By Mace Hartley, executive director, Australasian Fleet Management Association (AFMA)
Australia takes its time adapting to change. Electric vehicle benefits remain unrealised, so what more can we do?
Impressively, 2016 was a record year for new vehicle sales driven largely by business and rental markets with private sales delivering the worst result since 2013. For the first time since 2013 non-private sales exceeded half of total new vehicle sales (excluding heavy vehicles).
The Paris Agreement in November 2015 saw over 190 countries – including Australia, US, India and China – sign an agreement to limit global warming to well below 2.0 degrees Celsius, aiming for 1.5 degrees. The agreement entered into force on 4 November 2016 and was ratified by Australia on 9 November 2016.
Australia set ambitious targets to reduce emissions by 26-28 per cent below 2005 levels by 2030, which builds on the 2020 target of reducing emissions by five per cent below 2000 levels. Further, Australia committed to contributing towards the global goal of reaching net zero emissions by the second half of this century.
Transport represents 18 per cent of Australia’s total emissions. Within this, road transport accounts for 85 per cent with the largest impact being cars and light commercial vehicles at 72 per cent.
Given vehicles represent a huge portion of Australia’s emissions you would think sales of alternative fueled vehicles would increase. Whilst diesel has made inroads, electric vehicles (EVs) had their worst result since 2013 with step declines from 2014 and 2015, and LPG-only vehicles continue to decline as they are no longer available in Australia. (Table 1)
So, what’s stopping the uptake of EVs?
There are many factors, with high vehicle price, lack of suitable vehicles and charging infrastructure topping the list. Wealthy private buyers with higher disposable cash are purchasing Teslas and BMW i3s with few other options available, whilst non-private fleets struggle to find a vehicle fit-for-purpose at reasonable pricing with Nissan Leaf and Mitsubishi iMEV no longer available.
What’s going to change?
The government has recently released two draft Regulation Impact Statements for discussion and feedback. They’re called “Improving the Efficiency of New Light Vehicles” which considers the introduction of mandatory fuel efficiency standards which 80 per cent of the global light vehicle market already has in place in the US, EU, Canada, China, South Korea and India (amongst others), and “Vehicle Emissions Standards for Cleaner Air”, which considers the introduction of more stringent noxious emissions standards for light and heavy road vehicles which again already exists in most developed countries.
How will “improving the efficiency of new light vehicles” drive an increase in EV sales?
The term efficiency in this case relates to the grams of carbon dioxide (CO2) per kilometer a vehicle produces. In 2015 the average efficiency of new light vehicles sold in the EU was 120g/km whilst Australia was 184g/km. There is a range of ways to introduce targets; an example from overseas, manufacturers must meet average efficiency targets across their entire vehicle portfolio. This means they can still offer higher emission vehicles but need to sell more low emissions vehicles such as EVs to reduce their overall emissions.
In December, the government released its emissions projections for 2016 which includes a range of assumptions including that EVs will represent 0.5 per cent of new vehicle sales in 2020 and 15 per cent in 2030. For 2020 that’s an increase of 5,672 vehicles or 2,589 per cent over the 219 vehicles sold in 2016 and by 2030, an increase of over 176,000 vehicles or 80,594 per cent.
There’s clearly much to be done. Mandatory emission targets may increase the number of EVs on offer but simply increasing availability won’t necessarily increase demand. Both state and federal governments will need to consider incentives to drive private and non-private demand. State government levers could include reductions in stamp duty, lower registration costs, dedicated road lanes and preference parking.
The federal government already provides some incentive as EVs don’t pay fuel excise and other options could include removing FBT or lowering the luxury car tax for EVs. Whilst each of these measures will help, more is needed to reduce the purchase price of EVs in the short term before they reach price parity as the technology and demand matures.
It’s true the cost of EVs is reducing, driven primarily by the falling cost of battery packs, which can account for about a third of the cost of the entire vehicle. In 2015, battery prices fell by 35 per cent and continuing reductions in battery prices are projected to bring the total cost of ownership of EVs below that for conventional-fuel vehicles by 2025, eight years from now!
There is no doubt alternative fuel vehicles are important to Australia’s emissions targets but it’s unclear what’s going to jump start an increase in sales. There are many stakeholders working to support the uptake of low emissions vehicles, including the EV Council which has been established by industry to advise, advocate for and co-ordinate activities to support the uptake of electric vehicles, and the government continues to work through their options with the Ministerial Forum on Vehicle Emissions. Stay tuned!
Table 1: New Vehicle Sales (excl Heavy Vehicles)
|All Categories Total||1,104,531||1,081,899||1,123,224||1,145,024|
|All Categories Total||100%||100%||100%||100%|
Table Note: This tables excludes Tesla vehicle sales as they choose not to contribute their data to VFACTS.
Stay ahead of the curve, don’t miss the 2017 Australasian Fleet Conference & Exhibition, May 11-12. Book Tickets: http://afma.net.au/conference2017/
Want the latest public sector news delivered straight to your inbox? Click here to sign up the Government News newsletter.