Finance Finance News Australia is losing the electric car race for no good reason

Australia is losing the electric car race for no good reason

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Electric vehicles are expected to be cheaper overall than petrol or diesel cars within a year. Photo: Getty
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The fact that the British government has just announced £340 million ($594 million) in new funding to accelerate the rollout of electric cars should be a wake-up call to a far more car-dependent nation like Australia.

That chunk of its 2017-18 budget, converted into our currency and adjusted for Australia’s lower population, would be about $200 million – can you imagine Canberra signing off on that kind of boost for electric vehicles?

British chancellor Philip Hammond is spending £200 million ($349 million) to double the size of an existing fund to accelerate the rollout of charging stations around the country.

To that he’s adding a £40 million ($70 million) fund to back charging technology research and development, and adding £100 million ($165 million) to a fund that subsidises the purchase of electric cars.

So why would he do that, when in Australia calls for such subsidies fall on deaf ears?

Perhaps because, besides the well-known environmental and public health benefits, the UK government knows that by this time next year electric vehicles will also be cheaper than comparable petrol or diesel cars.

In May of this year investment bank UBS released a study showing that “total cost of consumer ownership [of EVs] can reach parity with combustion engines from 2018”.

That’s because despite the high purchase price, maintenance costs and ‘fuel’ costs are much lower over the life of the vehicle.

That is confirmed by an Australian study released by the NRMA and the Electric Vehicle Council which estimates the ‘per litre equivalent’ costs of petrol and electric cars are $1.23 and $0.30 respectively.

The net savings could be far higher in Australia than in the UK, because not only does the average motorist travel further each year – 15,500km and 12,700km respectively – but more Brits eschew car travel altogether in favour of more highly developed public transport networks.

Who can afford one?

You might think that motorists will baulk at paying around $40,000 to $50,000 for an entry-level vehicle until you consider the dramatic rise of lease-hold ownership of vehicles in recent years. We are already accustomed to spreading the cost over the life of the product.

Just as consumers don’t pay $1000 up front for their smartphones, nobody has to find $50,000 up front for a car that will save them around $1900 a year in fuel, according to the NRMA report. The entire cost of ownership can be packaged up, just like a lease-hold plan or mobile phone plan.

So why aren’t consumers queuing up for electric cars the way they are in the UK, China, the US, Germany, France, Norway and elsewhere?

Well the charging networks are only being rolled out in experimental pockets, and governments are reluctant to assist.

Part of the problem is the short-sighted politics that has gripped the nation since 2009, when former Liberal leader Tony Abbott began drowning out sensible debates on ‘cost and benefit’ with bogeyman fear-mongering over ‘debt and deficit’.

Using public funds to accelerate the rollout of a charging network would offer motorists the choice of cheaper travel – just as the public funding of a new train line does – but would also reduce the cost of health problems caused by petrol and diesel vehicles emissions.

But for that to happen, Australia’s political culture needs to change – and a lot.

As an example, the government could easily do more to exempt electric vehicles from the 30 per cent luxury tax that is slapped on petrol-fuelled prestige vehicles.

Electric vehicles are allowed a slightly higher threshold (around $75,000 instead of $65,000) but why not drop the tax altogether for EVs?

Wouldn’t we prefer lead-footed executives to roar through our CBDs in emissions-free Teslas or BMWs rather than polluting Maseratis or Ferraris?

To catch up with the EV revolution happening abroad, it’s critical mass that counts.

When enough users are demanding charging stations, they will literally start to replace pumps at service stations, besides mushrooming in other locations such as shopping centre car parks.

A heavy car-use nation such as Australia has everything it needs to win the electric car race except one crucial input ­– a forward-looking  government that realises the revolution is passing us by.

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