The Future is Here: Driving Policy Change for the ‘EV’ Revolution

10 Mar 2020

Although Australia has been a laggard in the uptake of electric vehicles, Geoff Allan says practical policy changes inspired by global developments could herald the imminent arrival of a cohesive national strategy for zero-emission vehicles.


The Age has made the bold prediction “that electric vehicles will be in general use within a year or two”. This ambitious forecast wasn’t made to coincide with the rise of the Tesla Model 3 or the Nissan LEAF. It was made in July 1881, when electric vehicles were competing against steam and petrol-powered cars to replace horse-drawn carriages. 

Over the past 140 years, there have been many promising, but ultimately false predictions of electric vehicles dominating the world’s streets and highways. Battery technology, consumer preference, auto-maker partiality, and government policy have all contributed to ‘EVs’ never quite making it as mainstream cars to rival the Toyota Corolla or Ford Ranger. 

But the past few years have seen a dramatic swing – by governments, investors, and more recently, the purchasing public – towards EVs. Driven by concerns about climate change, cheaper battery packs, and the charismatic Elon Musk, the era of the electric vehicle has finally arrived.

So why does Australia, as one of the world’s richest and most resilient economies, continue to lag behind so many other countries in the take-up of EVs? What are the practical and policy challenges that our governments will have to face as they transition our personal transportation to a zero-emissions economy? 

The rise of the EV
There are two main types of electric vehicles: Battery-Electric Vehicles (BEVs), which are propelled by one or more electric motors, with batteries that require recharging from an external electricity source. Examples of BEVs are the Nissan Leaf and Tesla Models S and 3. Plug‑in Hybrid Electric Vehicles (PHEVs) are propelled by an electric engine, which predominantly powers the vehicle, and an internal combustion engine, which extends the driving range and can recharge the battery. Examples of PHEVs are the Mitsubishi Outlander PHEV and the Mercedes-Benz C350e.  

Electric vehicles are quieter, smoother, have stronger acceleration than standard vehicles, and are far more energy efficient. With these advantages, a rational analysis would suggest that EVs should be the predominant automobile form across the world. However, it has taken more than a century for EVs to be considered something more than a fringe form of transport.  

In the late 19th century, electric vehicles were competing with petroleum-powered and steam-powered cars to replace horses and horse-drawn carriages. In 1899, 1,575 electric vehicles were sold in the United States – compared to 936 petrol-powered cars. In many ways, electric vehicles were technologically superior. They were cleaner and easier to start. They were simpler to drive and maintain. And they were faster. In 1901, an electric vehicle became the first car to reach 100 km/h. In contrast, petrol-powered cars were noisy, difficult to start, had a low maximum speed, and consumed a lot of water. 

Despite all this, from 1900, petrol-powered cars began to outpace the sales of electric vehicles in Europe and the United States. They got faster, their range grew longer, and they became cheaper. In 1908, Ford released its functional and affordable Model T. As founder Henry Ford stated, he wanted a car that was large enough for the family, but small enough for the individual to run and care for. Ford’s car was to be “so low in price that no man making a good salary will be unable to own one”. Between 1900 and 1920, Americans went from owning 8,000 cars to owning 8 million. 

As the price of petrol vehicles dropped, electric vehicle manufacturers increasingly marketed to wealthy urban dwellers who took only short trips. The biggest blow to EVs came in 1912, when petrol-powered cars incorporated batteries to improve the way they started. Battery manufacturers chose to focus on supplying batteries to the much larger market of petrol-powered cars. This left electric vehicle manufacturers without a power source. 

By the late 1990s, concern about global warming due to greenhouse gas emissions led to a new focus on developing low-emission vehicles. Between 2002 and 2012, more than 350 electric vehicles were presented at motor shows and launches across the world. 

In 2010 EVs went mainstream. General Motors released the Chevrolet Volt, a Plug-in Electric Hybrid, and Nissan released the LEAF Battery Electric Vehicle. In the decade since, EV sales have taken off in many parts of the world.

Worldwide sales of electric vehicles (source Queensland Government, 2017)

Worldwide sales of electric vehicles (source Queensland Government, 2017)

 Australia and vehicle emissions

All Australian governments have made commitments to reducing greenhouse gas emissions. The Federal Government is aiming for emissions to be 26%-28% below 2005 levels by 2030. In addition, all states and territories have committed to zero net greenhouse gas emissions by 2050. Each state has a different mechanism to achieve that goal. For Victoria, this commitment is outlined in the Climate Change Act 2017

Transport accounts for 19% of Australia’s greenhouse gas emissions. Cars and light commercial vehicles are the largest source of emissions within the transport sector, accounting for about 60% of total transport emissions. 

