Fuel efficiency standards will get EV sales on track

Australia is lagging behind the rest of the world, but upcoming regulations could change that.

Australia is lagging behind the rest of the world, but upcoming regulations could change that. Photo: TND

The government has finally unveiled its vision to accelerate Australia’s transition to electric vehicles.

The National Electric Vehicle Strategy released on Wednesday set Australia’s goals to increase the uptake of electric vehicles (EVs) to meet the country’s target of net-zero emissions by 2050.

Central to these plans is a pledge to introduce a fuel efficiency standard – but the government is yet to reveal what that standard will look like.

A draft of the policy, which will include details on the fuel efficiency standard, is expected by the end of the year following consultation with industry and community groups.

Australia is joined by Russia as one of the only advanced economies without a fuel efficiency standard.

Australia lags behind

Roger Dargaville, Monash Energy Institute deputy director, said a fuel efficiency standard would require vehicle manufacturers to meet average emission standards.

This means car companies will have to sell more low-emission vehicles, such as EVs and hybrids, to offset the emissions from high-emission vehicles, such as petrol cars.

“[A fuel efficiency standard] actually provides an incentive for the manufacturers to sell … enough low-emission vehicles to keep their quota within the regulations,” Dr Dargaville said.

“Australia has been lacking good transport policy in general, and [is] one of the last developed countries to have an emission policy for the transport sector.

“So [the National Electric Vehicle Strategy is] long overdue, and very welcome.”

More than 85 per cent of the global car market already has vehicle fuel efficiency standards, including the European Union (EU), US, UK, China, Japan, Brazil, India, Canada, South Korea, New Zealand and Mexico.

This leaves Australian drivers paying more at the bowser, with new cars in Australia using 40 per cent more fuel than in the EU, 20 per cent more than in the US, and 15 per cent more than in New Zealand.

EV prices and availability

Australia is behind the rest of the world in EV take-up.

EV sales accounted for about 9 per cent of the global car market in 2021; 15 per cent in the UK, 17 per cent in the EU and 4.5 per cent in the US.

In Australia, EV sales accounted for just 3.8 per cent of the national car market in 2022.

Electric Vehicle Council CEO Behyad Jafari said demand is not the issue holding back Australia – car companies simply don’t have the same incentive to import EVs that they do in countries with fuel efficiency standards.

For example, Hyundai has been drip-feeding its Ioniq 5 EVs into Australia, with demand vastly outstripping supply; the 758 Ioniq 5s made available in 2022 regularly sold out within minutes of the limited launches.

“[Hyundai has] recently published that they had 30,000 customers lined up waiting to buy [Ioniq 5s],” Mr Jafari said.

“Our challenge in Australia isn’t ‘How can we convince more Australians to buy electric vehicles?’ We have tens, if not hundreds, of thousands of Australians who want to get their hands on one today.

“So how can we make more available to Australians, so that they’re able to buy the vehicles … that they want to buy?”

Introducing a fuel efficiency standard would naturally see a wider range of EVs enter the local market, including more affordable options than are currently available.

The electric Ford F1-50 Lightning is hugely popular in the US, but will likely not hit Australian shores until 2024, Ford Australia boss Andrew Birkic told CarExpert this month. Photo: Getty

“There are more electric utes, for instance, available [internationally] than are available to Australian consumers. So [the fuel efficiency standard] would help provide more access to the options that already exist,” Mr Jafari said.

“Our standards aren’t aiming to get car companies to invent new cars.

“We’re saying these already exist, and they’re available to customers elsewhere in the world … we’ll introduce the same standards that [other countries] have so that [car companies] are required to bring them here.”

Climate Council economist Nicki Hutley said the changes will also be about building up a second-hand EV market – something the government will play a large role in, given its regular turnover of public sector vehicles.

The National Electric Vehicle Strategy included a commitment to ensuring 75 per cent of new passenger vehicle purchases and leases for the Commonwealth fleet will be low-emissions vehicles by 2025.

What about petrol cars?

The future of new petrol cars once a fuel efficiency standard is put in place is unclear.

Mr Jafari said prices won’t rise more than they already are, while Dr Dargaville said car companies will likely increase the prices of petrol cars further to encourage consumers to buy EVs instead to meet their fuel efficiency standard requirements.

Either way, Australians won’t be saying goodbye to the car models we know and love any time soon; they’ll still be able to be sold and driven, although some manufacturers may choose to upgrade engines to become more fuel efficient.

Ultimately, drivers stand to make significant savings over the lifetime of a new EV compared to a petrol car.

On average, a petrol car costs about $2400 to fuel annually, while the average EV consumes about $400 worth of electricity per year and tends to have lower maintenance costs as there are only a few hundred parts in an electric car, compared to 2000-plus moving parts in a petrol or diesel-fuelled internal combustion engine vehicle.

Other changes needed

Key to the successful widespread uptake of EVs will be supportive public and private infrastructure.

As much as 80 per cent of EV charging is done at home in Australia, which usually takes between six and 12 hours.

However, public fast and ultra-fast direct current chargers can get the job done within 15 minutes to an hour.

Dr Dargaville said Australia not only has to adapt the electricity network to cope with increased electric vehicles requiring charging – it should also take a different approach to charging infrastructure than other countries given local reliance on solar power.

“Typically in Europe, the model that’s been used is that vehicles charge overnight at homes, which is fine for Europe where they’re dominated by hydropower and wind energy for their green power,” he said.

“In Australia, we’re dominated by solar power … we therefore want the vehicles to be charged during the day where they’re parked.

“And so that means adopting infrastructure at workplaces, train stations, shopping centres, etc, where the vehicles are during the day … It’s quite a different model to what we’ve seen in other countries that have relatively high EV uptake, so we need to build the system to suit Australia’s energy infrastructure.”

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