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Electric car revolution fails to spark for Australia consumers

Resource-rich economy still heavily geared toward fossil fuels

A Tesla dealership in Sydney. Electric vehicles in Australia have so far not taken off with consumers.   © Reuters

SYDNEY -- Australia is bucking the global trend of sharply increased demand for electric vehicles, with lackluster sales of Teslas and other models despite the country's important role in the global supply chain.

Just 7,000 electric vehicles were sold in the country in 2020, an increase of about 250, or under 4% over the previous year, according to figures from the country's Electric Vehicle Council, which represents the industry. That compares with a 43% surge in electric vehicle (sales globally to 3.2 million even as overall car sales slid by a fifth.

EVs make up 4.2%, or 134,400, of all cars sold worldwide. In Australia, they account for a mere 0.7% of the 1 million cars sold annually, making it one of the slowest adopters of clean automobile technology.

Resource-rich Australia is a leading supplier of key battery minerals to the electric vehicle segment. But its economy is also heavily reliant on fossil fuels -- something that advocates of more EVs say is holding back the sector.

Industry experts blame an absence of a clear policy to promote EVs, with the country's conservative government seen as a major supporter of coal.

James Prest, a lecturer in environmental and energy law at the Australian National University, said that because of Australia's retrograde national climate change policy and a reluctance to acknowledge the urgency of climate change, "our national transport sector policy is laughable. Really, it's a go-slow policy on electric vehicles."

A national EV policy was recommended by Australia's Parliament in January 2019, but there has been no movement on it. A whittled down discussion paper on a 'future fuels strategy' was released in February but ignored previous expert recommendations and ruled out any financial incentives from federal government to help motorists switch to electric cars. Nor did the paper suggest any clear target for new EV sales.

"Essentially, the whole array of policy and economic incentives that could be marshaled towards encouraging people to choose electric vehicles has not been engaged with by the national government," Prest added.

Advocates of more action look to countries such as Norway, which last year became the first where electric vehicle sales overtook petrol and diesel-engined vehicles. EV buyers receive a variety of incentives such as zero import taxes, sales tax exemption and free use of toll roads.

The most popular electric car in the Scandinavian nation -- Volkswagen's Audi e-tron -- retails for the equivalent of $92,000 Australian dollars and sold more than 9,000 units last year.

By contrast only 64 e-tron vehicles were sold in Australia, where the model retails for nearly AU$150,000, largely due to import duties, a luxury car tax and no financial subsidy for the buyer.

Behyad Jafari, chief executive of the Electric Vehicle Council, says the lack of any buyer incentives and fuel efficiency standards in Australia has made it difficult for carmakers. "New technology carries a price premium and since there is no incentive in place it becomes difficult for customers to overcome the high ticket prices," he said.

Global automakers frequently trial new models under difficult conditions in Australia's vast outback, but offer only about 28 electric car models in the country, of which only two retail below AU$50,000. By comparison, over 100 models are available in the U.K. alone.

Consumer unfamiliarity with electric cars, combined with relatively higher prices and limited charging infrastructure have contributed to a snail-paced rollout of fully electric vehicles in Australia. The country has more than 2,300 EV charging points but only 357 of those are fast-charging -- capable of recharging a vehicle's battery in under two hours. By comparison, the U.S. state of California alone has around 22,000 charging points.

Some consumer shy away from purchasing EVs, believing that would require a supercharger in their garage when all they actually need is an ordinary power point, ANU's Prest said.

The industry says Australia needs to set a realistic time frame for phasing out petrol- and diesel-powered vehicles.

According to official estimates, only about a quarter of all vehicles sold in Australia will be electric by 2030. However, that contradicts the targets of Australian states to achieve net zero emissions by 2050. The EV Council's Jafari points out that all new vehicles will need to be electric between 2030 to 2035 to be able to hit that target.

Proponents of more EVs see grounds for optimism in Australia's growing demand for new hybrid vehicles, which combine an electric motor with a petrol or diesel powered engine. Sales ballooned to about 60,000 units in 2020, up 50% from a year ago. Some in the industry see this as suggesting that there is latent demand among Australian buyers for greener vehicles.

The country is also seeing a small yet rapidly growing market for used electric cars from Japan, prompting state and local governments to fill some policy gaps.

Most states now incorporate some degree of EV planning. They are setting targets for electrification of their own public vehicle fleets and providing funding for charging infrastructure. But standards vary significantly.

For instance, the Australian Capital Territory exempts stamp duty and registration fees and provides AU$15,000 interest-free loans for electric vehicle purchases. Larger New South Wales does not provide any financial incentives while Victoria and South Australia have some rebates but also call for EV owners to pay road user charges.

For carmakers, having a consistent policy or transition strategy across the country is important.

"Regardless of what the state or federal governments are doing, the vehicles will be arriving in the coming years because of consumer choices," said Scott Nargar, who works on government relations for the Australian arm of South Korean carmaker Hyundai. "We have to ensure the transition is smooth by making sure we have the infrastructure in place in Australia."

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