Advocates believe a perfect storm of competition concerns, new fuel efficiency standards and the axing of archaic parallel-import restrictions could provide “achievable change” that boosts the supply of electric vehicles (EVs) and slashes their prices by around $9,000.
That’s the amount Australians are overpaying for EVs, former ACCC chair Allan Fels concluded in a recent analysis of price gouging that found New Zealanders pay an average of 41 per cent less for the cars – $9,025 on average – because that country does not ban parallel imports of second-hand vehicles like Australia does.
Legislated in the Road Vehicle Safety Act 2018, such restrictions were implemented when Australia still had a domestic car manufacturing industry, but with that sector now defunct, Fels said the restrictions are no longer relevant and – by constraining the supply of new and second-hand EVs and hybrids to the market – have had “a number of significant consequences” including that “prices on electric vehicles are much higher than they should be”.
These consequences also include making it harder for Australia to meet international emissions reduction commitments; exacerbating cost-of-living pressures given EVs’ lower overall running costs; and hurting the livelihoods of mechanics, car repairers and parts suppliers “who would otherwise profit from servicing these vehicles”.
Fels called for the removal of “unwarranted” parallel import restrictions on EVs “immediately” and other cars “as soon as possible” – a move that, he said, would drive “a sharp fall in electric car prices and later in car prices.”
Parallel import bans are just one of many factors contributing to the cost of cars which are also, the government has argued in recently introducing Fuel Efficiency Standards (FES), more expensive to operate than they should be because the absence of FES rules let manufacturers dump models in Australia that consume more petrol than those in other countries.
While other countries introduced FES rules as a response to the 1970s oil crisis, Australia’s failure to do so despite long-understood benefits has left its cars burning 20 per cent more petrol than US cars, on average – wasting money and keeping greenhouse gas emissions higher than they need to be, even as US regulators further tighten the screws on carmakers.
Minister for Climate Change and Energy Chris Bowen believes the New Vehicle Efficiency Standard (NVES) will save Australians around $1000 per vehicle per year in terms of lower fuel and $17,000 over the lifetime of a typical car – equating to around $100 billion in fuel costs through 2050.
Recent changes to standards for the quality of Australian petrol will further boost efficiency and reduce emissions, with Bowen estimating those new rules will cut nearly 18 million tonnes of greenhouse gas emissions by 2050.
“We’re giving Australians more choice to spend less on petrol,” Bowen said. “This is about ensuring Australian families and businesses can choose the latest and most efficient cars and utes, whether they’re petrol and diesel engines, or hybrid, or electric.”
But will EVs really be cheaper?
The implications of cheaper EVs extend far beyond the consumer’s wallet: with Australia staring down tough emissions reduction targets, reducing overall vehicle emissions is a no-brainer for government policymakers and saw “overwhelming” backing in the around 2,700 responses and 1,200 publicly available submissions lodged during last year’s public consultation process.
The NVES will be open for public consultation through March 4, with its planned implementation on 1 January effectively weaponising the NVES as yet another arrow in a government emissions-reduction quiver that now has 102 separate programs in play.
Better emission standards will, Department of Climate Change, Energy, the Environment and Water (DCCEEW) executives told a Senate Estimates hearing this month, help cut Australia’s overall greenhouse gas emissions by 42 per cent below 2005 levels by 2030 – up from a projection of 32 per cent in 2022 and 37 per cent last year.
The new policy will set emissions targets for manufacturers across their vehicle fleets – allowing them to use zero-emissions EVs to offset the emissions of conventional petrol and hybrid vehicles.
By shifting the financial dynamics of the market towards EVs, observers believe the confluence of policies will drive a surge in the supply of EVs to Australia.
A recent Solar Citizens estimate suggested the introduction of a FES would boost Australian sales of EVs from 14,255 registrations in 2020 to over 913,000 in five years – driven in part by the importation of large numbers of second-hand EVs, which in turn could drive new specialised fleet operators to purchase large numbers of the vehicles for hire, lease, or occasional use.
Uber, for one, this year launched Australia’s first fully electric rideshare service, called Uber Comfort Electric, and halved service fees for drivers with EVs on the back of demand that saw Australians book over half a million trips in hybrid and electric Ubers during one week last year alone.
Other fleet operators, such as subscription vehicle provider Splend – which tapped government support to double its EV fleet last year – is adding the vehicles as quickly as it can afford to, and will benefit from a surge in supply lower-cost EVs.
“Electric vehicle sales hit record numbers last year and more Australians want to get behind the wheel of cheaper to run, more fuel-efficient vehicles,” said Solar Citizens CEO Heidi Lee Douglas, “but cost remains a barrier.”
“This new standard will provide more choices of both electric and more efficient fuel-efficient vehicle models, including more affordable electric vehicle options.”
