With petrol prices skyrocketing and the war in Ukraine showing no signs of abating, more of us are thinking now is the time to take the plunge and get ourselves an electric vehicle (EV) but find we face 12-24 month wait times and limited options compared to those available overseas.  So why is Australia at the end of the line when it comes to EVs?

One key reason is fuel efficiency standards.  Or the lack thereof.  Fuel efficiency standards have been adopted in approximately 80% of the light-vehicle market across the globe, including the United States, China, European Union, Japan, South Korea, Canada and India. Yet, Australia remains the only OECD country that has failed to do so.  

What are fuel efficiency standards?

Fuel efficiency standards are not a tax, but rather, a regulation.  The standards require all new light vehicles to emit no more than a set amount of CO2 per kilometre.

If EVs don’t use petrol, why do fuel efficiency standards impact EV sales?

Fuel efficiency standards do not require every car to emit less.  High emission vehicles can still be sold, but companies will be required to offset this by selling lower emitting vehicles to ensure their fleet average meets the standard.  Alternatively, they can trade with a company that produces low emission vehicles to offset the difference, as Tesla has done profitably in the European Union with companies such as Fiat-Chrysler.

The lack of fuel efficiency standards in Australia presents two problems.  First, there is little incentive for EV manufactures to sell into the Australian market. Manufacturers are incentivised to sell their EVs in markets with fuel efficiency standards to offset the costs of their higher emitting vehicles.  EV-only manufacturers like Tesla are incentivised to enter markets with fuel efficiency standards in order to profit from emissions trading with other companies.  Secondly, lack of standards is resulting in Australia becoming a dumping ground for high-emitting and inefficient vehicles, because there is no penalty to manufacturers for doing so.  Alongside the undesirable climate impact this creates, sale of inefficient vehicles means we pay more at the bowser.

How do party policies stack up for EVs this election?

Fuel emissions standards are considered one of the easiest and most effective policies to encourage EV uptake, encourage competition, bring down EV cost, and clean up our cities. The more EVs in Australia, the cheaper the purchase prices and the greater the infrastructure demand becomes. Right now, in Australia, EVs make up only 2% of new car sales.  Contrast that with 9% in China and a whopping 65% in Norway. Successive governments have dragged their feet on introducing fuel efficiency standards, but what are the parties saying in the 2022 election?

  1. Liberal-National Coalition:  The Liberal-National Coalition has rejected implementation of fuel efficiency standards.  
  2. Labor:  Labor has retreated from its plans to implement emissions standards ahead of the 2022 election, but plans to develop Australia’s first National Electric Vehicle Strategy.  This strategy will include exempting EVs from the 5% import tax.  
  3. Greens:  The Greens have announced plans to implement emissions standards this year, alongside introducing an EV rebate of up to $15,000.