How is Australia travelling with the switch to electric cars?

Electric cars will become a part of the power grid one day – and many countries are speeding ahead with uptake. So why is Australia stuck in the slow lane?

Powering up his local government’s car fleet with electric vehicles is one way for Canterbury Bankstown mayor Khal Asfour to deliver on his council’s climate commitments – but it’s saving some serious cash, too.

“The majority of our electric fleet consists of the Hyundai IONIQ, with each of these vehicles saving council in excess of $11,000 a year in maintenance and fuel costs,” says Cr Asfour. He’s starting small – with 46 electric or hybrid vehicles – but aiming big, with a 2025 goal to make all 345 of the council’s fleet electric vehicles, or EVs as they’re known.

It’s a far cry from what’s happening across Australia’s car market, where just 6718 electric vehicles were sold across the country in 2020 – a mere 1 per cent of annual car sales.

In an electric vehicle, the traditional internal combustion engine (ICE) is replaced with an electric motor – which means no fuel tank, no exhaust, no emissions of carbon dioxide and nitrous oxide. Electric vehicles will be crucial for countries aiming to deliver on their commitments under the Paris Agreement to reduce greenhouse emissions. In Australia, the transport sector accounts for roughly 20 per cent of greenhouse gas emissions and reducing this output will be critical to achieving the Prime Minister’s goal of decarbonising the economy before the end of this century.

Credit:Artwork: Matthew Absalom-Wong

What’s more, the size of electric vehicle batteries means they can help power homes that are hooked up to them. In fact, one day, when there are enough electric vehicles, they are likely to become integral to the smooth flow of power across the nation.

Countries around the world are starting from a low base of electric car ownership but many advanced economies are zooming ahead with ambitious plans to ramp up sales, motivated by the benefits to the planet of lowering carbon emissions and to consumers of reducing operating costs.

How is Australia going with accelerating the switch to electric cars? Why is it becoming a “pariah” among car makers? And how will cars become an integral part of the power grid one day?

Do electric cars emit fewer emissions?

Electric cars are powered by batteries that are recharged by being plugged into an electricity grid, or network. Around the world, grids are being made cleaner as low-emission solar and wind energy replaces high-emission fossil fuels.

A typical electric vehicle charged using the average Australian electricity grid generates about 40 per cent fewer emissions than a petrol-powered car with an internal combustion engine, a recent study by the Queensland University of Technology found.

Unless the nation’s light vehicle fleet of cars and small trucks is 90 per cent electric (buses aren’t light vehicles), state governments won’t be able to reach their net zero emissions by 2050 targets, says Dr Jake Whitehead from the University of Queensland.

It has been claimed that the emissions generated in manufacturing car batteries, coupled with the emissions created by the electricity generation needed to power them, makes the lifetime emissions of such vehicles higher than those of a petrol or diesel car.

A recent study by the Massachusetts Institute of Technology, which analysed the emissions generated in manufacturing and powering EVs, found their greenhouse contribution is offset over six to 18 months, depending on how much fossil fuels are burned to power the grid used for charging the car’s battery.

Norwegians have the highest uptake of EVs. Here, a resident charges her Tesla electric car.Credit:Getty Images

How does Australia compare with the world on EV targets?

Unlike many advanced economies, Australia doesn’t have a target for electric vehicle ownership, nor a deadline on internal combustion engine car sales. Nevertheless, the federal Bureau of Infrastructure, Transport and Regional Economics forecasts that even in Australia, where’s there’s no policy to incentivise uptake, 60 per cent of new cars sales will be electric by 2046.

The federal government is working on an electric vehicle policy that will focus on infrastructure, such as charging stations, and support for researching and developing new technology, but it is not expected to incentivise buyers to switch from petrol and diesel vehicles.

Meanwhile, the UK, Japan, France and Germany have pledged to ban sales of combustion engines between 2025 and 2030. The international experience shows the market share of electric vehicles could rise faster in Australia if we followed the lead of other countries that have set targets to phase out internal combustion engines.

Norway leads the world in electric vehicle ownership, driven by a range of incentives such as waiving import tariffs and sales tax as well as registration fees. In 2020, it became the first country where EV sales outstripped the sum total of all petrol, diesel and hybrid vehicle sales. There were about 140,000 EVs sold in Norway in 2020, or 54 per cent of the market.

