Opinion

John Hewson
The case for electric vehicles

Unfortunately, Australia is currently and correctly identified as a “climate laggard” – both in terms of our emissions reduction targets and in terms of our overall policy response to achieve those targets. This is most conspicuous in our absent commitment to the decarbonisation of the vehicle fleet and especially in our response to electric vehicles.

Rather than accept the inevitability of the transition to EVs, to prepare for it and to be smart enough to facilitate it, as many other countries are doing, we are ignoring the future manufacturing possibilities and opportunities and squandering billions of dollars of investment and thousands of jobs.

The Morrison government’s only response to date has been the scare campaigns they launched against the Shorten opposition at the most recent election, mocking his attempt to detail an EV strategy with fallacious claims that the policy would “end the weekend” by forcing people to drive cars that were “not going to tow your boat”. Evidence has emerged that demonstrates the naivety and inaccuracy of these claims, including many photos of electric vehicles towing not only large boats and caravans but also a 747. But the damage had been done. People expressed fear about the transition to electric cars and Labor has dropped its policy.

We desperately need a government-led overarching EV transition strategy that focuses on both the demand and supply side of the issue, including the need to develop essential infrastructure. The Morrison government has made it clear that it will not offer any assistance to purchase an EV. Compare this with the United States, Germany, France, Italy, Britain and Japan, which each have incentives worth about $10,000 for EV purchases.

There have also been substantial commitments to public–private charging points in these countries, and commitments to government fleet vehicle and bus contracts, and to facilitating the transition to low-emissions vehicles. Furthermore, many countries have set firm targets to ban the sale of combustion engine vehicles by 2025 or 2030. Norway is a standout in terms of the adoption of EVs. Its EV sales were more than 50 per cent of its market last year, with the waiving of sales tax, import tariffs and tolls.

Notice the Morrison government has been attempting to distract from the inadequacy of its own climate response by throwing barbs at China. How embarrassing for them to have to recognise that China is well ahead with its EV strategy.

Interestingly, the latest global data reflects the strong growth in electric car sales. Sales rose 140 per cent year-on-year in the first quarter of 2021. The main driver was China, with about 500,000 vehicle sales. Europe recorded about 450,000.

Although sales have picked up in Australia, despite all the uncertainty of government policy, they are well off the global pace. The Electric Vehicle Council shows new sales of more than 6900 last year. Australians now have access to 31 electric passenger vehicles from 12 manufacturers and the industry is forecasting 27 additional models will enter the market by the end of next year. It is important to note that media reports are quoting industry experts predicting full manufacturing cost parity with combustion engine cars by 2025 at the latest. The Morrison government should seek to capitalise on this.

As with so much of Australia’s response to climate, it’s the states that are leading in terms of both emissions reduction targets and effective policy responses to the EV transition. Victoria has set a sales target of 50 per cent new vehicles to be zero emissions by 2030, while NSW has done the same and has said EV will be the “vast majority” of new cars sold in the state by 2035. Both states offer financial rebates of up to $3000 for new EV purchases. The NSW package is set at $500 million and has boosted industry confidence significantly.

It is a tragedy that in all this the federal government ignored the excellent report of the parliamentary select committee on electric vehicles chaired by then independent senator Tim Storer. The committee had consulted widely and carefully dealt with the many challenging elements of such a transition, offering clear transition steps and pathways in the run-up to the most recent election. It called for “a national strategy to facilitate and accelerate EV uptake and ensure Australia takes advantage of the opportunities and manages the risks and challenges of the transition to EVs”.

The government’s choice to do nothing with this substantive document, in favour of running a cheap negative political scare campaign, was both reckless and irresponsible. Very obviously this was a key element of their re-election strategy, coming on top of the massive pork-barrelling exercise built around rorts for sports clubs, regional grants and car parks, directed to important seats that they wanted to retain or win.

The failure of the Morrison government to introduce an effective national EV strategy, along with its failure to clean up its petrol and commit to global vehicle emissions standards, has resulted in much negative comment from global car manufacturers. Volkswagen, for example, has labelled Australia a “Third World auto market”. As a result, it says, it can’t prioritise Australia for EV deliveries relative to many other global markets. In the company’s words: “Regulatory backwardness makes it almost impossible to make a case to the factories for prioritisation … First World markets where there are significant penalties for failing to meet emissions targets will naturally be the first in line for zero emissions vehicles.”

A particular focus of the senate report was on the opportunity for manufacturing EVs in Australia, leading to the following recommendation: “The Committee recommends that the Australian government develop and implement a comprehensive 10-year EV manufacturing road map, also covering research and development, vehicle and system design and manufacture batteries, telematics, supply chain and component manufacturing.”

Of course, the Morrison government has done nothing with this recommendation either. Adding salt to our auto wounds is the fact that while we could never be cost competitive in manufacturing traditional cars at scale, we did, as a nation, have particular skills and demonstrated expertise in design and in manufacturing key parts and components, such as wheels, braking systems etc, which were successfully exported. This industry was left to fail by the Abbott government, rather than being part of a transition. I have been told that global EV manufacturers such as Tesla have picked up some of the people with these skills since, taking them abroad. How could this happen? Why did we so easily miss the opportunity to begin our own EV manufacturing business?

I have personally seen some of the consequences of this unfold. A couple of years ago I joined with Zali Steggall at a Smart Energy conference in Sydney to launch an Australian small van, ACE, with considerable potential not only for our domestic delivery and courier market but also to export the technology to developing countries on a turnkey basis. It has the potential to be a half-billion dollar company in five years, with the prospect of annual domestic sales reaching 54,000 units by then. Its attraction to investors is as a highly focused energy software company crating electric mobility and storage. They claim it as e-mobility for people, goods and energy.

The developers of ACE have struggled for attention and support in Australia – from government, banks and other financiers, regulators and university partnerships. Unfortunately, it promises to be a repeat of so many other Australian technology innovations, having to go offshore for development support. The company is now considering basing its manufacturing operations in Thailand. This should be particularly embarrassing to a country that aspires to be recognised globally as clever and technology-driven.

It is very difficult to understand or accept why Prime Minister Scott Morrison has so readily ignored all the growth opportunities that would flow from having based his Covid-19 recovery strategy on broad, essential climate transitions across all the key sectors: power, transport, agriculture, property and industrial processes. Instead, he has taken the retrograde step of focusing on new gas and coal-fired power generation – a massive abrogation of his responsibilities to lead on these big issues in the national interest, and to govern to the benefit of current and future generations of Australians, rather than just to the benefit of party donors and mates.

This article was first published in the print edition of The Saturday Paper on Sep 18, 2021 as "Driving backwards from zero".

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John Hewson is a professor at the ANU Crawford School of Public Policy and former Liberal opposition leader.