, 75 per cent of new car sales by 2030 need to be electric for Australia to achieve net zero emissions by 2035, according to the latest report by the Climate Council.

So why are EV car makers skipping Australia, and what else is behind low EV sales?

Australians are interested in EVs … but aren’t buying them

Consumer interest in EVs isn’t a recent phenomenon. It’s been high for years.

Since 2018, the proportion of Australians who would consider buying an electric vehicle as their next car has stayed at about 50 per cent, according to annual surveys commissioned by the Electric Vehicle Council.

This interest isn’t translating into more EVs on the roads, though, with only 6,900 sold in Australia in 2020. This works out to about 0.7 per cent of new car sales.

The UK has a similar level of interest in buying EVs, surveys show, yet EVs make up a much higher proportion of new car sales — about 10 per cent.

Some of this demand is being soaked up by hybrids, which have both petrol engines and electric motors.

Almost twice as many hybrids were sold in 2020 as in the previous year — a growth in sales Australian Automotive Dealers Association (AADA) chief executive officer James Voortman described as “insane”.

“We are seeing changing attitudes towards low emissions cars,” Mr Voortman said.

But in other markets hybrids have been selling well alongside EVs. In Australia, hybrids are out-selling EVs 10 to one.

What makes the situation even more puzzling is that Australia has the highest per-capita uptake of rooftop solar in the world.

Studies show people who invest in rooftop solar are more likely to buy an EV, said Ezra Beeman, managing director of Energeia, a consulting firm that has modelled Australia’s electric vehicle market for government agencies.

“You’d think the number-one market for rooftop solar PV would be good for EVs as well,” he said.

Instead, Australia has the lowest rate of electric car ownership among developed countries.

Something has put the handbrake on EV car sales, said Scott Nargar, a senior executive at Hyundai Australia.

He said Hyundai’s own research consistently showed intent to buy an EV within the next five years was “very, very high”.

“It’s much higher than 50 per cent. There’s a great market there,” he said.

“But there is something that’s holding back Australia.”

So, why didn’t Volkswagen sell a single EV in Australia in 2020?

Because there were none for sale.

Volkswagen didn’t ship any EVs to Australia in 2020, despite many Australians asking to buy them, said Michael Bartsch, general manager of Volkswagen Group Australia.

“There isn’t a day go by where we’re not answering a query on when we’ll be able to supply an electric vehicle in Australia,” he said.

“We are a Third World dumping ground in terms of automotive technology.

“We’ll put those cars where we get the biggest commercial advantage, and the biggest commercial advantage of the moment, when you overlay the fines for not achieving the CO2 targets, is Europe.”

Each EV sale is thousands of dollars in ‘super credits’

We need to dive into a fairly dry topic: EU carbon targets.

The EU has mandatory carbon targets for car makers that are enforced with hefty fines.

Car makers are fined according to the average emissions of all the cars they sell in Europe over the course of the year.

The fine is about $150 for each gram of CO2 per kilometre beyond a nominated target.

The EU’s current target is 95 grams of CO2 per kilometre.

A Volkswagen Golf, for example, produces about 120 grams of CO2 per kilometre.

This means that every time Volkswagen sells a Golf in the EU, the company effectively faces a fine of thousands of dollars (though in practice the fine is calculated according to the average emissions of all the cars sold in the year).

But car makers can offset the emissions of their CO2 emitting cars with the “super credits” they gain by selling EVs (which are deemed to emit nothing).

Each EV sale in Europe therefore represents thousands of dollars worth of these carbon credits. In 2020, Volkswagen missed its CO2 targets by a few grams per kilometre and now faces fines of more than $150 million.

Jake Whitehead, a transport expert at the University of Queensland, said it was hard to estimate the value of the credits of each EV sold in the EU, but it could be something in the order of $26,000 per EV.

No wonder Volkswagen won’t send any EVs to Australia.

This is causing a shortage of affordable models

Carbon targets in the EU translates to fewer affordable EVs available for purchase in Australia.

About half of the EVs sold in Australia in 2020 were Teslas, which at the time cost from $73,000 to $144,000 — well outside the “affordable” category.