Electric vehicles are attractive, in part, because they have little to no tailpipe emissions. Although emissions may be produced indirectly, from generating the electricity to charge vehicle batteries, when combined with the decarbonisation of the grid, EVs have the potential to achieve significant emissions reductions. This has led to some state governments, including Victoria and Queensland, to produce electric vehicle strategies. 

Despite increasing sales since 2011, Australia’s proportion of EV sales is one of the lowest among developed nations. The National Transport Commission estimates that in 2018 there were just 2,357 EVs sold out of Australia’s total light vehicle sales of more than 900,000. This contrasts with 1.2 million EVs sold in China, 360,000 in the US, and 3,682 in New Zealand. The New South Wales Parliament has identified that a major underlying cause of the disparity between Australian and overseas EV sales is public policy, rather than consumer sentiment. 

Policy options to increase the use of EVs

While Australians clearly have a strong desire to ‘do their part’ to improve the environment and reduce their carbon footprint, this hasn’t translated into the purchase of electric vehicles. Both a Victorian and a Commonwealth parliamentary inquiry have canvassed a range of policy options that governments could adopt to increase EV sales. Both inquiries looked to other countries with exemplary EV records for guidance.
Norway has the highest proportion of EV sales of any country, with 29% of the market, and is aiming for 100% of car sales to be zero-emission vehicles by 2025. The country has used both financial and non-financial measures to increase EV sales – including exemptions from toll charges and purchase duties, which contribute to a cost reduction of about €20,000 at the time of purchase.

Given the very high taxes on vehicles in Norway, these reductions bring EVs into line with the cost of comparable conventionally-powered vehicles. Non-financial incentives include access to charging infrastructure, as well as the use of public bus and high vehicle occupancy lanes. Countries in Europe, North America and Asia have introduced a range of similar incentives to increase electric vehicle sales.

So, would similar policies work in Australia? In 2019, consumer sentiment and data analytics company Nielsen interviewed 1,000 Australian car owners over the age of 18 to assess their attitude to electric vehicles. Additionally, Milad Ghasri and Ali Ardeshir from the University of New South Wales (UNSW) surveyed 1,176 NSW residents to assess their views. This data was used to model the effectiveness of various policies to promote electric vehicle use. 

Both the Nielsen and UNSW studies indicate that there are two policy levers that will have the greatest effect on increasing EV sales in Australia. First, make the purchase of the vehicles cheaper. Second, ensure the provision of charging infrastructure to address range anxiety. Range anxiety is the worry drivers have of unexpectedly running out of charge for their vehicles or not being able to find a charging point when it’s needed. The Nielsen survey also found that consumer information would play a large role in increasing the sale of EVs. 

Price: The UNSW study found that subsidies should have a significant effect on EV sales. It also found that consumers would be much more likely to purchase an EV if its purchase price was closer to the price of an internal combustion engine vehicle. Nielsen found that 79% of survey respondents felt price was the key factor affecting their decision to buy an EV. Half the respondents said they would pay only $20,000-$30,000 for an electric vehicle – less than half the potential purchase cost of almost all EVs on the market in Australia.

Interestingly, the UNSW study also found that providing financial incentives could also play a strong role. Respondents suggested that rebates on the purchase price would be a more effective policy than a rebate to manufacturers – even if the actual prices were identical.

Range anxiety and charging infrastructure: In the Nielsen study, 77% of respondents indicated that perception of a lack of charging infrastructure was a key deterrent to buying an EV. There are two key factors affecting this perception. The first is that petrol stations are more visible: Australia has 6,000 petrol stations compared to 800 charging stations. The second is that most respondents believed EVs have a range far shorter than they actually have. Nielsen also found that for EV sales to take off, either the government has to step in and improve the infrastructure or manufacturers have to find alternative ways of recharging.

The UNSW study found that the perceived deficiency of charging infrastructure was not as strong as an influence on purchase as some studies would suggest, although it does have an influence. 

Consumer education: The Nielsen study found that Australians do not feel properly informed about electric vehicles. Their findings correlate with a US study that shows that the low take-up rate of EVs may be a barrier in itself. Another consumer survey of 1,000 US residents found that in the US many potential buyers of EVs had little understanding of the technology and were reluctant to purchase an EV until there was greater market uptake.

