Well who’d have guessed electric cars just got cheaper: Moreover, we now have state governments on both sides of politics making moves to get the show on the road.
For investors, the sudden lift in tempo across the sector also comes at a useful time since share prices across the electric-vehicle spectrum, from lithium miners to carmakers, are experiencing a rare pullback.
Really, whether you “support” the idea of electric cars is irrelevant, it’s like if you were back in 1920 wondering if you “support” the movies moving from silent screens to “talkies”.
As coal baron turned electric-vehicle tycoon Trevor St Baker put it recently: the EV revolution is “unstoppable”.
“There are no global car manufacturers putting any new investment into internal combustion engines … In 20 years there will be no petrol bowsers – they will all be electric chargers,” St Baker said while making a $20m investment in TrueGreen Mobility, a venture aiming to take an early lead in the local electric-car market.
The big news of course this week is that the Liberal government in NSW announced the most generous package of incentives yet seen locally where buyers can get up to $7000 off of an electric vehicle through a mix of rebates, stamp-duty waivers and other perks. The NSW government forecasts that the provision of the incentives can lift the portion of electric vehicles on the road by a substantial 15 per cent.
Across the border in Victoria, the Labor government has recently announced a $3000 rebate. In both states, the rebates have a cap of $68,750 – that’s good, too, because it offers incentives to the affordable cars that will make the electric-vehicle industry a reality. What’s more, it does not help those in luxurious Teslas, who don’t need it anyway.
Why did the left and right in politics come to agree on giving incentives to electric vehicles at the same time? Because in each case it is coupled with a road-usage tax that over time will more than compensate for the fading revenues of fuel (that is, petrol and diesel) excise tax.
If you watch this industry closely, you’ll find some very smart people making moves – St Baker is the current titleholder (he made a fortune in coal power stations). But he’s not alone.
Iron ore magnate Gina Rinehart is also involved in the scene. She is backing Vulcan Energy, the German lithium miner that is set to benefit from the European electric-vehicle boom.
Why, even Kerry Chikarovski (yes, the former NSW Liberal leader) has re-emerged as the chairman of Bell Resources, a company that has bought a chain of 60 car-wash outlets and plans to convert them into a network of high-speed electric-vehicle charging stations.
Usefully perhaps, as Australia makes better-late-than-never moves in the electric-vehicle sector, the wider investment market is having a moment of reflection. However, bargain hunters should note that where there is a “new, new thing” coupled with government support, there will be hits and misses.
Tesla, the most widely held overseas stock among Australian investors, is down by 50 per cent in the year to date. The ARK innovation exchange traded fund, which roared on the market last year, has posted a flat 0.47 per cent this year to date.
Meanwhile, the sector may be looking at its first casualty if things continue as they are at Lordstown Motors, the US-listed company that promised to make “electric trucks”. The Ohio-based manufacturer is down 10 per cent this year as reports flood in that it overstated pre-orders while key executives sold shares before the drop.
But these twists and turns are to be expected – the sector is roaring hot. And there is a long way to go. That’s good news for many who have neither invested in the area or have yet to make a move to actually buy an electric vehicle.
If you’re looking at the investment scene, the doors to entry are many and varied – though strictly within the ASX it largely comes down to exchange traded funds and “battery metal” stocks such as lithium favourites such as Vulcan, Piedmont, Orocobre and Galaxy.
The single best performing ETF across the Australian market in the 12 months to March 31 was ACDC: Battery Technology and Lithium from ETF Securities.
As for the cars themselves – as opposed to electric-vehicle stocks – we still have a lot more Australians interested in investing in the sector than actually driving the cars themselves.
In fact, we would have to triple our electric vehicle sales to even come up level with other advanced economies. At last count, electric vehicles represented about 0.7 per cent of new cars in Australia.
The very low electric-vehicle usage numbers reflect two things: first, “range anxiety”, which is the term used for the inability of electric cars just now to easily do huge distances. EVs clearly are more suitable to high-density small countries such as the UK. Second, the sector had until recently been caught up in the bitter politics around climate change. (Coal remains a substantial, if fading, component of the electricity grid.)
That’s why the state-based EV initiatives really matter. What’s more, it makes the cars at least $3000 cheaper. Seven electric cars currently on the road locally qualify for the rebates in both NSW and Victoria, as they are under the $68,750 “cap” list. Here’s the list: The Hyundai Ioniq and Hyundai Kona, the MG EV, Nissan Leaf, Mini Cooper EV and Kia E-Niro: Just one Tesla gets under the barrier: the Tesla Model 3.
Prices are also coming down in the fast-growing EV subscription business, led by some well known energy companies such as AGL or the specialist group Sonnen.
Ultimately as the prices of everything in the EV sector come down, from cars to batteries to charging points, the sector will hit an “inflection point”, like mobile phones did at one stage. From that point, the car industry effectively becomes “electric”. That day just got a little closer this week.
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