The Australian automotive industry is divided over whether taxpayer dollars should be used to boost electric vehicle sales or help pay for a national charging network.
Car companies have also warned against a ban on petrol and diesel cars because, they say, the profits from these mass market models are crucial to funding advancements in battery technology.
The Federal Government is preparing to rollout an electric car plan that would bring Australia into line with other countries such as Norway and the UK, which wants to ban petrol and diesel engines by 2035.
However, the Australian car industry has cautioned against such a radical policy change because the cost of electric vehicles is still too expensive – despite the economies of scale brought by mass production – and motorists will need a mix of options that best suits their needs for decades to come.
Farmers, tradies, holidaymakers and those living in regional areas will still be best served by a new generation of super-efficient petrol and diesel cars, which are also under development, the industry says.
“There is no one solution to eco cars,” says Scott Nargar, Hyundai Australia’s senior manager for future mobility and government relations. “For some buyers, electric cars will be ideal, others will need the flexibility of a plug-in hybrid so they can have some electric driving range, but then have the option of an economical petrol engine if they need to travel longer distances. Australia will need a lot of options for quite a while. Our transition to alternative energy cars is just beginning.”
Hyundai and Toyota are also working on hydrogen-powered vehicles (story, story), but currently there is only one refuelling point in Australia, in Sydney. Others are planned for Melbourne and Canberra this year.
While luxury brands such as BMW have repeatedly called for tax incentives in Australia to help sell its premium-priced electric cars, mainstream manufacturer Kia believes the technology should be driven by consumer demand because subsidies “are not the right thing to do to the community”.
“While electric cars will have a big role to play in our motoring future … I don’t think that subsidies – from the government or from the public purse – are necessary,” said Kia Australia boss Damian Meredith.
Kia is one of more than a dozen car companies readying a range of electric vehicles in Australia over the next two years, however most will cost in excess of $45,000.
Currently the lowest price for an electric vehicle is $52,500 drive-away for a Renault Zoe (pictured above in upcoming facelift form). An equivalent-sized petrol-powered hatchback is $17,490 drive-away.
Hyundai is the only manufacturer to offer all three options in one model range: electric, plug-in hybrid, and conventional hybrid power. Buyer demand shows 42 per cent of Hyundai Ioniq models sold so far are pure electric, 37 per cent are hybrid, and 21 per cent are plug-in hybrid (pictured below).
During a meeting in Sydney between the Electric Vehicle Council of Australia and the Federal Chamber of Automotive Industries this week, an industry insider warned the electric-car lobby group that it “could become a cart with no horse without car manufacturers selling a range of products, including petrol and diesel engines, which continue to pay the way for the industry”.
The car industry has been sending mixed signals about how long it will take for electric vehicles to become profitable.
In the US, General Motors and Ford combined have pledged to introduce 60 electric or hybrid vehicles over the next five years, but the profit from top-end luxury models is expected to be absorbed by the losses on more affordable versions.
The former boss of Fiat Chrysler Automobiles, the late Sergio Marchionne, once boasted the company lost money on every Fiat electric car it sold. “I hope you don't buy it, because every time I sell one it costs me $14,000,” Marchionne told a US debt bail-out hearing in Washington in 2014. The Fiat 500 electric car retailed for $US33,000 at the time. “And you can’t run economic entities on losses,” said Marchionne.
“I will sell the (minimum) of what I need to sell and not one more,” Marchionne said. “If we just build those vehicles, we'll be back asking ... in Washington for a second bailout because we’ll be bankrupt.” After that, the company doubled down and invested heavily in hugely profitable pick-ups and SUVs.
Tesla, following a surge on the stock market this week, might be rated as one of the most valuable car companies on the planet, but it is yet to turn an annual profit.
Official industry figures show less than 3000 of the 1.06 million new cars sold in Australia last year were electric or plug-in hybrid, but the unofficial total climbs to 6700 when Tesla (which does not supply data) is included, representing a total of 0.6 per cent of all vehicle sales.
While electric car sales tripled last year – largely driven by the introduction of Tesla’s cheapest offering to date, the Model 3 (pictured above), and two new models from Hyundai and Nissan – the automotive industry has warned that Federal and State Governments should keep an open mind when it comes to alternative power options.
