Motoring lobby exposes cost impact of Bowen’s electric drive

The nation’s peak motoring body has called the federal government’s bluff on the impact tougher emissions standards will have on the cost and availability of the vehicles that its 9.3 million members want to drive. In a detailed submission to government, the Australian Automobile Association makes the obvious point that the proposed changes will act as a cross-subsidy from the majority of motorists to those who can afford the additional cost and perceived inconvenience of driving an electric vehicle. The AAA supports greater fuel efficiency standards but it demolishes the government’s argument that what has been proposed is a simple copy of what is happening overseas, notably the US. The distortion is most extreme when it comes to large SUVs and four-wheel-drive vehicles, which are popular both in the US and Australia.

The AAA says the US Environmental Protection Agency’s standard excludes heavier pick-up trucks but in Australia the government’s preferred standard groups all SUVs with passenger cars, which are subject to a more stringent target. The US EPA standard allows a big list of credits that makes it easier for vehicle manufacturers to meet the specified headline targets, whereas the Albanese government’s preferred standard does not allow any of them but appears to keep the same headline targets. The US uses a different laboratory test procedure to determine the carbon dioxide emissions than that used in Australia. And the Biden government’s Inflation Reduction Act is loaded with billions of dollars in subsidies to encourage the take-up of electric vehicles.

Going electric is the core agenda of the new emissions standards, which are being sold on the basis of cheaper petrol bills. The truth is that too little attention has been paid to the life cycle analysis of the carbon footprint of EVs, particularly given the bulk of electricity needed to power them at present will come from burning coal. Modelling commissioned by the AAA shows the government’s preferred new vehicle efficiency standard would require more than 40 per cent of new passenger vehicles and about 50 per cent of new light commercial vehicles to be EVs by 2029. To get there, the AAA’s modelling suggests “prices of electric vehicles will need to be reduced to incentivise more buyers to purchase them, whereas internal combustion engine vehicles will need to be disincentivised through increased prices”. It says to reach market shares required to comply with the headline targets, relative prices would need to adjust dramatically or EV technology would need to improve significantly. The analysis suggests the targets will be unlikely to be met without additional consumer and/or producer subsidies, as well as significant enhancements to Australia’s EV recharging network. This all adds up to even greater taxpayer support for a transition the motoring public has shown itself to be less keen to embrace than was expected by policymakers and carmakers.

The AAA documents how the popularity and availability of the fabled electric pick-up truck exists more in the minds of devotees than on the roads. The Michigan plant where Ford’s F-150 Lightning electric truck is built has recently cut its output by half because of poor demand. The China-built LDV eT60 is currently the only electric ute available in Australia and 15 of these vehicles were sold in the fourth quarter of 2023.

Given the high cost per tonne in carbon dioxide abatement the policy entails, Climate Change and Energy Minister Chris Bowen has yet to make the case for why the proposed policy is the correct approach. The wildcard is the potential flood of cheap EV imports from China that threatens to up-end established carmakers and make the world even more dependent on Beijing for the green transition.

Forcing the issue through subsidies and financial penalties risks repeating the mistakes that have made such a mess of the energy market in general.