Australia is lagging other nations, spending billions on fossil-fuel industry subsidies that would be better spent on clean energy solutions such as electric vehicles, experts warn.

Fossil fuel subsidies cost Australia $11.6 billion in the past financial year, money that could help fast-forward the country’s transition to clean energy.

Before this month’s federal budget, the Climate Council has released a paper outlining five clean energy solutions that could be funded with the $22,000 a minute the government would save in fossil fuel subsidies.

Electric vehicle industry investment scored two places on the Climate Council’s recommendation list.

The council found the money saved could pay for one EV charging station for every 12 kilometres of the country’s entire road network, and could help replace Sydney, Melbourne and Brisbane’s entire public bus fleets with electric versions, with 2300 buses to spare.

The findings came as rising fuel prices and international agreements on emissions agreements make the need for a national transition to EVs greater than ever.

But Ajaya Haikerwal, clean transport campaigner at Solar Citizens, told The New Daily a lack of federal government incentives had left Australia lagging New Zealand, the US, and countries across Europe and Asia.

“The state of the EV industry in Australia right now is quite dire, in comparison to a lot of other countries,” he said.

“There’s not really many incentives here for an electric vehicle industry to exist.

“It’s similar to the vaccine game, where you have global supply of electric vehicles, not enough to share around all the countries, and so the manufacturers are sending those to places where they can get the most benefit … and that’s not Australia.”

Electric vehicle costs scaring off drivers

Cost is a major factor in Australia’s hesitant EV uptake.

Canstar Blue data shows Australians spend an average of $40,729 on new cars. But the average cost of an EV in Australia is more than $60,000.

The cost of EVs in Australia is hindering uptake – a ‘chicken and egg’ conundrum.

Getting the less pricey EV options into the market could help generate more public interest, but Climate Council economist Nicki Hutley said the situation was similar to the classic chicken and egg scenario.

For car manufacturers to release a wider range of EV models in Australia, they need to see a strong potential customer base.

But the country had just 20,665 EV sales in 2021, meaning electric vehicles make up just 1.95 per cent of the new car market.

States and territories take the lead

Ms Hutley said the federal government needed to take charge by improving the nation’s charging infrastructure and providing more subsidies and rebates to aid affordability.

Instead, states and territories have been left to pick up the slack.

“There’s probably more work being done on this at the state government than the federal government level,” she said.

“Talking up the market, talking to international suppliers, making sure they know that Australia wants these vehicles and we would like as many as possible so that people don’t have to wait a year, is important.

“But also for a lot of people there is that upfront cost differential.”

States and territories are taking the lead on EV charging stations. Photo: AAP

Ms Hutley pointed to the ACT government as the best example of state and territory leaders taking matters into their own hands.

The ACT government has committed to expanding its EV charging network to at least 180 public chargers by 2025, and its incentives for residents to buy EVs include no stamp duty, free vehicle registration, and zero interest loans of up to $15,000.

Used EVs to meet low-income needs

Mr Haikerwal said such incentives were an important piece of the puzzle, but more work was needed to entice low-income Australians into the electric vehicle market.

“My concern with subsidies in general is that people who have the capital to buy an electric vehicle already might not be the ones who need the subsidies,” he said.

“We need to really make sure that we can bring everyone along with this EV transition as fast as possible, and that’ll mean targeting subsidies based on income.”

But getting enough EVs into Australia for them to trickle down faster into the second-hand market was also important.

Disrupted supply chains meant Australians struggled to get their hands on new cars in the past three years. This, in turn, spurred increased demand for used cars.

“Ensuring we have secure flow of [new] electric vehicles in the country means that in a few years time, they’ll have this big offering to the second-hand vehicle market,” Mr Haikerwal said.

He said ‘grey imports’ – new or used motor vehicles legally imported through channels other than the manufacturer’s official distribution system – were an important opportunity for the second-hand EV market.

Mr Haikerwal pointed to Tasmania’s Good Car Company, the largest importer of second-hand EVs in Australia, as a prime example.

Prices for vehicles sold by the company start from $22,000, compared to almost $50,000 for the cheapest new EV available in Australia.

The federal government had plenty of opportunities to bring in more EVs at affordable prices – it just needed to take action, Mr Haikerwal said.

“We’re at a crossroads,” he said.

“It’s been really promising to see … the National Electric Vehicle Strategy that they’ve opened up a consultation for recently.

“It’d be great to see something come out of that within the first year of government.”

A spokesperson for Climate Change and Energy Minister Chris Bowen told TND the government would work collaboratively with states and territories, industry, unions and consumer groups to deliver Australia’s first National Electric Vehicle Strategy.

As part of the ‘Driving the Nation’ plan, the government plans to establish EV charging stations every 150 kilometres on major roads, a national hydrogen refuelling network, and a low-emissions vehicle target for 75 per cent of the Commonwealth’s new leases and purchases by 2025 to encourage EV growth in the second-hand market.