The Hidden Cost of Electric Vehicles in Australia

Australia needs to avoid increased congestion, lessen the nation's reliance on imported fossil fuels and escape further greenhouse warming. To do so it needs a broader and more reliable mobility strategy. Even with a recent turn of Prime Minister it seems that while Australia's leaders aren't inclined to fight the good fight, the people of Australia are. Electric vehicles have a huge role to play in developing more sustainable cities across the world, this technology has potential to develop a variety of industries and provide Australia with a much needed solution, altering the nation's energy, political and economic dynamics.

Costs to Consumers
Of course the upfront costs to consumers in Australia, like everywhere else in the world, are substantially more for an electric vehicle over their petrol-powered counterparts, the total lifetime costs are substantially reduced. After doing a little more digging, I asked the Australian Electric Vehicle Association (AEVA) what consumers could expect when buying an Electric Vehicle in Australia.

"Most automakers are not currently tooled up to manufacture large numbers of electric cars, so the low production runs are more expensive. Also, most automakers rely on finance arrangements and regular service schedules for revenue. With a substantially reduced maintenance regime, you can expect a higher upfront cost. A new Nissan Leaf is about $39,000 and a new Tesla Model S (P85) is about $150,000. But bear in mind you will be driving around at less than 3 cents per kilometre, while a similarly sized petrol car might cost you about 12 or 14 cents per kilometre. If you drive an average of 14,000 km a year for six years, you will have spent as much overall on your electric car as if you'd been driving on petrol. You'll also break even sooner if you charge off-peak or charge from roof-top solar."

Further costs to consumers may also include home upgrades in order to support the extra charging load needed of an electric vehicle. This upgrade is usually essential when your house was built before 1970 and/or has not previously gone through any substantial renovations.

That being said, there are also further wins in store for electric vehicle owners with EV's registered in the ACT (Australian Capital Territory) having exemptions from vehicle stamp duty. For those registered in Victoria there's a $100 reduction in registration fees each year too.

Manufacturing Costs
While Australia's onshore car manufacturing facilities are dwindling, we certainly aren't seeing much in the way of EV production in the country. Manufacturing costs are perhaps the number one reasons for electric vehicle technology not being more readily accepted in Australia, with low production volumes and labour-intensive manufacturing processes the norm. Meaning upfront costs remain far too high for the average consumer.

With a miniscule 2.5% profit on electric vehicles there certainly isn't much incentive for manufacturers or retailers in the country to sell EV's over their petrol-guzzling cousins. EV's based on existing vehicle designs, however, could path the way to the future and potentially give a greater profit by lowering manufacturing costs through being assembled in the same plant as ICE vehicles.

Battery Costs
The significant costs of electric vehicle batteries used to be the main reason EV's weren't made more available through the world, however in the past 4 years, battery costs have been dropping substantially and quickly. We're sure to see more EV's on Australian roads soon as a result of the significant price drop. Price per kilowatt hour of the battery normally would range from US $500-650, however the latest projections indicate a range of $300-325 by 2020. If prices keep falling at the current rate of 8% per year though we may even see prices drop to as low as $150 per kWh within the next decade. This is the price at which experts believe electric vehicles will become truly cost comparative with internal combustion engine vehicles. Meaning electric vehicles really are the way of the future.

Energy Storage Costs
While Australia is one of the largest exporters of energy in the world, the value of Australian imports of crude oil, diesel and automotive fuel equalled more than $32 Billion between 2011 and 2012. As stated, Australia clearly needs to reduce this dependence on imported fuels and the risks associated with such, including price vulnerability due to oil supply constraints. Right now, the additional load on the electricity grid thanks to EV's is pretty low and is expected to remain that way. Even in California, which has the highest electric vehicle sales the world over, utility companies are totally unconcerned with the impact on their system, stating that upgrading transformers is well within the normal cost of doing business.

While EV market shares continue to remain below 1% in the majority of major markets, there has to be a coordinated effort among all stakeholders to address these significant cost issues towards not just Australian consumers but on a global scale in order to get more electric vehicles on Australian and international roads.