Electric vehicles comprise about 5 per cent of vehicle sales in China – which has now ditched its strategy of incentivising consumers to buy them and has instead imposed a mandated sales target on manufacturers to make such vehicles 40 per cent of all sales by 2030.

An EV charging point car park in the UK.Credit:Getty Images

Do electric vehicles add to the grid or drain it?

Regardless of how quickly the market share of electric vehicle grows, there are ongoing concerns over their drain on the electricity grid. When the Labor Party made an election pledge ahead of the 2019 federal poll to lift the market share of such vehicles to 50 per cent by 2030, energy agencies warned the grid could meltdown due to the drain on the grid from millions of car batteries plugging in for a recharge.

But Victoria Energy Policy Centre director Bruce Mountain says there’s no cause for concern for the health of the energy network, as the spike in energy demand from growth in EV sales “is not going to be a big deal”.

“It’s amazing how much energy we use to heat our homes and hot water systems. The energy for motor cars is much smaller and can be accommodated by the grid quite simply.”

Mountain says a typical array of rooftop solar panels generates more than enough power for the home and an electric car. But because many electric vehicles will be used for a daily commute, and solar power isn’t available at night, he doesn’t expect the home will be the primary charging point for many drivers.

A home rooftop array produces 20 kilowatt hours of electricity each day, averaged out across the year. An average household consumes about 10 kilowatt hours, and a commuter in a major city needs about five kilowatt hours a day to recharge their EV.

But the size of an electric vehicle battery is bigger than the household batteries coming onto the market, meaning they could be used for the home to avoid expensive peak demand periods in the early evening when people get home from work and switch on their appliances. EV batteries are around 60 kilowatt hours compared to a typical five- to 10-kilowatt hours in-home battery used to store power for rooftop solar.

What’s more, electric car batteries can be hooked up to the grid through charging points at home. With smart technology, their stored power can be tapped to smooth peaks and troughs in network supply, which will come from the growth of large-scale wind and solar farms.

Energy retailers are trialling contracts under which a vehicle owner is paid by the network operator to use their car battery as a power supply when it is hooked up to the grid in peak times while also making sure the battery is charged with cheap power overnight.

Mountain says many suburban workplaces would be able to install rooftop solar to power their workers’ charging stations, but in cities where space is more limited power would need to be bought in off the wholesale market.

“I think the pressure will be on workplaces to have charging stations. I expect it to be offered as a fringe benefit for employers because as the cost of power comes down, it won’t be a significant cost for employers but it would be very attractive for employees,” he says.

But isn’t the price tag a bit steep on electric cars?

Electric vehicle advocates warn that Australia’s lack of emissions standards is out of step with international markets, which have encouraged manufacturers to phase out some of their petrol models. Unlike Australia, the US and EU and other markets set a quota for the volume of carbon dioxide that can be emitted collectively across the fleet of a manufacturer’s internal combustion engine cars, in part to encourage manufacturers to develop new electric models.

Price tags in showrooms reflect a lack of policies to entice electric car makers Down Under. The cheapest EVs in the UK and US sell for about $30,000 whereas currently the five cheapest electric car models available in Australia cost between $44,000 and $64,000 and are expensive compared to the cheapest petrol models – which start at less than $15,000.

An electric car-charging station in Taizhou, East China’s Jiangsu province.Credit:Getty Images

Whitehead says Australia is becoming a “pariah” in the eyes of electric vehicle manufacturers because there are no major incentives to encourage consumer uptake. Car makers would choose to run out their end-of-line petrol models here while they ramp up sales of electric vehicles in more attractive markets, Whitehead says.

“Manufacturers are in a situation where they have to make a choice [as to] where around the world they send their limited production. Australia is a risky choice compared to the US and UK, where the vehicle is sold before it hits the dock,” he says.

Energy company AGL is the first Australian company to commit to the EV100 global initiative, pledging to replace its fleet of 400 vehicles with electric vehicles by 2030. AGL chief operating officer Markus Brokhof says EVs “are at a point where the vehicles themselves are no longer just for early adopters, and we will begin to see prices fall”.

Brokhof moved to Melbourne from Switzerland nine months ago and was “shocked” at the small range of electric car models on offer to commuters.

“There were 17 used vehicles for sale in Victoria when I got here,” he says. He eventually bought a second-hand Nissan Leaf model. “It’s not the newest model but it’s got a range of 170 kilometres, which is very sufficient for me,” he says. “It’s very easy, too. I can charge it at home with a normal socket and it’s fun to drive because the acceleration is rapid.”

