Challenges facing the uptake of Electric Vehicles (EVs)

Globally, growing concerns over greenhouse gas emissions and fuel costs have led to rapid growth in electric vehicle (EV) sales, but their overall takeup among Australian consumers remains low. According to the Grattan 2021 Car Plan, in 2020, new electric car sales in proportion to all car sales were only 0.78% in Australia compared with a global average of 4.2%. World leaders in EV takeup are Norway at 74.8% and Iceland at 45.0% (of total sales).

In Economics Explored episode 154, Adept Economics Director Gene Tunny discusses how a low adoption rate in Australia can be partly attributed to the high price point, range anxiety, and lack of infrastructure. Whereas in Iceland, where driving distances are much smaller and regular renewable energy (i.e. geothermal) is readily available, more rapid uptake of EVs makes sense. Regardless, the widespread global uptake of EVs can provide economic opportunities for Australia, particularly given the abundance of lithium in Western Australia. 

Regarding the high current price of EVs, Ampol CEO Matt Halliday has suggested typical EVs need to almost halve in prices, so they’re in the $20-30k price range, before there will be widespread takeup by Australian households (see this AFR report). With technological improvements, this may happen, but it may take many years before this occurs.

Arguably, one of the significant problems to overcome in Australia, before widespread consumer adoption of EVs, is a lack of infrastructure for power generation and EV charging, ranging from the electricity grid to household levels. Australia’s National Electricity Market already experienced supply issues earlier this year, as Adept Economics director Gene Tunny and Andrew Murdoch discussed in episode 156 of Economics Explored. This, combined with the difficulties associated with replacing coal with renewable energy, will undoubtedly contribute to the challenge of meeting the new electricity demand created by EVs. At the household level, there is a particular safety concern for some apartment blocks, which may be unable currently to support the increased demand for electricity (see this Drive article Electric cars could have ‘big impact’ on Australia’s energy supply). Investments by body corporates will be needed to address this issue. 

Unlike much of the world, Australians are often required to drive much longer distances, creating anxiety about the range of EVs. The Queensland Government has already begun to tackle consumer range anxiety by rolling out an Electric Super Highway. The 1,800km long highway connects Coolangatta and Port Douglas across 31 charging stations. These stations are currently being operated by third parties, mainly Chargefox, currently charging 30c/kWh across the highway. Therefore, the cost of driving along this highway in a EV is $4.50/100km compared with $14.25/100km of a internal-combustion engine vehicle – assuming the average EV is consuming 15kWh/100km and the internal-combustion engine vehicle is consuming 7.5L/100km at a cost of $1.90/L. The table below, from a Drive Magazine article, presents the current rates charged from other providers across more then 3,000 charging stations nationally. The most costly rate of 63c/kWh (for Tesla Superchargers) will cost $9.45/100km, clearly demonstrating that running costs are still lower for an EV than for a petrol-powered vehicle. 

Average cost of public electric car charging in Australia
Electric charger
ChargeFox 0-30c/kWh for Standard AC chargers
40c/kWh for rapid DC chargers (up to 50kW)
60c/kWh for ultra rapid DC chargers (up to 350 kW)
Tesla Free for Destination AC chargers (up to 22kW)
63c/kWh for Superchargers (120kW or 250kW)
Evie 40c/kWh for fast DC charging (up to 50kw)
60c/kWh for ultra-fast DC charging (up to 350kW)
Jolt Free for the first 7kWh (every 24 hours period)
NRMA NRMAFree for rapid DC chargers (up to 50kW)

Source: Drive Magazine.

Note: Prices are accurate as of August 2022. Providers are changing the prices frequently.

The whole conversation about EVs by Adept Economics director Gene Tunny and his colleague Tim Hughes is available in episode 154 of his podcast Economics Explored. You can listen to the episode via the embedded player below or podcasting apps, including Google Podcasts, Apple Podcasts, Spotify, and Stitcher.

Adept Director Gene Tunny again discussed EVs in Economics Explored episode 155 with Marion Terrill, Transport and Cities Program Director at the Grattan Institute. During the episode, they discuss the Australian federal government fuel excise, which does not apply to EV users, as they are not consuming fuel. The Victoria Government has attempted to impose an EV tax based on distance travelled, but this is being challenged by the federal government in the High Court.

Rather than simply introducing a new distance-based EV tax, Marion suggests we need a new comprehensive system of charging for road use in Australia which takes into account the impact of drivers on traffic congestion at different times of the day (i.e. congestion charges). Also discussed during the episode is how dangerous pollutants and emissions from old trucks are, especially in densely populated areas — further reinforcing the desirability of the widespread uptake of zero-emission EVs.

 You can listen to episode 155 via the embedded player below or podcasting apps, including Google Podcasts, Apple Podcasts, Spotify, and Stitcher.

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