We finally have a National EV Strategy!

It's great to have a strategy in place 

It’s been a long, long, long time coming and it’s so great to see a National Electric Vehicle Strategy released by the federal government that will put EVs front and centre of a clean transport transition well overdue. 

For the first time, Australia has a chance to get it right, and get it right the first time.

But more importantly - we need to make this strategy happen quickly. 

So far, media focus on the EV Strategy is the introduction of a mandated Fuel Efficiency Standard. 

And rightly so - given Russia is the only other developed economy without a competitive Fuel Efficiency Standard, implementing strong standards will ensure Australia is on equal terms with other markets when it comes to importing more new EVs.

But Australia is still a small market globally, and the Good Car Co believes there is one simple policy change that would not cost the taxpayers a cent. And it would in fact support two of the key outcomes of the strategy: supply and affordability.

First - what’s included in the National EV Strategy? 

The National EV Strategy released on 19th April says it aims to encourage EV uptake in Australia. Its aims are:

• To increase the uptake of electric vehicles in Australia to reduce emissions and thereby improve the health and wellbeing of Australians
• To accelerate Australia towards a future where people have greater choice in cleaner and more affordable vehicles
• To implement initiatives that will reduce road transport emissions, make it easier to charge EVs across Australia, increasing a local manufacturing and recycling (including batteries but possibly to encompass a broader circular economy)
• To establish the resources and infrastructure to enable rapid EV uptake, and thereby encourage more demand for EVs by reducing “range anxiety”
• To consult with various stakeholders on developing a Fuel Efficiency Standard

The strategy is certainly to be commended. At its heart, minister for climate change and energy Chris Bowen says he is committed to introducing “Australia’s first vehicle Fuel Efficiency Standard, to make us competitive with other parts of the world for EV supply.”

It notes that: “Overseas, fuel efficiency standard requirements are a strong driver for the supply of fuel-efficient vehicles.”

It also says it wants an ambitious standard that is “internationally comparable” with overseas markets, and acknowledges that stakeholders want a light vehicle Fuel Efficiency Standard “as a matter of urgency.” 

Unfortunately the policy does not include any actual targets for EV adoption outside of Government fleets - and even then, targets are only that 75% new vehicle sales for the Commonwealth fleet be low emissions by 2025, not zero emissions.  We understand that the last time a public EV target was mentioned was a political nightmare, but we think it's critical that a policy is specific on when and where we are going achieve the outcomes we need!

Urgency and action will be key to a successful  National EV Strategy.

First and foremost, the response from stakeholders and organisations has been welcoming.

But it's only urgent action on all fronts that will put us on the right path for this to have the impact we need for our climate and wellbeing.  

However, there is a general consensus that because the government wants yet another consultation period for the Fuel Efficiency Standard it's contradictory to the matter of urgency it expresses in the strategy.

The loudest voices calling for changes to Australia’s EV policy are asking that the federal government implements an ambitious Fuel Efficiency Standard, and pronto.

Some examples are:

“Strong fuel efficiency standards are the key to unlocking supply of the cleanest and cheapest-to-run cars for Australia - including electric ones,” said Dr Jennifer Rayner, Climate Council Head of Advocacy in a statement.

“The government and industry will be driving with a flat tyre in trying to deliver the rest of the National Electric Vehicle Strategy if we don’t get these in place soon.”

From Dr Fiona Davis, CEO of Farmers for Climate Action: “Many farmers are telling us they want to switch to electric vehicles, but they need more EVs to choose from at better prices.

“Australia’s lack of a fuel efficiency requirement has meant car makers send us their least efficient vehicles. Rural Australians already drive further and pay more for fuel than city Australians, so the cost of living impact is real.”

Carmakers argue there needs to be a balance, because if fuel emissions standards are too stringent they won’t be able to meet them.

But this is because carmakers are already prioritising EV production for other markets, where EV sales are more certain due to more aggressive incentives, policy, and thus greater consumer demand. 

