Electric Vehicles

  • March 16, 2021

Australia and the world’s commitment to respond to climate change is leading to incredible changes in technology, showing our ingenuity and demonstrating the role new technology will play. We are seeing this most dramatically in the energy sector, with renewable sources having so quickly become the most cost-effective solutions to so much of our future energy needs.

Today I want to speak about one area of technological potential where change is coming more slowly in Australia: the use of electric vehicles. While EV sales saw significant growth in Australia before the pandemic, the market share remains just 0.75 per cent of new car sales. Nineteen per cent of Australia’s greenhouse gases come from the transport sector. If we are to achieve net zero emissions by 2050, which surely must become our goal, this sector must be a focus of our work. The average age of cars on the road today is just over 10 years. Working back from 2050 means that, to reach net zero, we need to adopt the goal of reaching close to 100 per cent electric or other low-emission vehicles in the new car market by the mid-2030s. Adopting such an ambitious target would provide an important signal to the car industry and would give them the certainty they need about Australia’s intentions. Similar targets need to be adopted for other vehicles. State governments should be following the lead of the Berejiklian government and working to move to 100 per cent electric or low-emission bus fleets by the end of the decade.

Many car manufacturers have announced their plans to phase out conventionally fuelled vehicles over the coming 15 years. Costs are coming down, and price parity should be reached in the second half of the decade. This is, however, not a case for relying solely on those market trends. The worst outcome for Australia would be for us to become the dumping ground for old technology as other markets expand in electric vehicles. I’m pleased that earlier this year the Minister for Energy and Emissions Reduction released the Future Fuel Strategy discussion paper. The discussion paper correctly points to the key priorities of expanding charging infrastructure, improving information to motorists, integrating EVs with the grid and supporting Australian innovation. The paper also highlights the value of targeting the commercial car market, which accounts for 40 to 50 per cent of new car sales. Commercial fleets can be early adopters of new technology and critically, because of more frequent turnover, can become an early source of EVs for the second-hand car market.

If, however, we are to ensure the transport sector reaches net zero, there is much more that can and should be done. For example, many nations have provided some form of tax or direct subsidies to deliver lower-cost vehicles to consumers, with strong results. Early and short-term subsidies can provide a kickstart to more rapid growth while market prices trend down through technological and production innovations. We should be open to these approaches in Australia. At the federal level, it is time we removed the luxury car tax entirely from low-emission vehicles. At the state level, state and territory governments must look towards measures like lower rego and stamp duty and even toll relief for electric vehicles. What they should not do is follow the lead of the Victorian government in implementing new road charges on EVs while the market is so thin. The Victorian approach is a disaster for encouraging motorists to buy an electric vehicle.

In the corporate fleet sector, we can improve the attractiveness of electric vehicles even further through tax changes. For example, currently any electric vehicle used in a workplace attracting FBT is at a tax disadvantage relative to conventionally fuelled vehicles because of the treatment of fuel. One way to address this is to provide EVs with a partial FBT exemption and to establish a different statutory method for EVs—essentially a discounted rate. The federal government should also institute accelerated depreciation rates for EVs, following the clear success of the instant asset write-off deployed during the pandemic.

The rollout of the public charging network is improving every year, but this addresses only half the challenge. Most potential EV owners want to be able to charge their cars at home or work. Planning laws should be updated to ensure new homes, apartments and commercial buildings are EV ready with the necessary infrastructure. This will be far less costly than a retrofit in five or 10 years time.

Finally, there is a clear intersection and overlap between state and federal governments on these issues. Coordination of a national approach is vital in this regard. Governments should therefore consider whether a new national taskforce that brings jurisdictions and industry together can assist in delivering a zero net emissions transport future. With the right support, Australia can be a leader in the rollout of low-emissions vehicles, be they electric or using other technologies such as hydrogen. It’s time we make that so.