As global adoption of electric vehicles rapidly accelerates, spurred by ambitious climate policies and lucrative industry incentives, Australia finds itself at a critical moment in time.
While Australia has lagged in implementing comprehensive Federal Government incentives compared to other major economies, this deficit paradoxically highlights the enormous opportunity before it.
Daniel Bleakley, Senior Energy and Technology Transition Advisor at Next System spoke with ecogeneration about how in comparison to many countries, Australia lacks nationwide incentives for purchasing new electric vehicles (EVs).
“However, this gap represents a greenfield space for impactful policymaking to rapidly accelerate our EV transition,” Bleakley said.
The US has taken the lead through its $US7500 federal tax credit for EV purchases, turbocharging consumer demand. While a few Australian states initially offered modest rebates, these have since been cut back or concluded, removing vital demand levers.
Yet Australia’s lack of a cohesive national EV strategy should not be viewed solely as a shortcoming, but as an open runway, said Bleakley, as the country can leverage insights from successful policies abroad while avoiding costly missteps through careful planning and visionary regulation.
Recent data shows Australia’s EV market is showing promising signs of growth. EV sales more than doubled in 2023 to 87,217 vehicles, capturing 7.2 per cent of the total market, according to the Federal Chamber of Automotive Industries (FCAI).
When including hybrids, electrified models accounted for an impressive 16.2 per cent share.
This momentum has continued into 2024, with EVs achieving a record 9.6 per cent market share in February. Over 10,000 full battery EVs were sold that month alone, led by Tesla’s Model 3 as the nation’s best-selling passenger vehicle.
“The recent sales figures demonstrate the pent-up demand for EVs in Australia,” Bleakley said.
“Combine that with our mineral wealth and renewable energy, and we have all the ingredients for an EV manufacturing powerhouse – if we get the policies right.”
According to Bleakley, the national fuel efficiency standards, announced by the Federal Government earlier this year, would mark an initial step in the right direction.
“Manufacturers will have to sell more and more efficient vehicles, and ultimately EVs, to meet the standards,” he said. “It’s Australia’s biggest pro-EV policy yet, but just an opening move.
“By forcing automakers to slash fleet emissions over time through stiff penalties, the policy will compel them to import and produce more EVs for the Australian market.
“Exempting EVs from import duties and luxury car taxes would also provide an immediate demand boost,” Bleakley suggested, pointing to Norway’s long-standing tax holidays as a blueprint, adding Australia could also learn from Norway about other benefits like toll exemptions, allowing EVs in bus lanes, free parking, etc.
Bleakley further highlighted Australia’s need for long-term plans if it wants to grow its EV industry, giving China as an example as the country now controls around 70 per cent of the global EV supply chain and resulted from good policy decisions that China made a decade ago.
But the real prize for Australia, as Bleakley pointed out, is moving downstream into battery production and manufacturing.
He cited the US’s Inflation Reduction Act, with its tax credits for EVs and battery manufacturing, as a model for catalysing domestic industry. Similar incentives could transform Australia’s mineral wealth into value-added revenue from refined battery materials and cell production.
Estimates suggest a fully built-out battery supply chain in Australia could generate over 30,000 new jobs and $7.4 billion annually in economic activity.
“We’re perfectly positioned, with an abundance of cheap renewable energy too,” Bleakley said.
“Tax credits for mineral refining and battery ‘giga-factories’ would be game-changing, letting us move up the EV supply chain.”
From this strong footing in midstream battery components, Australia could then potentially broaden into downstream transportation electrification.
While large-scale passenger EV manufacturing may prove too competitive initially, Bleakley sees opportunities in commercial vehicle electrification like mining trucks, leveraging the Australia’s relevant expertise.
However, Bleakley said one area where Australia may face steeper challenges is the highly sophisticated software platforms underpinning EVs and autonomous driving systems.
He said the expertise of American and Chinese tech titans leaves relatively little room to establish an independent operating system.
“For that level of software, going it alone would be extremely difficult against the incumbents,” Bleakley said.
“But partnering strategically or focusing on niche applications leveraging our AI talent could be viable long-term bets.”
While Australia’s EV journey has faced delays, the race itself is still squarely ahead. According to Bleakley, with world-class mineral reserves, renewable energy, manufacturing know-how, and now rapidly growing consumer demand, the Australia is remarkably well-provisioned to emerge as a frontrunner in the EV industry.
This article featured in the April edition of ecogeneration.
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