The electric car revolution
23 Mar 2020
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Previously occupying a niche luxury market dominated by Nissan and Tesla, EVs are growing in popularity and are set to become more mainstream with manufacturers such as Hyundai, Kia and Mini releasing more affordable options later this year.
Besides price, other barriers to ownership such as recharging are being addressed with innovations and improvements to the EV charging network. In this article we examine the rise of the EV and the role it will play in a green transport future.
The global growth of electric cars
Over the past ten years, electric car popularity has grown steadily and at the beginning of 2019 there were 5.6 million on the road across the world.2
As the graphic below highlights, China leads the way in terms of total EV sales with 45% of the market, closely followed by the US.
Norway remains the global leader with 46% market share, a position supported by a number of Government incentives including placing a high stamp duty on internal combustion vehicles and exempting EVs from both stamp duty and their GST equivalent of value-added tax (VAT). They also provide their owners with a total exemption from road tolls, free car ferry travel, free recharge sites, free parking and access to bus lanes for all EV drivers.
Globally, electric cars are gaining momentum. UK Prime Minister Boris Johnson recently announced his intent to ban the sale of petrol and diesel cars from 2035 and China is rolling out initiatives to wean the country off fossil fuel-powered cars. As a result, EV sales are set to hit nearly 5.5 million units by 2025.
In Australia, while sales of electric cars tripled in 2019, that figure only amounted to 6718 vehicles compared to over one million sales of fossil-fueled vehicles.3
The benefits of going electric
The most obvious benefit of going electric is cutting down on fossil fuel use to reduce your carbon footprint. The average new car emits 182 grams of carbon dioxide per kilometre, with older vehicles emitting even more.4
EVs have no exhaust emissions meaning they don’t directly pollute the air. Of course, you need to consider the source of your electricity in the first place. If you use ‘green’ or renewable electricity to charge your car, or if you have a home-based solar-powered charging station, you’ll be minimising your carbon footprint.
Cost-wise, EVs are more economical to run. Even charging from the main power grid, a fully-charged car will cost you around a third of the price of a tank of fossil fuel.
And then there’s maintenance. As EVs have significantly less moving parts than a traditional petrol or diesel car, the cost of servicing is also greatly reduced. No exhaust systems, starter motors, fuel injection systems or radiators means less maintenance and fewer service bills. Battery packs are expensive, however, and may need replacing during the lifetime of the vehicle.
When it comes to registration and stamp duty, there are also benefits depending on which state you live in. In the ACT, new EVs pay zero stamp duty and are eligible for a 20% registration discount. In Victoria, EVs have a $100 annual registration discount, while in Victoria and Queensland you’ll benefit from a reduced rate of stamp duty.5
While running costs of an EV are much less than a petrol or diesel car, it’s worth noting that, at present, the costs of an EV are significantly higher. If you buy a brand new EV you won’t be left with much change from $50,000 and when a comparable fossil-fueled car is around half the price, you’ve got to be in it for the greater good – and the long term.
How far will it go?
The biggest practical stumbling block for many people in relation to EVs is refueling. When driving a petrol or diesel car, it’s easy to get a tank full of fuel in a matter of minutes and be on your way.
This is known as ‘range anxiety’ and it’s often cited by people as a major reason for why they decide not to purchase an EV. Depending on where you live and how far you travel, an EV requires more forethought and planning – at least for now.
In a country the size of Australia, range is critical. The top-of-the-range Tesla can manage to drive up to almost 600km and, while more ‘everyday’ EVs have a range closer to 300km, you can still comfortably go about your day-to-day travel.6
It’s when you want to go further afield that it gets tricky. Any holiday plans will need to include stop-offs at recharging locations. Every EV sold comes with a charging cable that can be plugged into domestic power outlets. A wallbox charging station will set you back more than $1000 to purchase and install, however with at least double the output and therefore half the charging time, it could be worthwhile.
When it comes to public charging infrastructure in Australia, there’s been a dramatic upward trend. The International Energy Agency reports that the number of public charging stations increased by 143% between June 2018 and July 2019 and there are now almost 800 across Australia.7
Another benefit is safety. EVs are less likely to roll thanks to their lower centre of gravity. Their body construction and durability makes them a safe option in a collision and they are also less likely to catch fire or explode.
Contact us if a big purchase like an EV is likely to affect your financial plan.