15 jan 24

Electrification in Australia: Better, but still a long way to go

Australia experienced a significant surge in EV sales in 2023. Despite the positive momentum, challenges such as government policy delays and a prevailing preference for gas-powered SUVs and pickups still hinder the nation's progress in global EV adoption.

Record year

According to the Federal Chamber of Automotive Industries (FCAI), EVs accounted for 7.2% of total new car sales (at a record breaking 1.21 million units), up from 3.2% in 2022, while hybrid vehicles slightly increased to 8.1% from the previous year's 7.9%. However, Australia lags behind global peers in EV adoption, with only 0.6% of cars on its roads being electric, compared to 1.3% in the U.S., 2.8% in the U.K., and 4% in Germany.

To expedite EV adoption and meet carbon reduction targets, the Australian government is set to introduce a long-awaited fuel efficiency standard for automakers. Currently, Australia lacks mandatory fuel economy laws, placing it as one of the few OECD members without such regulations. The Labor party, having committed to reducing greenhouse gas emissions, has yet to release the model for the fuel efficiency standard, despite the initial promise to do so by the end of the previous year.

Governmental involvement

The proposed standard aims to set an average carbon emissions target per kilometer for car fleets; manufacturers that beat these targets, receive credits that can be sold to manufacturers that don’t. This move is crucial in sending signals to manufacturers to bring more electric models to Australia and prevent it from becoming a hub for environmentally unfriendly vehicles.

Australia's EV market is currently dominated by Tesla and BYD, with only 60 EV models available compared to 230 in the European Union. Affordability however, remains a challenge for EV adoption in Australia, with just 15 models priced under AUD 65,000. Creating a robust secondhand market, driven by large-scale purchases from governments and corporations, is identified as a key strategy to make EVs more competitive with internal combustion engine cars.

The right form factor

While electric SUVs, particularly the Tesla Model Y, show promise in sales, challenges such as limited choices and pricing constraints persist. Electric pickups, although capable of competing in certain aspects, are yet to gain widespread favor compared to their non-electric counterparts.

Range anxiety has highlighted the need for an expanded charging infrastructure, especially in Australia, one of the world's least-densely populated countries, where sales and field service drivers often drive long journeys. The rise in EV sales is putting pressure on existing charging stations, signaling a potential challenge in the future if infrastructure development doesn't keep pace with the growing demand for electric vehicles.

Authored by: Yves Helven