Living in electric dreams

Over the past few weeks, we have heard a lot about the promise of Electric Vehicles (EVs) since the announcement by Opposition Leader Bill Shorten regarding the ALP's national EV policy package. The ALP's new policy sets an arbitrary target of 50% by 2030 for all new vehicles sold in Australia to be EVs. It aims to achieve this target through $100 million in investment to provide 200 fast charging stations and another $100 million on other initiatives to promote EV uptake, predominately subsidies and tax incentives.

There is no doubt EVs are, in policy terms, 'sexy' and have that feel-good factor about them. Indeed Bill Shorten is convinced that all-electric vehicles are the next big thing. Perhaps they are. Yet Labor's policy fails to detail exactly how it will resolve key challenges to EVs in the Australian market such as affordability, mileage, and consumer choice. Nor does it fundamentally explain why taxpayer dollars are required to ensure consumers buy EVs and for what societal benefits, other than the vague notion of saving the planet. It feels more like a policy developed to virtue signal the ALP's climate change credentials during an election, rather than seriously address any real environmental concerns. And like much policymaking these days, it seems to be based on "wishful thinking" and "conventional wisdom", that more often than not turns out to be wrong.

If it sounds too good to be true…

The history of the EV stretches further back than most people realise. The first crude electric vehicle was developed in 1832. Since the turn of the 20th century, car manufacturers, inventors and journalists have been spruiking EVs as the 'next big thing'. Indeed, in The Washington Post in 1915, one journalist reported that "Prices on electric cars will continue to drop until they are within reach of the average family." In the wake of the 1970s oil crisis, again The Washington Post reported that GM had found "a breakthrough in batteries" that "now makes electric cars commercially practical, with a 100-mile range that General Motors executives believe is necessary to successfully sell electric vehicles to the public." It is an industry that has over-promised and under-delivered for over a century. While it is true that much progress has been made over the past decade, with advances in battery technology and materials, EVs still make up a small percentage of cars sold worldwide compared to their internal combustion engine vehicle (ICEVs) counterparts. Of the 86 million vehicles sold in 2017, only 1 million of them were electric. In Australia, the figures are even more dismal, with EVs only making up a fraction of a percent.

Challenge 1: The consumer

One of the biggest barriers that EVs will need to overcome will be Australian consumers. Like other frontier nations such as the US and Canada, consumer habits and expectations have been set by ICEVs. These include driving long distances without range concerns, quick and convenient fill-ups and being able to choose from a wide selection of manufacturers and models, some of which are inexpensive, while others meet special requirements (such as SUVs and Utes). In the Australian context, the last point is an important consideration. This is evidenced by the fact that the top 10 most sold cars in Australia according to CANSTAR include the Toyota Hilux, Mitsubishi Triton, Toyota Landcruiser, and Ford Ranger. These are not only transport choices, but they are also lifestyle choices, because of what they enable the driver to do and where they enable the driver to go.

Australia also has a larger and older used car market than in the UK or Europe. This makes purchasing and owning a car significantly more accessible and affordable for those on low incomes. No doubt there is a range of issues associated with this, but nevertheless, it is a factor that should not be overlooked. Thus EVs, for now, remain outside the budgets of low-to-middle income earners. As such, mass adoption of EVs by Australian consumers, will not happen anytime soon until there are significant reductions in price and where the driving experience is equivalent to ICEVs.

Challenge 2: Charging Infrastructure

Availability of charging infrastructure is one obvious precondition to the mass adoption of EVs. Unlike other countries, Australia faces some unique challenges. The population is concentrated in urban centres, but these centres are separated by vast distances. This is demonstrated by the fact that Australia's road network measures 877,651 km in length - twice the distance of the UK's road network and 9 times the size of Norway's, two countries cited as examples for Australia to follow. Thus, for EVs to make serious penetration in the Australian market, serious thought, therefore, must be put into resolving questions such as: what type of charging technology should be deployed; who will provide the necessary capital for public charging; and where such charging infrastructure should be located, particularly outside city centres. These questions will be particularly relevant while EV utilisation rates remain low.

Challenge 3: Electricity Capacity

Another obvious precondition to mass adoption of EVs is electricity generation capacity to be available. Given the current perilous state of Australia's electricity grid as a result of over-investment in intermittent renewables and underinvestment in dispatchable generation, there are questions over the grid's ability to absorb the extra demand created by EVs. This is particularly relevant given the need for the AEMO to constantly intervene in the market to maintain the stability of the grid. Australians are also seeing the cost of their electricity soar, with some parts of Australia having some of the highest electricity prices in the world. As Madison Czerwinski and Mark Nelson from Environmental Progress noted, "expensive electricity acts as a disincentive to electrify transportation" among other things. Yet again serious thought needs to be put into where the extra capacity to recharge batteries - on-demand - will come from and that it is affordable for consumers.

Challenge 4: Environmental impact