Improved consumer information, by governments or manufacturers, could be a way of overcoming a reluctance to buy EVs. It is the perception of relative advantage, rather than the actual or objective advantage, that is of greater importance to many individuals when they adopt innovative practices. Therefore, information that can better inform consumers should significantly help EV sales. 

The role of the electricity network 

Austroads has indicated that one of the biggest impacts of EV adoption in Australia will be their effect on the electricity grid. An electric vehicle that drives about 40 kilometres a day would have electricity consumption that is equivalent to a small house. A Victorian Parliamentary Committee heard that there are several potential problems associated with the demand of more EVs charging from the grid – including extra strain on transformers and electrical cables. However, most of these problems could be offset by charging in off-peak periods. In 2019, Energeia found that most EV drivers would likely want to charge at home, mostly during off-peak periods.

The inevitable rise in the use of EVs will be just one challenge for the electricity network. Rooftop solar, battery storage and EVs are all likely to continue as major drivers of electricity demand over the next 20 years. The effect of all these technologies on the grid will need to be considered together. In evidence to the Victorian Parliamentary Inquiry, energy company AGL noted that distribution networks were originally designed for one-way electricity flows. These networks may need to be modified to accommodate the increasingly bi-directional nature of energy flows, from rooftop solar and other dispersed electricity sources. If not managed properly, reverse flows can cause voltage, protection and thermal network problems.

Conversely, electric vehicles could well address some of these potential problems. Energeia found that the large battery storage capacity that would be created by EVs has the potential to be harnessed through emerging vehicle-to-grid technology. If managed well, EVs could take up supply at certain times, when demand is low, and feed electricity back into the grid when demand for electricity is high. This is one potential benefit of Australia being a laggard in the uptake of electric vehicles, as we will be able to learn how grids and electricity suppliers in other countries adapt to their increasing numbers of electric vehicles.

With vehicle-to-grid technology, the challenge for energy companies will be to understand when, where and how EVs will be charged – and how they will be able to provide energy back into the grid. Once understood, energy companies will be able to factor these decisions into new business models.

Towards our electric future

Electric vehicles have a long history. For a century they’ve been perceived as a niche fringe, and have been resisted by mainstream automakers. But finally, the spectre of harmful climate change has disrupted that status quo. Manufacturers are now making EVs in commercial quantities to meet growing global demand. Given that transport is Australia’s third-largest source of greenhouse gas emissions, a shift to EVs will have significant benefits, even from using only grid power. 

There have been several recent indications that sales of EVs in Australia will take off. Data released for 2019 shows that EV sales have tripled, although they remain a minuscule proportion of Australia’s vehicle purchases. Even with increasing sales, however, Australian governments may need to intervene if they want zero-emission vehicles to be the bulk of Australia’s vehicle fleet. 

The problems that afflicted EVs a century ago remain in Australia today – specifically, the perception of being too expensive and lacking in range. However, both problems could be addressed through a coordinated government policy. Making electric and other low and zero-emission vehicles comparable in price to internal combustion engine vehicles will have a significant effect. Ensuing more visible charging infrastructure is likely to reduce range anxiety among potential EV buyers. 

Technologically neutral financial incentives for low emission vehicles could increase the sale of fuel-cell EVs powered by hydrogen. As Australia’s chief scientist Alan Finkel recently noted, hydrogen fuel carries much more energy than the equivalent weight of batteries. It provides a viable longer range, and an alternative for powering heavy vehicles such as long-haul buses and B-double trucks.

It appears that a coordinated plan for zero-emission vehicles could be produced in the near term. A November 2019 meeting of Australia’s transport ministers indicated clear support for zero-emission vehicles. They committed to three actions: encouraging the purchase of low and zero-emission vehicles; preparing the electricity grid for a larger electric vehicle fleet; and coordinating the rollout of charging infrastructure. This commitment provides the basis for Australian governments to develop a cohesive national zero-emission vehicle strategy. 

Any such strategy should set Australia on a course to increasingly use low and zero-emission vehicles. However, it will also have to recognise the challenge that we have of being a vehicle-importing nation. As other countries increasingly move to low and zero-emission vehicles, potentially there will be fewer right-hand drive petrol-powered vehicles available in Australia.

Regardless of what approach we choose, it may well be the vehicle manufacturers in Europe, Asia and North America that could have a greater effect on the vehicles available for sale in Australia than any domestic government policy. These commercial inevitabilities could mean that the prophecy in The Age of having electric vehicles in general use becomes a reality relatively soon. It will just be 140 years later than first predicted. 

Dr Geoff Allan is the Chief Operating Officer of Austroads. This article reflects the personal views of the author and are not those of Austroads.


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