Business Daily Media

What would it take to get Australians to buy electric cars? Canberra provides a guide

  • Written by Yogi Vidyattama, Associate Professor, National Centre for Social and Economic Modelling, University of Canberra
What would it take to get Australians to buy electric cars? Canberra provides a guide

Only 5,532[1] of the 101,233 new cars sold in Australia last month were all-electric.

While that number is an improvement on previous months, it is tiny[2] compared to the 25% to 85% of new cars sold that are all-electric in European nations such as Germany, the Netherlands, Denmark and Norway.

A lot has been written about why that is[3], but less about what an individual state or territory can do to improve it, in the absence of help from the federal government.

Our team at the National Centre for Social and Economic Modelling, University of Canberra[4] has examined what the Australian Capital Territory[5] (ACT) is doing, and what effect this is having on electric vehicle take-up by price and type of household.

The ACT offers three incentives[6]

  • a full exemption from stamp duty on purchase

  • two years free registration

  • a zero-interest loan of up to A$15,000 for eligible households[7]

We used Australian Bureau of Statistics census and household expenditure data as well as microsimulations based on a survey of vehicle preferences to examine behaviour before and after the changes.

We simulated the decision to buy electric based on a total cost of ownership, which included the value of the vehicle as well as operational costs including petrol, service and repair.

Incentives matter

Our modelling found that with a stamp duty exemption, at an electric vehicle price of A$50,000, around 9%[8] of new vehicles sold would be electric in five years.

The proportion climbs to 11% with zero-interest loan and free registration added.

But even after five years, the proportion of total cars on ACT roads that were electric would be small: just 1.6% with just the stamp duty exemption, and 2.0% with the other measures as well.

This result is much higher than the latest-known proportion of electric vehicles in the ACT, which in 2019 was 0.1%. Nationally, only 23,000[9] (0.011%) of the 20.1 million vehicles registered are electric.

Prices matter

At a much-lower electric vehicle price of $25,000, an extraordinary 23%[10] of new vehicles sold after five years would be electric, provided they were stamp duty exempt.

If there was also a zero-interest loan of $15,000, the proportion would increase to 27%, and with two years free registration as well, to $30%.

As a proportion of the entire car fleet in the ACT, the figures would be 4.1%, 4.8% and 5.3% respectively, depending on those price, loan and registration factors. That would mean much larger demand than at present, but still small enough to mean the infrastructure for maintaining conventional vehicles would be needed for some time.

Income matters

We found that high income households are far more likely to replace their cars within five years and far more likely to switch electric even without incentives – and that for them, the incentives didn’t make much difference.

NATSEM, Impact simulation of ACT EV policy[11] The incentives had their biggest impact, not among the highest earning three-fifths of households, or among the bottom fifth, but in the second-bottom fifth. For that group, the interest-free loan was found to be more important than the free registration, whereas for higher income households it was the other way around. In terms of geography, the highest take up is set to be in Canberra’s inner north and south where incomes are high. Nevertheless, our modelling also suggests a high take up in the south of Canberra. Petrol matters And the take-up rate depends on the price of petrol. The price used in our modelling was the 2018-19 price of around $1.45 per litre for unleaded and diesel. Our modelling suggests that the recent increase in price to around $2 a litre would lift the purchase of electric vehicles by 0.5 percentage points, while an increase to $3 would increase take-up by around 2.5 percentage points. Different states are experimenting with different incentives. Victoria, NSW and Queensland are offering $3,000 rebates[12] on the purchase price, along with a registration discounts in Victoria offset by a road user charge. Read more: The embarrassingly easy, tax-free way for Australia to cut the cost of electric cars[13] What applies to the ACT might not apply elsewhere, especially as average incomes in Canberra are higher than in other cities. But our modelling provides a guide as to how incentive-based policies can work. Policies that increase the electric vehicle take-up in lower income households are likely to have the greatest effect, and also likely to benefit these households by freeing them from the need to pay for fuel. References^ 5,532 (www.carexpert.com.au)^ tiny (en.wikipedia.org)^ why that is (theconversation.com)^ National Centre for Social and Economic Modelling, University of Canberra (www.governanceinstitute.edu.au)^ Australian Capital Territory (www.environment.act.gov.au)^ three incentives (www.environment.act.gov.au)^ eligible households (www.climatechoices.act.gov.au)^ 9% (cdn.theconversation.com)^ 23,000 (www.abs.gov.au)^ 23% (cdn.theconversation.com)^ NATSEM, Impact simulation of ACT EV policy (cdn.theconversation.com)^ rebates (evcentral.com.au)^ The embarrassingly easy, tax-free way for Australia to cut the cost of electric cars (theconversation.com)Authors: Yogi Vidyattama, Associate Professor, National Centre for Social and Economic Modelling, University of Canberra

Read more https://theconversation.com/what-would-it-take-to-get-australians-to-buy-electric-cars-canberra-provides-a-guide-178778

Business Reports

Cash Flow Uncertainty from Australian Small Business Owners is Impacting their Mental Wellbeing

Released today, American Express’ Working Capital Research1 explores the impact cash flow uncertainty has on the mental health and wellbeing of Australian small business owners2 (SBOs).   The report found that 49% of SB...

4 Tips For Planning a Work Conference

Planning a work conference can be extremely exciting, yet also quite stressful. Some say that it can even be on par with planning a wedding, So, it's important that you have the right elements in place since unfortunately, man...

HSBC Chief Economist: Travel a bright spot amid global challenges

Paul Bloxham reveals key insights from his upcoming keynote talk at Flight Centre Corporate’s #Illuminate2022 conference  Amid the global challenges of high inflation, supply chain disruptions and the conflict in Ukraine...

Unit4 Signs New ISV Partnership with eConnect

Unit4, a leader in enterprise cloud applications for people-centric organisations, today announced that it has signed a new partner deal with eConnect International, a Dutch market leader in multi-channel invoice and ord...

Recovery from a disaster like Hurricane Ian takes years, and nonprofits play many pivotal roles before and after FEMA aid runs out

The rebuilding in places like Matlacha, Fla., won't happen overnight.AP Photo/Gerald HerbertMassive storms like Ian and Fiona mark the beginning of a long and frustrating process for anyone who loses their home and possessions.Rec...

Bandits are losing interest in robbing banks, as some crimes no longer pay

John Dillinger, played by Warren Oates (pictured) in the 1973 film 'Dillinger,' allegedly robbed 24 banks.Bettmann via Getty ImagesBank robbery is a high-profile crime that fascinates many people.Movies have been made about famous...

Web Busters - Break into local search

WebBusters.com.au