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ABC News
ABC News
Business
political reporter Jake Evans and Angelica Silva

Will the new electric vehicle strategy put more EVs on the road, and how much will they cost?

Australians want electric cars, but federal policy has held back supply for several years. ( Supplied: Volvo)

Australia is way behind most nations on electric vehicles. 

There are fewer choices here and the wait to get them is longer, and as a consequence fewer than 4 per cent of car sales in Australia last year were EVs, compared to 9 per cent in the rest of the world.

One of the main reasons for that is because Australia is almost alone in the developed world in not having what's called a "fuel efficiency standard", which have been in place elsewhere for decades.

Now the government plans to introduce one here, after several failed attempts by previous governments.

It is the biggest lever the government can pull to boost electric vehicle supply, but they will still be more expensive than the average petrol car.

How will a CO2 standard on cars improve EV uptake?

Put simply, a fuel efficiency standard will require car makers to sell more fuel efficient vehicles and lower or zero emission cars like EVs.

The way the standard works is that car makers are required to keep under a certain carbon emissions ceiling relevant to the type and number of cars they sell.

And if they don't, they'll face a penalty.

Because there is far more demand globally for EVs than there is supply of the vehicles, Australia struggles to convince car makers to send EVs here when they face no penalty for failing to do so, while other countries fine them for not meeting emissions obligations.

The motor industry and environment groups say that lack of a standard is the main reason Australia is so far behind on EV uptake, and has had fewer options to choose from.

The question for the government now is how hard to go, considering Australia is already playing catch up on cutting car emissions.

Most proposals suggest the government should either pursue a standard in line with the US, whose cars emit 20 per cent less than ours on average, or the EU, whose cars emit 40 per cent less.

A tougher standard would encourage faster take up of lower emission cars, but if it was too tough for car makers to meet they would potentially need to sell fewer cars overall to Australia or massively raise the price of certain cars instead.

How many EVs will be on the road in coming years?

Environment group Solar Citizens last month estimated that if Australia could introduce a fuel efficiency standard in line with Europe's it would "turbocharge" the growth of EVs here from about 40,000 registrations last year to more than 900,000 in five years.

Demand in Australia already outstrips supply, and even with wait lists to get an EV and the rising cost of living, EV sales so far this year have been more than double what they were over the same time last year.

The government will spend the next six weeks consulting on a fuel efficiency standard, and will develop its own expectations of EV uptake from that, but some state governments have specific targets in place already.

Queensland has set a target for half of new car sales to be zero emissions by 2030, and the ACT has a target for 80 to 90 per cent of new car sales to be zero emissions by that time.

Experts say to reach net zero by 2050 new car sales need to be zero emissions by roughly 2035, because of the general life span of petrol vehicles.

Will the government's strategy make EVs cheaper?

There's nothing in the government's strategy that will bring down the cost of EVs overnight. 

However, several measures will help make them cheaper over time.

The fuel efficiency standard itself will help bring down costs by incentivising car makers to sell EVs cheaper here to drive more sales, and more electric vehicles on the road sooner will grow the second-hand market of EVs, offering a cheaper way for more people to pick up a zero emissions vehicle.

For the same reason, the federal government has set a fleet strategy for the public service to be net zero by 2030, and have 75 per cent of its new cars be low emissions by 2025, giving manufacturers confidence to send more EVs Australia's way.

The difference that makes, according to University of Queensland researcher Dr Dia Adhikari Smith, should not be underestimated.

"It’s very interesting to know that in Australia, fleet sales account for 41 per cent of all car sales yearly," Dr Adhikari Smith said. 

"These vehicles are available in the second-hand market within three to five years, which could potentially result in more people being able to purchase an electric vehicle at a reduced cost."

The federal government last year also introduced a discount on the import tax for some EVs, as well as exemptions to the fringe benefits tax saving employers up to $9,000 a year, or individuals who get an EV on through salary sacrifice up to $4,700 a year.

And there are various incentives at the state level, including fleet incentives for councils and business in NSW, a $3,000 subsidy in Victoria, and interest free loans for EVs in the ACT.

But Wednesday's announcement does not offer any new incentives on top of those.

And of course, even in countries that have had a fuel efficiency standard in place for decades, EVs are still the more expensive option.

How much will a new EV cost?

The cheapest EV available for sale in Australia is currently the MG ZS EV Excite, which costs roughly $45,000, however, the BYD Dolphin launching later this year is expected to cost below $40,000.

That compares to about $20,000 for the cheapest new petrol cars currently on offer.

The federal government estimates the average petrol car costs around $2,400 to fuel each year, compared to $400 a year for EVs, saving a few thousand on the lifetime cost of a car.

So when can you expect EVs to finally reach the same price as a petrol car?

Electric vehicle advocates have estimated EVs will reach price parity with the average petrol car by 2025 — though some critics suggest it will take longer before prices match the cheapest new petrol vehicles.

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