Federal Government releases Australia's first-ever Electric Vehicle Strategy

On 19 April 2023, the Federal Government released Australia’s first National Electric Vehicle Strategy, a comprehensive roadmap aiming to increase the uptake of electric vehicles (EVs) in Australia.

The need for a National Electric Vehicle Strategy

Australia is lagging significantly behind the rest of the world when it comes to EV uptake and infrastructure. Only 3.8% of new vehicle sales in Australia in 2022 were EVs, compared to the global average of around 9%.

There are several factors contributing to this, including limited EV charging infrastructure nationally and a lack of a fuel efficiency standard, with the Strategy aiming to address both these issues.

Consultations on the Strategy ran from September 2022 until end of October 2022, with the Federal Government seeking the views of State and Territory Governments, industry, unions and consumers on details of the proposed Strategy.

What is the aim of the Strategy?

The Strategy sets out three key objectives:

• to increase the supply of affordable and accessible EVs;
• to establish the resources, systems and infrastructure to enable rapid EV uptake; and
• to encourage increased EV demand.

According to the Strategy, there are six expected outcomes from the implementation of initiatives pursuant to the key objectives:

• expand EV availability and choice;
• reduce road transport emissions;
• make it easier to charge EVs nationally;
• increase local manufacturing and recycling of materials;
• make EVs more affordable; and
• reduce the cost to Australians of running their vehicles.

EV Charging Infrastructure Network

State and Territory Governments have been actively committing to the construction and expansion of the Electric Vehicle Supply Equipment network (often referred to as “charging stations” or “charging points”) to both drive and satisfy the uptake of EVs in their respective State or Territory. Examples include:

• NSW: $171 million investment into building network charging infrastructure, including ultra-fast charging stations;
• Victoria: $19 million to accelerate the rollout of Electric Vehicle Supply Equipment infrastructure across Victoria;
• Western Australian: $22.9 million investment to build the world’s longest continuously connected electric highway, with the network aimed to be fully operational by January 2024; and
• Queensland: $10 million in funding commitments for contribution towards building fast-charger infrastructure.

The Strategy announces the Federal Government's commitment to building the National EV Charging Network, a national network of EV charging infrastructure installed at 117 sites on major highways at an average interval of 150 km.

State and Territory Governments have agreed to collaborate with the Federal Government in aligning reporting and sharing of vehicle and infrastructure related data across Australia, and in developing nationally consistent standards.

Fuel Efficiency Standard

Chris Bowen MP (Minister for Energy and Climate Change) said previously that "apart from Russia, Australia is the only OECD country not to have or be in the process of developing fuel efficiency standards. The lack of standards in Australia is cited as one of the key factors impacting on the supply of EVs into Australia."  

A key aspect of the Strategy is the plan to introduce a national Fuel Efficiency Standard. Essentially, the Fuel Efficiency Standard will require car manufacturers to keep under a certain carbon emissions level relevant to the type and number of cars they sell, or otherwise face penalties. The idea of the Fuel Efficiency Standard is that this will then encourage car manufacturers to sell more EVs or more fuel-efficient vehicles in Australia to remain under the relevant emissions limit.

With the release of the Strategy, Chris Bowen MP (Minister for Energy and Climate Change) has said that "with passenger cars making up almost 10 per cent of Australia’s CO₂ emissions, [the Fuel Efficiency Standard] it is an important step to meet our emissions reduction targets."

Consultation on the design of the Fuel Efficiency Standard begins in April 2023. Following the consultation, the Federal Government will release its proposed Fuel Efficiency Standard by the end of 2023.

How does the Strategy measure up?

As noted above, the Strategy's key objectives are to increase the supply of affordable and accessible EVs, to encourage increased EV demand, and to establish the resources, systems and infrastructure to enable rapid EV uptake in Australia.

In terms of achieving these objectives, the planned introduction of a Fuel Efficiency Standard represents a major step forward in pushing for a greater uptake of EVs, by actively encouraging car makers to sell more fuel efficient vehicles and lower or zero emission cars (like EVs). Similarly, the commitment to building the National EV Charging Network and clear focus on collaboration with State and Territory Governments in the roll-out of EV charging infrastructure certainly assists in working towards the goal of enabling rapid EV uptake by Australians.

The Strategy also provides that the Federal Government intends to undertake research to develop an EV and other large format battery recycling, reuse and stewardship initiative, which (if implemented) will assist in establishing sustainable resources and systems for the ongoing uptake of EVs in Australia.

However, the Strategy likely falls short in respect of rapidly bringing Australia up to pace with the rest of the world, including by achieving our emission-reduction targets.

The Strategy fails to set new targets to push a rapid transition to EVs, instead mainly confirming already existing programs and policies, such as the electric car discount, Australian Made Battery Plan, and other already announced plans to upgrade EV charging infrastructure. In terms of immediate action, the Strategy does not provide any new incentives to directly help consumers with the cost of buying an EV, which paired with the delayed release of the Fuel Efficiency Standard, means it is unlikely there will be any meaningful increase in the rate of uptake of EVs for at least the rest of 2023.

The Strategy focuses on light passenger and light commercial vehicles, to the exclusion of heavy commercial vehicles. Road freight vehicles accounted for 38% of Australia's emissions in 2022, but the uptake of electric trucks has been very minimal in Australia.

The Strategy also does not directly address the rather vexed (but topical) issue of whether (and if so, how) the decline in fuel excise expected to be collected by the federal government over time will be replaced by some form excise payable by owners or users of EVs.

In comparison to recently announced plans by other countries, the Strategy appears somewhat unambitious. For example:

• USA: on 12 April 2023, the Environmental Protection Agency (EPA) in the US released proposed new emissions limits, which (if implemented) will require two-thirds of all vehicles sold in the US to be EVs by 2032, and would represent the strongest push towards EV uptake and the most aggressive vehicle emissions reduction plan in US history. Additionally, in comparison to the Strategy, the EPA is also proposing new stricter emissions standards for medium-duty and heavy-duty trucks.
• EU: on 28 March 2023, the European Parliament voted to approve a new law banning the sale of internal combustion engine cars from 2035 (with limited exceptions for some combustion engines that run on e-fuels), aimed to hasten the transition to EVs.
• Canada: on 21 December 2022, the Canadian Government published draft regulations requiring that all new passenger vehicles and light trucks sold in Canada after 2035 be electric zero-emission vehicles, with the rules to be phased in gradually, starting with a 20% requirement in 2026.

There will be a major review of the Strategy in 2026.