“If somebody in Australia could buy a really good electric vehicle for $52,000 or thereabouts, which is completely doable, then you open up a completely different [segment] of the Australian market,” Mr Bartsch said.

“Most of the intelligence says that an average person would pay a 10 per cent premium for an electric version of an equivalent [petrol] vehicle.”

But EVs in this “affordable” price range are in very short supply in Australia.

According to the Electric Vehicle Council, Australia has many fewer EVs in the $30,000 to $60,000 range than other markets.

“If we look at the UK, they’ve got some 32 models available in that range — we have about four,” council chief executive officer Behyad Jafari said.

“And even those are only bought here in very low allocations.”

‘Supply’ is the main reason people aren’t buying EVs — not demand

The number one issue is supply, Mr Whitehead confirmed.

“If there’s not a vehicle to sell, it doesn’t matter how much demand there is.”

In fact, the number of models that are made available directly correlates to the uptake of EVs, according to modelling conducted by Energeia for the Australian Energy Market Operator (AEMO) in 2016.

“Model availability is as important as anything else,” Mr Beeman said.

“Even if EVs were all the same price, people want to be able to drive the car they like.”

And to make matters worse, EVs are generally much more expensive than their petrol-powered equivalents.

The cheapest EV in Australia, the Hyundai Ioniq Electric Elite, retails for $48,970.

The equivalent petrol car, the Hyundai i30 Elite, is priced at about $30,790.

Hyundai sold 526 Ioniqs in 2020, but more than 20,000 i30s.

Other developed countries such as the US, France, Germany and Canada offer generous financial incentives and tax breaks worth about $10,000 to close that price gap and make EVs a more affordable option.

In Australia, stamp duty concessions in the ACT and Queensland, and registration discounts in ACT and Victoria, work out to less than $1,000.

There are no national incentives directly aimed at making EVs more affordable.

However, Victoria has done the opposite. It’s set to introduce a per-kilometre road tax on EVs from July 1.

What can be done to improve supply?

Volkswagen says it will ship EVs to Australia if the government introduces EU-style mandatory carbon targets backed up with fines.

This would solve the supply shortage by giving car makers a greater financial incentive to ship EVs to Australia, Mr Bartsch said.

“Where you have no legislative imperative, that is always going to be the last place you send the vehicles.”

In February, the federal government released a discussion paper with ideas to support the shift to electric vehicles, including investing in charging infrastructure and adding electric cars to the COMCAR fleet.

Carbon targets, also known as fuel efficiency standards, were not on the list.

A spokesperson for the Minister for Energy and Emissions Reduction, Angus Taylor, said the government would “not be lectured about vehicle emissions by a car manufacturer that has a track record of deceiving motorists and violating clean-air laws”.

In 2015, Volkswagen admitted to rigging around 11 million diesel vehicles with software that enabled them to pass emissions tests.

“Volkswagen has shown its concern for the environment is meaningless,” Mr Taylor’s spokesperson said.

But other car makers voiced similar concerns to Volkswagen’s.

Nissan Australia managing director Stephen Lester said he also supported mandated CO2 reduction targets for all vehicles.

“Clear and consistent direction from governments is a critical signal to car makers to prioritise the importation of the latest low and zero-emissions vehicles for Australian consumers,” he said.

Hyundai Australia’s Scott Nargar said other manufacturers — though not Hyundai — were pausing shipping cars to Australia.

“Other manufacturers are just holding off because they don’t know what the government’s doing,” he said.

“It’s impacting people’s decision to bring vehicles here.”

The Electric Vehicle Council’s Mr Jafari said CO2 targets would help, along with financial incentives for EV buyers and better charging infrastructure.

“Eighty per cent of the new vehicle sales market around the world has … CO2 standards, and Australia doesn’t,” he said.

“The United States first implemented those back in 1976.

“Not having CO2 standards in 2021 is like not having roads built.

“We get the dregs — we get the cars that can’t be sold in those other markets.”

Extracted from ABC

Scroll to Top