AGL’s Markus Brokhof with his second-hand EV. “I can charge it at home with a normal socket and it’s fun to drive because the acceleration is rapid.”Credit:Luis Ascui

How much does it cost to run an EV?

With virtually no engine maintenance required and electricity to charge an EV battery costing the equivalent of 30¢ to 40¢ a litre for fuel, the running costs of current electric vehicle models are low compared to those of petrol cars, says the Australian Electric Vehicle Council.

“An EV engine has far fewer moving parts than an internal combustion engine so most wear and tear on the vehicles is in the tyres and brakes,” says the council’s chief executive, Behyad Jafari.

“In general terms, a petrol car’s maintenance costs around 7¢ per kilometre and for an EV that is more like 2¢ per kilometre.”

Batteries are a major cost factor for electric vehicles and with recent improvements they now have an average lifespan of around 15 years.

A peek under the hood of Brokhof’s battery-powered car.Credit:Luis Ascui

Why are our governments taxing electric cars?

Growth in electric vehicle sales is set to siphon off the stream of petrol tax revenue that flows into state coffers – and that will be lost when EVs come to dominate the market. Fuel excise revenue has fallen 30 per cent in the past 20 years as petrol and diesel vehicles become more efficient, and federal government projections show an $11-billion decline by mid-century.

Eyeing this looming revenue drop, Victoria announced in November a 2.5¢ per kilometre tax on electric vehicles, and South Australia plans to legislate a similar measure. The state governments argue that road-user charges levied on such vehicles compensate for the loss of fuel excise tax.

But, while governments miss out on fuel excise, Ernst and Young says this is more than compensated for by higher registration costs due to the heavy weight and high prices of electric vehicle models sold in Australia, with the average electric vehicle delivering a $137 annual increase in revenue compared to fuel-powered cars.

Electric vehicles also save governments money by lowering the public health costs associated with pollution from combustion engines.

Whitehead has recently completed research on the impact of fuel excise taxes on electric car sales, including a survey of 500 drivers, which he said was a representative sample of the national market. He found that a 2.5¢ per kilometre tax like Victoria’s would discourage sales and reduce market share to as little as 30 per cent by 2050 – or up to 9.5 million fewer vehicle sales.

How will we get enough charging stations?

Car manufacturers have cited concerns over the driving range of electric vehicles and a lack of public charging infrastructure as a major factor in their popularity. It’s a chicken-and-egg scenario, with the low number of such cars on the road holding back the rollout of more charging stations. The EV models on offer in Australia have a range of around 130 kilometres on a single charge.

Mountain says he “wouldn’t be surprised if the problem took care of itself” as the retail cost of new electric vehicles comes down, with cheaper models hitting the market as manufacturers cease producing combustion engine cars. “My guess is, as more EVs are on the road there’ll be a niches for retailers to combine the cost of charging with services like coffee or car washes and so on.

“I would also expect there would be a role of government to roll out infrastructure to generate confidence in the EV market – and that is entirely within the capability of state budgets to do that without big costs.”

Jafari says businesses such as shopping centres and those in regional towns are rolling out charging stations to attract customers.

“In more mature markets in Europe, EV charging is done where you are – at the movies, in hotels, in shops or towns which are off the main highway,” he says.

“The electricity grid has already been built so charging stations are relatively cheap to build, so businesses don’t care about the 30¢ in electricity it costs to charge your car if they get you into their shop.”

Also in the Future Power series …

With a worldwide energy revolution under way, where is Australia up to? In this six-part series, we’re exploring some of the issues in green (and perhaps not so green) energy and reviewing how new technologies – and the issues that come with them – are set to shape up in 2021 and beyond.

What’s a “just transition” and can you switch to green energy without sacking coal workers? Science says the switch to renewables needs to be fast while workers on the ground say it should also be fair. We ask, how did Germany do it? And could Australia really have a “just transition” too?

What is the role of gas in a green economy? We explain why the Australian government wants more gas and we ask, how clean is it actually? So what, then, is the future of gas in Australia?

What is carbon capture and storage (and does it work)? We unpack “CCS” and variations on it. What are the hopes for them? And why are they so devilishly hard to pull off? 

Still to come … How big are batteries now? and Is hydrogen the new super energy source?  

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