The real cost of electric vehicles

Michel Masson has a vision: to make Melbourne the go-to global destination to trial electric and autonomous vehicles.

Electric and autonomous cars require a clear regulatory framework.

Michel Masson has a vision: to make Melbourne the go-to global destination for the world’s biggest carmakers and automotive component manufacturers to trial electric and autonomous vehicles.

But Mr Masson, the chief executive officer of Infrastructure Victoria, an independent body responsible for delivering Victoria’s first ever 30-year infrastructure strategy, sees a big obstacle to his dream.

According to modelling conducted by his group, over the next quarter of a century Victoria needs to increase its electricity generation capacity by 56 per cent, at an infrastructure price tag of up to nearly $10bn, if every car on the road became electric and driverless.

At a minimum the expenditure on energy network upgrades will need to be $2.2bn to accommodate the additional demand from just a proportion of the population switching to electric cars.

Infrastructure Victoria chief executive Michel Masson.

“I’ve been very clear in every one of my public speaking engagements that we are facing the convergence of the transport and energy policies in the future, the way we have seen the convergence of energy and climate change policies in the past,’’ Mr Masson, the former CEO of Melbourne trams operator Yarra Trams, told The Australian.

“This is happening right now with electric vehicles in the marketplace. Every new EV that will hit the road is going to contribute to enhancing the challenges we are facing here.

“A normal battery of a vehicle is equivalent to drawing the same energy from the electricity grid as a traditional home.”

Infrastructure Victoria informed the Victorian government of its shock findings more than a year ago and since then a small team has quietly been assessing the recommendations.

Separately the State Department of Jobs, Precincts and Regions has established a team dedicated to examining the evolution of autonomous vehicles (AV) to identify the economic benefits for the emerging sector in Victoria.

“We are keen for industry to embrace opportunities in EV and AV in Victoria and for Victoria to become the No 1 Australian state in this area,’’ Matt Lowe, the Victorian government’s head of industrial intelligence and capture team, told a recent Future of Mobility summit at the Melbourne headquarters of German manufacturing giant Bosch, which was attended by executives of a number of the world’s biggest car­makers.

“We will adopt a strategic client-centred approach with a focus on promoting industry development for the EV and AV industry. We are looking to consult actively with industry, with universities, with the skills sector to proactively identify and capture opportunities and will tailor partnerships to deliver value for industry,’’ he said.

He added that the underpinning infrastructure and regulatory systems to enable widespread adoption of EVs and AVs need to be developed, tested and implemented early to provide “a suitable and flexible yet stable environment”.

But Mr Masson, who early last year attended the Bloomberg Energy Finance global conference in California to present his findings and has also briefed South Australian Premier Steven Marshall on his group’s work, says the regulatory frameworks governing investment in the state’s electricity networks must be fixed before any wholesale rollout of EV vehicles.

“In the environment where every person can buy a car and draw from the grid, it is fundamental to look at the regulatory framework to see what needs to be changed to enable those investments in transmission and distribution,’’ he said.

“We are facing a completely different future if we manage and control the demand peak than if we don’t.”

He added that the federal government could play an important role in ensuring the design standards for electric vehicle charging infrastructure were common between the states.

A report compiled by KPMG titled “Silent movers: electric cars are coming, but is energy regulation ready?” also called for a clear regulatory and policy framework to be put in place to ensure electric vehicles are efficiently integrated into the evolving energy markets.

The report argues that effective integration means that there are no barriers to customers’ uptake, the cost impact is managed and the benefits from electric vehicles to the energy market are fully captured.

It also suggests vehicle owners should face incentives to encourage off-peak charging to minimise impact and costs.

But it claims the current regulatory rules prevent specific network tariffs for electric vehicles and could discourage fast charging stations.

For autonomous vehicles, Victoria last year finalised regulations authorising the use of AVs for testing and development on the state’s roads.

Bosch was awarded $2.3m from the Connected and Automated Vehicle (CAV) Trial Grants Program and allocated the state’s first ADS permit for on-road testing of highly automated driving systems. It is preparing to test the technology on high-speed rural roads over the coming months.

Bosch trialled a Tesla Model S refitted with Bosch autonomous driving gear, such as sensors, cameras and computers, at its Anglesea Proving Ground in coastal Victoria last year and now wants to build a similar facility next to its Australian headquarters at Clayton in Melbourne’s southeast.

It could mean an investment of as much as $30m.

“We see it more as an experience centre rather than just a test facility, so people can experience their car before it goes on the road. We are talking to manufacturers, importers, road safety organisations and government bodies about it,’’ says the company’s Australia and New Zealand president Gavin Smith.

Bosch Australia is currently proposing to its global board to hire an extra 100 engineers in Melbourne to be part of its international division developing autonomous driving technologies.

Matthew Macleod, Toyota’s manager for future technologies and mobility, told the Bosch mobility summit that Toyota had also built and commissioned an autonomous driving course at its Altona property in Melbourne’s west.

“For us it is about supporting our customers,’’ he told the forum, noting up to 20 drivers could go on to the course at a time to test the safety elements in their new autonomous vehicles.

An Audi Aicon concept car at the Shanghai Auto Show in April 2019. Picture: AFP

Shawn Ticehurst, Audi Australia’s product planning and pricing director, told the forum that it was incumbent on the car manufacturers introducing the AV technology to offer drivers some sort of education.

“It becomes an important part of the vehicle handover experience when the customer picks up their car. It starts to spread out to how driving licences are obtained,’’ he said.

“We would make sure everything is explained an interpreted in a language Australians are familiar with. People love quick videos that can entertain and educate, as they do on YouTube. That is one way I can see it happening quite quickly.”

Trent McNeil, Ford’s advanced driver assistance systems engineer, told the forum there was an irony in the mistrust consumers have for AV technology.

“People just don’t trust the technology but we inherently trust the tens of thousands of people around us in cars every day in different mental states driving cars with different levels of roadworthiness. It is all about educating on why these features are there, how are they going to help,’’ he said.

Mr McNeil said the reality was that the days of fully autonomous vehicles driving around the Melbourne or Sydney CBD remain a long way into the future.

“Where we are at the moment is enhancing the driver’s capabilities. In the stop-start traffic, meaning you as a driver don’t have to keep a constant eye on the road. It is really just about the convenience,’’ he said. “The features are there to augment you … but the human is always in control.”