Australia is currently at the end of the line for EV supply which has a big effect on factors such as range and choice for the market, and all signs point to this continuing while  any fuel  standards are not at least in line with overseas.

Importantly, the new Fuel Efficiency Standard consultation paper does not list being competitive with overseas standards as one of its guiding principles. 

Instead, it states it wants to be “broadly consistent” - potentially opening up room for less ambitious standards that still leave Australia at the end of the line for clean, efficient and electric vehicles. 

It would seem on that basis that any policy would in fact stay on the fence with the conservative side of the transport industry.

And, we think there are other omissions in the strategy - we outline a bit more below.

Why have Australia’s EV sales fallen behind?

While we at the Good Car Co. applaud moves towards these measures, we want to be clear on one thing……

Australia doesn’t have an EV demand issue, it has a supply issue. 

Australia is, alongside Russia, one of a small handful of developed nations that do not fine carmakers for exceeding carbon emissions limits under such a standard. By contrast, 85% of the cars sold globally are subject to mandated standards.

So Australia’s electric vehicle sales are currently far behind that of other developed nations.  In March 2023, 7% of new car sales were plug-in electric (92% of these were battery electric) - but globally, the figure was double this in 2022.

Australia’s national car and light SUV fleet emissions intensity was 131 g CO2/km in 2022 according to the latest self-reported figures from carmakers to the Federal Chamber of Automitice Industries (FCAI), whereas European law stipulates a fleet average of 95 g CO2/km.

Carrots AND Sticks enable faster change

Policy can be put into two simple camps.  "Sticks" that mandate change and have regulatory might and potential consequences and "Carrots" that sweeten the transition for the end user.  Using this analogy the Fuel Efficiency Standard is the Stick but what are the carrots?

The EV strategy is relying on two already announced policies and the states to do the lifting for the “carrots”. 

FBT Exemption is a massive incentive for folks who's workplaces will provide this option of Novated Leasing. This effectively reduces the price of EVs by tens of thousands of dollars.  We see this will do most of the “heavy policy lifting”.  Unfortunately, it's not very well targeted (eg low income , pensioners and retirees can't access this benefit).  However, it will put a lot of new EVs on the road albeit with a large cost to the Federal budget bottom line.

Reducing the 5% import tariff on EV’s sounds good but the jury is out when it comes to its impact. Currently there is a 5% tariff on vehicles imported to Australia unless they are managed through a Free Trade Agreement (which many countries have with Australia).  For example the EVs GoodCar imports from the UK have had a 5% Government tax applied at the border.  A 5% reduction in this will be significant for European imports but not so much if these cars are from Asian countries which manufacture most of our cars.  Japan, South Korea, Thailand, China and USA already have Free Trade agreements.  So all we can hope here is that VW, Renault and Citroen can try their hand at the Australian EV market in Australia!

States are doing a lot of hard work with policies and incentives but they are largely ad-hoc.  These include incentives that are coming to a close (come on Tasmania, extend the Stamp Duty Exemption!) to those that are scaling up like Queensland's move from $3,000 to a $6,000 incentive.  It would be great if the nation could get behind a common suite of incentives for EVs.  This would really help, especially for dealers trading into different states.

Can Australia’s EV sales catch up to the world?

By 2030, analysis by SPGlobal predicts 64% of passenger car sales will be battery electric vehicles (not hybrids). In Australia, this would equate to 640,000 new EVs a year.

This again is where you can see Australia doesn’t have an EV demand issue, it has a supply issue. 

Reports of some EV models selling out in minutes is because only small numbers of vehicles have been offered in each sale tranche.

To accelerate the uptake of EVs in this country the Good Car Co focus is on alternative sources of EV inventory.

As Good Car Co noted in its submission to the National EV Strategy consultation, Australia’s 2022 EV sales accounted for 0.3% of the global market. If this trend continues, only around 80,000 of the 27 million EV sales predicted globally by Platts Analytics will reach Australian shores per year by 2030.

Where will all these EVs come from?