Another industry insider, who works for a brand planning to roll-out several electric cars in the coming years, said: “Electric cars are coming any way, why should the government be using taxpayer dollars to encourage people to buy them?”
Strict vehicle emissions regulations in Europe – and generous government-funded incentives in certain countries – are the main drivers of electric car sales overseas, but demand hits the brakes once tax concessions and rebates are removed.
Meanwhile, Volkswagen, which will roll-out a range of electric cars in the next few years – including the reborn Kombi, a Golf-size hatchback and mid-size SUV – has called on the Federal Government to expedite the introduction of cleaner petrol.
“Australia could cut its vehicle emissions overnight if it could only get better quality fuel,” said Volkswagen Australia spokesman Paul Pottinger. “The introduction of low sulphur petrol in this country has been pushed back to 2027, some 18 years after Europe. While the government and others are pursuing electric cars, the fastest and easiest way to reduce vehicle emissions in Australia is to get better quality fuel. That would cut the emissions of existing cars on the road and enable the introduction of a new generation of super-efficient engines.”
Why are electric cars so expensive?
Battery packs and electric motors are still dearer to manufacture than conventional engines and a fuel tank.
Cost will come down as economies of scale improve, but there is still uncertainty around when an electric car will fall into the $20,000 bracket, which is why the industry has pivoted to luxury models, to have a better chance at covering development and manufacturing costs.
Conventional hybrid cars, such as the Toyota Prius, don’t need to be plugged in. They recharge their onboard battery packs while on the move, but the electric motor is only used to move the car from rest up to, say, 40kmh, before the petrol engine takes over.
Plug-in hybrid cars have a larger battery pack and can travel between 30km and 50km on electric power before the petrol engine kicks in, adding 400km to 500km to the total driving range.
Pure electric cars only run on battery power and take between 45 minutes to recharge to 80 per cent capacity on a fast charger, or up to 30 hours to full capacity on a household power socket. Depending on the model, electric car range varies from 160km to 500km.
Five key electric cars on sale today
Renault Zoe, from $52,500 drive-away
Pros: Cheapest electric car on sale in Australia.
Cons: As small as a Toyota Yaris, modest real-world range of 200km.
Hyundai Ioniq, from $52,900 drive-away
Pros: Second cheapest electric car on sale in Australia, roomiest among its peers.
Cons: Real-world range has recently improved but only to 300km.
Nissan Leaf, from $54,500 drive-away
Pros: Third cheapest electric car on sale in Australia.
Cons: Less spacious than the Hyundai Ioniq, modest real-world range of 200km.
Tesla Model 3 Standard Range Plus, from $67,900 drive-away
Pros: Cheapest Tesla sedan available, real-world driving range in excess of 400km, fast acceleration.
Cons: Battery pack and software have NASA tech, but the fit and finish of the body panels are poor. No AM radio, no spare tyre.
Jaguar i-Pace, from $150,000 drive-away
Pros: SUV space and practicality, agile handling, fast acceleration.
Cons: Testing shows real-world driving range is about half the 470km claim.
COMMENT: BY JOSHUA DOWLING
The Federal Government probably thinks a grand announcement about electric cars might win favour among those in the electorate frustrated by climate policy in the wake of the recent bushfires and, now, floods.
However, Canberra should remember how much backlash there was to the opposition’s plan in the lead up to the last federal election to push half of Australia’s car fleet to electric power.
Electric car advocates point to the popularity of the technology overseas, however that has been driven by strict emissions policies and generous tax incentives or rebates for buyers.
The Electric Vehicle Council of Australia – whose members include energy and infrastructure companies with a vested interest – want government money to help build their recharging networks and boost their bottom line.
The car industry lobby group is divided: some car brands also want the government to help foot the bill (by offering tax incentives to buyers) while others say there should be no public money spent and electric cars should survive on their own merit, based on natural consumer demand.
To put the current arguments from both sides into context, a hundred years ago governments didn’t offer tax incentives to petrol companies and car makers to get their businesses – and the internal combustion engine – up and running.
Further, should taxpayers be footing the bill for a vehicle technology that only suits a small percentage of the population?
Here’s hoping policymakers can find the balance between the hype being pushed from both sides of this debate, and come up with a meaningful package that won’t cost the earth.