Representative body for Australia’s motoring industry, the Federal Chamber of Automotive Industries (FCAI), says it will not necessarily lobby government to apply subsidies encouraging the take-up of zero emissions vehicles.
Instead, its short-term focus is on encouraging the government to mandate minimum standards for the higher-quality fuel that many modern cars require (bringing maximum sulphur content well down from the current 150ppm), and to move to the stricter Euro 6 emissions framework as soon as feasible, without hitting commercial vehicles too hard.
This seems to place the peak body at odds with at least some car manufacturers here – otherwise known as its paying clients – many of which have gone on-record requesting precisely this style of short-term subsidy/tax cut to make EVs and alternatives such as fuel-cell cars cheaper, until the technology matures.
Direct subsidies on EVs – which give early adopters access to the greenest cars at a big discount, funded by the taxpayer – are employed in a number of markets around the world such as Norway, the UK, China, Japan and the US state of California. To mixed results, we must add.
In many cases these subsidies total many thousands of dollars. For instance, the UK government scheme reimburses up to £4500 ($7777), while California has spent a reported US$449 million ($573m) on consumer rebates in seven years. Norway places huge taxes on internal combustion cars but essentially waives them for EVs, which in practical terms does the same thing.
The argument for such a proverbial carrot goes something like this: the way to make battery-powered cars popular is to make them more affordable, increasing public demand and thereby encouraging brands to produce more, which will drive costs down through scale.
That said, given most major car makers around the globe will have a significant number of EVs and in some cases hydrogen vehicles on sale within a decade or less (many will have wide representation in this market by 2020), there’s a case to be made that bigger markets than ours will already have done the proverbial ‘heavy lifting’ for us.
Whatever the case, FCAI chief executive Tony Weber said recently that the direct EV subsidies employed elsewhere were not something the organisation he leads would lobby for.
“I think that the FCAI has a role in actually informing this debate but I think it’s a technology neutral debate,” he told us.
“I don’t see that one form of propulsion should be subsidised over another, I think that what we need is a holistic approach to this, which the government needs to adopt and that includes fuel quality, when we move to Euro 6, and a CO2 standard.
“I think there’s a number of ways people can be incentivised to move to more efficient vehicles and what we need to do is make that transition so that the Australian lifestyle and the way in which we work, especially on farms and in the mining industry, is not adversely affected.
“So I think it needs to be a much broader approach than just subsidisation of EVs or fuel cells, I think it needs to be a holistic approach.”
In the spirit of The Ashes, there’s a very straight bat…
At present, Australia’s EV fleet comprises the BMW i3, Tesla Model S and X, the Renault Zoe, and soon, the new Nissan Leaf (which uses some Australia-made parts). Many brands have withheld their infant offerings for now. Numerous PHEVs from the Mitsubishi Outlander to the BMW 330e supplement this.
While some industry insiders have backed the FCAI’s view, some also haven’t, stating that incentives are vital to kick start (or jump start?) new technology, with all its impediments to market capitalisation.
This points to something of a schism between the country’s car brands as they seek ways to up their sales of green vehicles in a market (ours) which is famously reticent to drive them, and has woeful carbon emissions per capita.
“It is very difficult to make the electric car an attractive buy without government subsidies for the consumer. “So how can you support electric cars if it depends on government subsidies? We need not for an infinite period of time: just to make sure that you jump-start the sales.”
BMW Australia’s CEO Marc Werner said Australia’s emissions levels were “shocking” and suggested “financial and non-financial incentives. Incentives that will put these low-emission vehicles within the reach of more Australians”.
Hyundai Australia’s head spokesman Bill Thomas said: “We think our Ioniq [electric car, due inside a few months] will be well-priced, but government incentives can only help the initial take-up of our car and other cars like it”.
Heath Walker, communications boss for Tesla Australia, has previously told us that: “I believe we’re the only first world country to have a tax and no incentives on electric vehicles, and despite there being some subsidies on Luxury Car Tax, it truly does hamper the cross-shopping when it comes to a choice between internal combustion engine and an electric vehicle”.
These are just a few brands out of many which have called for some kind of public help. While self-interest is clearly a factor, there’s a case to be made that cleaner cars are a net benefit worth shelling out for. Even if they ultimately get their power from wall chargers driven by coal…
On the other side of the argument, you have the likes of Volkswagen Australia’s boss Michael Bartsch, who was quoted in local industry title GoAuto as saying that “I think it’s wrong. I think it’s fundamentally wrong”.
“Why should the public first pay for something? Why distort the market with incentives? I’m really against it. I think what should be allowed to happen is let the entrepreneurs, the capitalists, work it out.”
Clearly, the issue of whether to give buyers a carrot to purchase a zero- or low-emissions vehicle, alongside the stick of forcing government to mandate sensible CO2 emissions laws that align us better with other mature markets, is fraught with divides.
Another stakeholder is the Electric Vehicle Council, which claims to have been working with governments across Australia “to support and grow the market for electric vehicles in Australia”. In other words, it’s a lobby group for the electric vehicle industry.
“Last year we joined several state and local governments in launching Electric Vehicle Strategies, and signed and delivered a cross-jurisdictional MOU to integrate EVs into government fleets,” its CEO Behyad Jafari told us.
“Our priority this year is to deliver incentives to encourage Australian motorists to buy electric. As demonstrated around the world, some initial government support is required to deliver the societal, economic and environmental benefits of transitioning to electric vehicles.
“We’re calling on the Federal Government to start by providing tax exemptions to bring down the upfront cost of an electric vehicle. This ‘jump start’ provides certainty for further investment to develop infrastructure, increase model availability and create new businesses and jobs.
“Other incentives such as preferential lane access, free parking and tolls can then provide an additional short-term incentive.
“I see the global transition toward electric vehicles as an opportunity for Australia in the future of mobility. This is absolutely the time for leadership in our industry, to stand out and illustrate a vision for its future.
“The market globally, like the industry at home is going through profound change, led by technological advances driving consumers demand for innovative new services. We see a big part of our job as informing decision makers in governments and businesses about the challenges and opportunities in-front of us.”
What do you think? Should subsidies or tax cuts on zero emissions vehicles be applied in Australia? Or should it instead be charging infrastructure we fund? Or is it just a case of letting the market equalise? Tell us below.