Electric vehicle taxes, slated by the Victorian and South Australian state governments for 2021, will dramatically limit the uptake of electric vehicles in Australia, according to a new report from the University of Queensland.
The transport sector is currently responsible for about 18 per cent of Australia’s greenhouse gas emissions, and light vehicles 10 per cent.
Both Victoria and South Australia have stated aims to reach net-zero greenhouse gas emissions by 2050, however taxing electric vehicles puts those targets in jeopardy, according to report author and University of Queensland E-Mobility Fellow Jake Whitehead.
The preliminary report, which is yet to be peer reviewed and is based on surveys and modelling, forecasts that the proposed 2.5 cent-per-kilometre taxes will mean electric vehicles (EVs) will make up between 30 and 40 per cent of new vehicle sales in those states by 2050.
“In the worst-case scenario … [electric vehicles will make up] no more than 30 per cent of new car sales by mid-century, which is ridiculous,” Dr Whitehead said.
We’re just being pushed further and further into the wilderness.”
A study done for the Australian government last year suggested that with a business-as-usual approach without any additional taxes or incentives, electric cars would account for about half of all new cars sold in Australia by 2035.
That rises to about 65 per cent by 2050.
Only by offering significant incentives can Australia hope to get to a 100 per cent electric vehicle market in line with a net-zero emissions target by 2050, according to Dr Whitehead.
“Our early modelling suggests that the proposed 2.5 cent-per-kilometre EV road taxes could result in a 2050 sales rate that is at least 25 per cent lower than business as usual,” he said.
“Only the best-case scenario gets us [to 100 per cent EVs] – that’s not the central scenarios, that’s the best-case scenarios.
“What I’m really concerned about is state governments continuing to use that [net-zero] rhetoric but then not backing it up with action.”
Given the likelihood that overall vehicle numbers will increase in Australia alongside population growth, having more than half of those vehicles being petrol and diesel powered will continue to contribute to our greenhouse gas emissions through to 2050.
As part of the report, Dr Whitehead’s team surveyed 500 households on what incentives would be most likely to encourage them to buy an electric vehicle.
Exempting EV drivers from existing road taxes had the most significant effect on those surveyed, followed by offering monetary credit for electricity costs.
This concurs with a 2018 ARENA report that noted that “financial costs, and particularly reductions in upfront purchase costs” had the strongest impact on EV uptake.
Other incentives, such as stronger public charging networks and access to free charging, were seen as playing supporting, rather than leading roles in vehicle sales.
A South Australian government spokesperson did not respond to questions put to them about whether they had modelled the potential impact of a tax on electric vehicle uptake.
However, the spokesperson said it was “important that all road users contribute fairly” to road costs.
“The Marshall government is investing a record $18.3 million in its electric vehicle action plan, including $13.4 million to roll out a statewide fast-charging network,” the spokesperson said.
“This will help drive the uptake of electric vehicles and help reach the Marshall government’s target of a 50 per cent reduction in carbon emissions by 2030 on 2005 levels.”
A spokesperson for the Victorian government also said the tax was “fair” and that the state is still on track to achieve net-zero emissions by the middle of the century.
“The government has set a legislated target of net-zero emissions by 2050 and we will be announcing a range of policies to deliver on that target,” the spokesperson said.
Electric vehicles in Australia: the state of play today
Globally electric cars accounted for 2.6 per cent of all new car sales in 2019 or about 2.1 million cars.
That was much higher in places like China where EVs comprised about 5 per cent of the market, the EU around 3.5 per cent, and Norway, where more than half of new cars were electric.
Norway is aiming to phase out new petrol and diesel cars by 2025.
But Australia is lagging far behind. In 2019 electric cars made up just 0.6 per cent of new car sales for a total of just over 6700 new electric vehicles.
While that may not sound like a lot, there were just 2216 sold the year before in 2018. And if we go right back to 2011, only 49 Australians bought EVs.
Viewed in that context, the Australian electric vehicle market looks to be in the early stages of a strong rise.
While there’s been an Australian and worldwide downturn in car sales due to COVID-19 this year, electric car sales here and internationally have bucked the trend.
And although there’s talk that hydrogen technology could rival electric vehicles, that’s not going to happen, according to Peter Newman, an energy, transport and sustainability expert at Curtin University.
“The 2020s is the time when [electric vehicles] will dominate the market,” Professor Newman said.
“[Hydrogen] is fantastic for industry in regional and rural areas and a fantastic option for green industry, things like green steel exports … [but] EVs and lithium ion batteries have won – they’re clearly the better option. We just need to roll it out.”
There are 24 electric vehicle models available in Australia and more than 2300 public charging stations.
Where are we headed?
There are a lot of factors besides a driving tax that will influence the adoption of electric vehicles in Australia.
Increasing oil prices in the future could mean electric vehicles become the more cost-effective alternative to drive, and upfront cost of EVs will also impact consumer choices.
The cheapest electric vehicle on the Australian market right now is about $44,000, which is still out of reach for many.
However, prices are expected to continue to fall over the next few years.
Research by the Electric Vehicle Council has found that 56 per cent of people surveyed said they would now consider purchasing an electric vehicle as their next car.
While range anxiety and lack of access to charging stations are still identified as impediments to people buying electric vehicles, that is becoming less of an issue as EVs become more mainstream, according to Dr Whitehead.
“People are becoming more familiar with the technology. They’re getting exposed to seeing charging infrastructure around the place,” he said.
“We’ve noticed in the consumer work we do, there’s been a change in the understanding of the technology.”
Australia’s slow adoption could leave us scrambling to catch up
Britain has recently joined the growing list of countries planning to phase out new petrol and diesel vehicles by 2030, and more countries should be doing the same, Professor Newman said.
“The 2030 phase out of diesel and petrol vehicles should be a world standard,” he said.
But right now, our electricity grid would not be capable of sustaining a 100 per cent electric vehicle market.
To be able to cope, we need to install large-scale community batteries to manage peak loads and integrating charging infrastructure into public transport stations.
“It’s just a matter of rolling it out. It’s a matter of removing barriers,” Professor Newman said.
“The technology is there.”