Our first in a series on the complex and interdependent nature of the transport system, Rachel Lynskey explores why electric vehicles are an important part of the net zero conversation – but not the whole picture. 

Australia’s transport sector includes one of the most energy- and emissions-intensive road vehicle fleets in the world. Eighty-two per cent of emissions in the sector come from road-based transport, and 62 per cent is specifically from private passenger cars. As the infographic above shows, Australia can rapidly reduce emissions by electrifying a range of vehicles such as cars, trucks and buses, and other modes including micro mobility and trains, and powering all these modes with 100 per cent renewable energy.

Countries around the world are moving in this direction. Norway has achieved major electric vehicle uptake over the last decade by using incentives including tax reductions and subsidies for vehicles; financial compensation for scrapping fossil-fuelled vehicles; and increasing infrastructure for charging. The USA has committed to transitioning all government vehicles and public buses to electric. To meet a target of 100 per cent zero-emissions vehicles by 2035, California offers incentives of US$1,500-7,000 for purchasing or leasing a new zero-emission vehicle, while electricity companies provide rebates for customers driving electric cars. The UK is progressively banning the sale of petrol and diesel vehicles. Currently, electric vehicles make up 11 per cent of new vehicle sales in the UK and six per cent in China.

Meanwhile, in Australia, electric cars make up only 0.6 per cent of the vehicle fleet. To increase uptake, Australia needs clear policy direction. Climateworks analysis has modelled four pathways to net zero by 2050 for Australia. Based on these,  between 50 and 76 per cent of new car sales in Australia must be electric by 2030, with the higher target of 76 per cent aligning to a scenario that limits global warming to 1.5 degrees Celsuis. This is far more rapid than the Australian Governments’ Emissions Projections, which anticipates 26 per cent of new car sales will be battery electric or plug-in hybrid in 2030. Austroads – representing Australian and New Zealand transport agencies at all levels of government – found that, for all road vehicles to be zero-emissions by 2050, sales of internal combustion engine passenger vehicles must end by 2024.

Electric vehicle technology is well-established internationally for passenger and light commercial vehicles – ready to be deployed at scale in Australia, with the right supporting environment. Targets, subsidies and standards can kick-start a local electric vehicles market. Electric vehicle policy should sit within a broader emissions reduction strategy that prioritises the reduction of transport demand and shifting to more efficient modes of transport, including public transport, walking, cycling and shared mobility options.

Electric vehicles bring other environmental and social benefits, too: they are cheaper to maintain, reduce noise and air pollution, and can play a role in addressing increasing fuel insecurity in Australia. A local electric vehicle market can create jobs in construction, electrical trades and infrastructure manufacturing. PwC found that building infrastructure to support three million electric vehicles is estimated to generate a net increase of 13,400 jobs in 2030, compared to 2017. 

Electric passenger cars are expected to become cost competitive, or cheaper, than conventional vehicles by the middle of this decade internationally – but Australia is likely to lag behind due to slow uptake. Using financial incentives is an important way to bring down the upfront cost of electric vehicles, until price parity can be reached. This will enable people to make vehicle purchase choices based on total cost of ownership. It also encourages vehicle manufacturers to introduce more models, increasing choices and supporting associated investment such as charging infrastructure, or skills and training for mechanics and dealerships. 

Subsidies can be scaled based on the size of the market: greater incentives while the market is small, and a planned wind-down once vehicle sales hit certain milestones. They can be targeted towards particular product types or buyers, for example company fleets, since 50 per cent of annual new vehicle sales in Australia are generated in this segment. In some jurisdictions, the market for electric vehicles has matured to the point that support is gradually being rolled back: the UK electric vehicles grant scheme has been in place since 2011, initially offering grants for ‘ultra low emissions cars’. Since then, grant criteria has narrowed to only include ‘zero emissions vehicles’, lowest cost models, and offering a low grant amount. In China, significant subsidies for the last decade are now gradually being rolled back so the industry can become more independent.

Incentives and subsidies need to sit within a broader electric vehicle strategy that covers infrastructure, reguluation, education, road pricing and targets. These measures should also consider the future impact of autonomous vehicles on emissions. For Australia to adequately address transport emissions, a supportive zero-emissions vehicles policy is long overdue. 

States are beginning to put in place policy to increase zero emissions vehicle uptake, in both the community and in government fleets. Both New South Wales and Victorian state governments have announced subsidies of $3000 for an allocated number of electric vehicle purchases. Additionally, New South Wales will phase out stamp duty for electric vehicles, while the ACT has interest free loans of up to $15,000 for the purchase of zero emissions vehicles. New South Wales, the ACT and Tasmania are transitioning their entire fleets. All newly leased passenger fleet vehicles in the ACT are to be zero emissions (where fit-for-purpose), starting in 2020–21. New South Wales set a target for 100 per cent electric passenger fleet by 2030, as has Tasmania. The Tasmanian government estimates this transition will save the state $2 million in maintenance and $6 million in fuel costs this decade.

Now’s the time to start a discussion in your company or organisation on transitioning your vehicle fleet, or even planning for an electric vehicle at home. Our research has shown that most electric vehicle options have a similar or lower total cost of ownership than current fleet vehicles, over the vehicle lifecycle.

Electric vehicles, and policy to support their uptake, needs to sit within a broader emissions reduction strategy for the transport sector. This includes reducing demand for transport and shifting to more efficient modes of transport such as public transport, walking, cycling and shared mobility options.

Look out for our coming blog posts that dive into the other areas of the sector, including where hydrogen fits and how public and active transport can be incorporated into infrastructure. In the meantime, find out more about our work on transport and electric vehicles.