Australia remains a low-priority market for EV manufacturers because it lacks key policies including strict vehicle emissions standards, according to a new report from Bloomberg NEF.
Australia has one of the most polluting passenger vehicle fleets in the world, ranking 22nd in the world for fuel efficiency, behind Indonesia but ahead of Saudi Arabia.
The report attributes that in part to a penchant for pickup trucks and utes, but it’s not just consumer preferences that make uptake so low: the Federal Government has no current effective fuel efficiency measures that would incentivise consumers to purchase EVs and manufacturers to market them here.
That means EV demand is outstripping supply, in a country where EVs represent just 2% of total passenger vehicle sales, expected to lift to 4% by the close of 2022. By contrast, one in ten cars sold in the EU is battery electric.
According to the report, Australian EV customers are now waiting months for their vehicles: the average wait time for a Tesla Model 3 is currently five to eight months, while Hyundai’s Australian allocation of the Ioniq 5 sold out in less than ten minutes.
The report states that the improving economics of EVs alone cannot be relied on if the Australian government is to reach its ambitious climate targets. It finds that without policy that can lift Australia’s supply of EVs, only 3Mt of CO2 will be removed from the road transport sector by 2030 from 2021 levels, below Labor’s planned 4Mt.
Policy architecture falls short of Labor targets
According to climate change and energy minister Chris Bowen, that is going to change. The Federal Government has an ambitious target for an 89% EV share of vehicle sales by 2030, but its policy architecture falls short. A discussion paper on fuel efficiency standards is forthcoming in late 2022, but the Bloomberg report highlights the need for urgency.
If no emissions standard or equivalent policy is introduced, the report alleges, EVs could represent just 66% of sales by 2040, making up just 32% of the total fleet. This would mean lagging well behind other peer markets like the US, where EV fleet penetration could reach 56% by 2040.
The report finds that emissions standards must be introduced in a staggered process, because Australia is so far behind the EU. It recommends an efficient emissions standard that would give consumers and infrastructure time to adjust in the short term, before rapidly ramping up to meet net-zero targets.
The report’s calculations assume 100% EV sales by 2033.
If achieved, the report finds that oil demand will fall by 30% by 2040 without any additional policy, and power demand from road transport will balloon to 23TWh, or 10% of total annual power demand.
“A swath of ambitious sales targets from state governments, and a bold 2030 emissions reduction target from the federal government, means Australia can no longer rely on the improving economics alone to drive EV uptake,” said BloombergNEF associate Will Edmonds.
“Without policies that can solve the EV supply issue, Australia is unlikely to reach any of its existing targets.”