Hybrids to cost more under Labor’s aggressive pursuit of electric vehicles, Honda says

Honda Australia has warned the price of hybrids will increase under the Albanese government’s aggressive pursuit of electric vehicles.

Honda Australia president and CEO Jay Joseph.

Honda has issued an explosive warning that the price of hybrid cars will increase in the next few years under the Albanese government’s policies, declaring the ­aggressive pursuit of electric ­vehicle takeup is out of step with consumer demand and risks being “counter-productive” to reducing carbon emissions.

The significant intervention by Honda Australia chief executive Jay Joseph comes amid industry concerns over the trajectory of policy in the sector after the ­Climate Change Authority revealed a fortnight ago its assumptions that EVs would have to make up half of new car sales between now and 2035 for Labor to hit its ­emissions-reduction target of 62 to 70 per cent.

Honda and Mitsubishi are urging the Albanese government to increase funding for charging ­infrastructure given “range ­anxiety” is the biggest deterrent to buying battery vehicles, while also accepting the need for the ­private sector to invest more into charging.

With the industry concerned that the CCA advice will lead to more aggressive targets under the New Vehicle Efficiency Standard, Mr Joseph said the scheme’s existing targets would force the carmaker to put up the price of both petrol and hybrid vehicles “in the next few years” to cover the costs of fines it will be forced to pay.

With the NVES to be reviewed next year, Mr Joseph told The Australian that “the math says” any ratcheting up of the scheme to encourage further uptake of EVs would lead to higher price increases of other cars.

About 9 per cent of new car sales are EVs. Mr Joseph backed a call from the Federal Chamber of Automotive Industries for direct subsidies to lower the price of battery vehicles if the government ­intends to meet the level of uptake predicted by the CCA. “The countries that have high adoption of (EVs) have that alignment of policy and subsidy and the other things that help accelerate the consumer adoption,” he said.

While Honda’s new car sales are expected to be 50 per cent hybrid this year rising to 75 per cent next year, Mr Joseph said those vehicles would begin to be ­penalised as requirements under the NVES become increasingly more stringent to lower the emissions of newly sold cars by 60 per cent by 2030.

“Most hybrids, we believe, including ours, will start to be above the compliance threshold next July,” Mr Joseph said.

“We want to minimise how much we pass that along to consumers but at some point we can’t bear those costs without passing them on to consumers.”

Mr Joseph said Honda was committed to net-zero emissions by 2050, but policies that put ­upward pressure on the price of hybrids and more efficient petrol cars will deter people from buying new cars.

“There’s a very real possibility that people will buy fewer new cars and they will keep older vehicles on the road longer because the economics change to the point where it is more viable to invest in repairs and maintenance of older vehicles,” he said. “Older vehicles, by their ­nature, have more emissions. They don’t have the ­modern emissions technology, not to mention the safety features and other things that benefit all road users.

“I believe there’s a very real cost, real unintended consequence, of people keeping older vehicles on the road longer, which is counter-productive to reducing emissions.”

With Climate Change and ­Energy Minister Chris Bowen having ­argued before the May 3 election that the NVES would not put upward pressure on any cars, Mr Joseph said: “I don’t see how that is possible. We can introduce vehicles but people have to buy them.”

FCAI chief executive Tony Weber last week told The Australian the industry was supplying nearly 100 EV models to the market but they were being rejected by consumers.

“The supply is coming on stream, the demand is not there,” Mr Weber said.

The sector is anticipating the NVES, which came into effect in January, would lead to car ­suppliers paying $2.7bn in fines by the end of the decade for missing carbon-emission requirements.

Mr Bowen told The Australian the NVES brought Australian car standards “into line with the rest of the world”.

“We don’t want Australia to be a dumping ground for out-of-date models that guzzle petrol and cost more to run – putting us in the same basket as Russia when it comes to standards,” he said.

“Consumer and motoring ­advocates, carmakers, and dealers support standards with teeth ­because they know their ­customers benefit from cars that are cheaper to run.

“People can buy whatever car suits their needs, from four-wheel-drives and utes to EVs and hatchbacks. Whether motorists need a petrol, diesel, hybrid or electric car, the NVES will encourage carmakers to make the choices they offer more efficient.

“Indeed, Honda Australia ­itself has welcomed the NVES and promised to work with their global parent to bring more of the hybrid and electric Honda ­choices offered overseas to Australia sooner.”

The debate over transport policy comes as the federal government faces pressure for failing to outline a timeline for introducing a road-user charge system, amid concerns it will deter people from buying EVs.

NSW Premier Chris Minns said there needed to be revenue to replace declining fuel excise to maintain the standards of roads.

“There’s not too many roads across NSW that don’t have a bloody huge pothole in it,” Mr Minns said.

In a report released last week explaining why Australia can lower emissions by 62-70 per cent from 2005 levels by 2035, the CCA said Australia could replicate the 90 per cent EV uptake in Norway. Petrol cars in Norway are hit with a 25 per cent tax, while EV drivers have a range of ­benefits, including cheaper parking and tolls.

A Toyota Hilux that costs a bit over $60,000 in Australia costs nearly $120,000 in Norway.

In an interview with The Australian ahead of the election, Mitsubishi Motors Australia chief executive Shaun Westcott said Australian car yards were brimming with electric vehicles that people did not want to buy as he warned the targets in the NVES were too aggressive.

A Mitsubishi Motors Australia spokesman said this week range anxiety was the “main concern” for buying EVs.

“Publicly available data indicates that there are 68 EVs per public charge point in Australia, far exceeding the International Energy Agency’s recommendation of 11, as well as charger availability in (other) countries,” the spokesman said.

“To meet Australia’s climate goals, (Mitsubishi) suggests ­increasing availability of EV charging infrastructure in the long-term and reinstating support for plug-in hybrid electric vehicle technology in the short-term.”