Well that’s simple, where all EVs come from now: international markets.

The Good Car Co. view is that some simple changes in parallel import policy can also help address the issue of EV supply in Australia in a significant way.

Current legislation originally designed to protect the now non-existent local car manufacturing industry is out of date. Parallel imports are currently only allowed on vehicles not available for sale here as a new car in Australia. 

However, local arms of carmakers often put new vehicles through the stringent Australia Design Rules testing procedures and register vehicles for sale. 

This immediately rules them out from being imported into Australia by any other party. It's almost as if certain models are deliberately withheld from sale to “corner the market”  - notably ones they seem to models that manufacturers also struggle to secure from overseas HQ, such as……electric vehicles!

Meanwhile, in international markets, there are low-kilometre pre-owned vehicles overseas that we could be bringing here to increase supply and meet demand. In the UK, there are many, many more EV models we could bring here if import rules were loosened up. 

We don't have to wait years for expiring fleet leases and people upgrading their EVs  to drive a preowned EV market here in Australia, it can and is happening right now!

This simple change in law would increase supply, expand choice and competition and drive affordability into the EV market.

The simplest and quickest path to more affordable EVs.

Another key objective in the strategy is to make more EV models available priced below $60,000. Whilst the idea is the right one we think that this figure is not low enough to achieve affordable access for more people.  Given average car purchase costs for Australians vary by State from $34,000 to $45,000 this is more of an indicator of where consumers see affordability.

So how do we supercharge the path to affordable EVs. 

Enabling more imports of low-mileage, high quality pre-owned  EVs is one of the simplest and quickest ways affordability can be achieved.

Simple policy changes that allow parallel imports of vehicles regardless of being registered for sale by carmakers are again the key.

“Opening Australia up to more Independent Imports will increase vehicle diversity, accessibility and equity. This is a simple policy change, with zero cost to the taxpayer, that will bring a heap more affordable EV’s to market for all Australians,” Good Car Co Anton Vikstrom said in a recent interview with SBS.

Good Car also says renaming the term “parallel imports” (also known as “grey imports”) to “Independently imported vehicles” would dispel those old misconceptions that these vehicles are of murky or dubious origin. See the EVs Good Car Co has on offer here 

Changes can also be made to deal to arguments normally raised by carmakers that parallel imports are unsafe. These issues can be addressed by the following:

• Declaring manufactured NCAP, Euro Star or ANCAP ratings on imported vehicles.
• Ensuring that VIN numbers of independent import vehicles are connected to a national database for recall (this data already exists when imported cars go through their Australian compliance processes). 
• Allocating legislative responsibility for recall monitoring to either a) the dealership or b) the SEVs (Special and Enthusiast Vehicles) Model Report owner.
• Requiring dealerships that import vehicles maintain a strategy to support vehicles consumables, repairs and servicing.
• Imposing an import age limit of no older than 6 years, to ensure that used imports are younger than the current fleet average of 9.8 years.
• Dealerships that import vehicles declare major differences to an equivalent Australian OEM vehicle.
• Require each dealership that imports a vehicle maintains a recall monitoring and advice system.

The changes that Good Car Co proposes would help to reduce the average age of Australia’s passenger car fleet, and make it safer.

It would also help to create a healthy local EV circular ecosystem sooner - another goal of the strategy.

To this end, Good Car Co is already working on upgrading early model EVs to make them more affordable and attractive to consumers. For example, it can do this by upcycling older EVs to give them additional driving range with newer batteries - ensuring that the vehicles themselves are not simply consigned to the scrapheap.

By leveraging the skills of partners such as Roev and Fellten to share knowledge, manufacturing facilities, and funding to access tier one components, the functionality and user experience of older EVs can also be improved.

So with all the great initiatives that come with this National Strategy we'd love to see a few more initiatives and the strongest urgency and ambition from here to make sure the vision we all seem to have in making this transition a success to ensuring it happens in the quickest possible way. 

Our climate and our communities are depending on it.