The lack of fuel standards and a national zero emissions commitment is keeping cheaper electric vehicles out of the market and discouraging take up of the technology, according to market watchers.
New analysis from comparison site Compare the Market has found that it would take 16 years of driving before the purchase of an electric vehicle would became more cost effective than a petrol car.
However the price point for the EV used in the comparison is $67,205 while for the petrol vehicle it’s $28,990. So despite the fuel costs for the year averaging $2,531.25 for the petrol car compared to only $55.50 for the $40,000 price differential means the EV wouldn’t stack up for 16 years.
Fewer models available
If you bought a cheaper EV, catchup time would be a lot less but economical EV models aren’t available in Australia. The analysis uses a pricey Hyundai Kona SUV but even if you went for a cheaper vehicle the best deal you could get would be about $50,000 which still keeps it out of the race with the petrol runabout.
As the chart below shows, if you were buying in the UK you could pick up six different cars for less than $40,000. And those prices would finish up even cheaper because of government incentives and overall there are far more EV models in the UK market than here.
There is a Catch 22 situation that is keeping cheaper EVs out of the Australian market. “The challenge is to get a broader range of of models into the Australian market but to do that there needs to be regulation or fuel standards that demand reduced emissions,” said Rupert Posner, an executive with activist researcher CimateWorks.
Fuel standards are a major driver in the US and the UK and they work like this. Manufacturers are given an overall fuel consumption standard in the market which they must conform to across their total sales.
That means if they sell a lot of high fuel consumption cars they have to balance their market exposure with sales of low or no emissions vehicles like EVs or hybrids to meet the overall target. That in turn encourages big manufacturers to save lower margin, cheaper EVs for those big markets where emissions targets are mandated to ensure they can sell them in the necessary numbers.
“Without a strong signal from government they’re more likely to send vehicles to those big markets,” Mr Posner said. As the chart below shows, the Australian market is currently almost forgotten by the big manufacturers.
Of course car purchases are not all about price and plenty of people will pay more than the base rate for a petrol car because it meets their needs or fancy. And for those people the EV offer can be compelling with maintenance as well as fuel costs far below those for petrol cars..
“There are some people for whom electric vehicles are already cheaper because of the way they use them,” said Behyad Jafari, CEO of the Electric Vehicle Council (EVC).
EV costs higher
Currently EV manufacturing costs are 50 per cent higher than petrol models, mainly because of the price of batteries and the heavy research and development costs being incurred as the technology rapidly evolves.
However, EV prices are set to decrease to an average of $41,184 by 2030. according to The Bureau of Infrastructure and Transport Research Economics. And there is also the imperative of emissions reduction for the environment.
“Because we do need to reduce emissions we do need to transition over to electric vehicles. In Australia we have some of the most heavily polluting cars in the world and you pay absolutely nothing for the pollution you create,” Mr Jafari said.
“So over 10 years EVs are more expensive because taxpayers are footing the bill for a part of driving a petrol or diesel vehicle,” Mr Jafari said. “But there is a price attached to pollution- it makes people sick and our environment worse.”
While there is no significant move at a federal level to force emissions reductions on the motor industry NSW and Victoria have implemented 50 per cent no emissions targets by 2030 for manufacturers selling vehicles in their states.
Victoria, however, will introduce a 2.5c a kilometre road tax on EVs.
The analysis found that EVs are capable of achieving the equivalent fuel economy of 55km per litre of petrol. That equates to the same efficiency as a car with a 50 litre tank having a range of 2750 km before refueling.
Alina Dini, CEO of net zero consumer experience group Whirl, said there were two significant ways to get cheaper EVS. One was the AGL Subscription Service which provides use electric vehicles for rent for as little as $235 weekly.
“The Good Car Company imports used electric vehicles from Japan that are around two years old and can be bought for between $20,000 and $40,000,” Ms Dini said. New Zealand has a much higher per centage of its fleet as EVs than Australia and most of those are second hand, she said.
Building both electric and hybrid vehicles produces an average of 13 tonnes of carbon while petrol vehicle production results in 10.5 tonnes of carbon emissions.
The EVC reported that 8,688 electric vehicles were had been purchased in the six months to June 2021 compared to 6,900 over 2020.
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