Welcome note
RICHARD KLIPIN Chief Executive Officer, NIBA
PHUONG LY Chief General Manager, Allianz Commercial
Understanding the evolving EV landscape
At the last count, electric vehicles (EVs) – which throughout this guide encompass battery electric vehicles (BEV) and plug-in hybrid vehicles (PHEV) – accounted for almost 10% of all new vehicle sales in Australia, edging towards the ratios we currently see in Europe and the US. Appetite is increasing as the technology evolves, and with greater supply and choice, EV take-up is rising steadily.
We’ve written about EVs in previous Broker Guides, however, this is a continually evolving space – and it’s one that provides huge opportunity for both brokers and businesses.
Throughout this guide, we delve into EVs from a number of different angles, providing a rounded and realistic view of EVs, and their potential in business terms, too.
We explore the current state of EVs globally and here in Australia, and look at what a transition to EVs could look like for businesses.
For some organisations, now isn’t the right time – for others, there is a significant opportunity. However, it’s not as straightforward as introducing some new petrol or diesel vehicles into a fleet – there’s a lot of groundwork to cover, including policies, procedures and driver familiarisation.
There are a number of concerns people have about EVs, too – including range and charging, the availability of repairers, as well as battery fires and what the environmental impact of an EV actually is.
In this guide, we bring together experts from national organisations and the world of academia – as well as Allianz’s dedicated EV and sustainability people – to tackle some of these conversations head-on.
As a broker, you need a realistic view of EVs and the role they can play for your clients. It’s not our role to promote or sell EVs; it’s our role to help businesses understand the opportunities and risks, the challenges and the potential benefits, and weigh them up.
One thing is for certain, however – transport is one of only three sectors in which emissions are still increasing in Australia, and action is needed.
Collectively, we have an opportunity to do something about that right now – and EVs are undoubtedly part of that solution.
Electric vehicles: The transition so far
EVs represent a significant opportunity for businesses and therefore brokers. However, while take up is increasing, there’s a lot of work to be done.
Electric vehicles (EVs) have long been talked about as being the long-term successor to internal combustion engine (ICE) vehicles as the world moves towards a sustainable transport solution with little to no environmental impact.
Proponents of EVs point to lower emissions, reduction in greenhouse gases and energy efficiency as being compelling reasons in the ‘for’ camp, while the more sceptical highlight range, charging issues and battery safety among the items in the ‘against’ column.
Globally, including here in Australia, the take up of EVs is growing by the year. In 2023, almost 14 million EVs were sold across the world – a 35% increase on 2022. This brought the number of EVs on the road to 40m.1
Today, EVs account for 18% of all vehicles globally, 2 and in 2023, more than one in three new car registrations in China was electric, as was more than one in five in Europe and one in 10 in the US. 3
In Australia, EV take-up is increasing too, albeit a little more slowly. At the end of April 2024, EVs represented 9.4% of new vehicle sales, compared to 8.4% in 2023 and 3.8% in 2022,4 with more than 180,000 on the road at the end of 2023. 5 EVs are forecast to make up 30% of the Australian market by 2027. 6
Samantha Johnson, CEO of the Electric Vehicle Council, says, “We are observing a steady rise in demand for EVs, particularly for battery electric vehicles (BEV), as more models become available at different price points, charging infrastructure continues to expand, and government policies such as the FBT exemption on novated leases makes EVs more affordable and supports take-up.
“Australians are making the switch to electric vehicles because they know it can save them thousands of dollars in fuel and maintenance costs, and they know it’s good for the environment.”
Supporting the transition process
Over the past few years, however, EV take-up is trending up – and it’s the right time for many businesses to begin the process of transitioning to EVs.
Because, while Federal Government statistics show that Australia’s emissions peaked in 2007 and have been declining since, one of the three areas in which emissions are not declining is transport.7
“A lot of businesses are approaching the deadlines for meeting sustainability targets, so now’s the right time to be having conversations about helping businesses to transition to EVs,” says Chris Wood, Emerging Risks Manager at Allianz Risk Consulting.
As Johnson identifies, authorities are doing their bit to help growth, too – both at home and overseas. In Britain, for example, 22% of manufacturers’ sales this year must be electric, with a fine of £15,000 per sale payable for each car sold under that figure. That percentage figure rises to 25% next year and 80% by 2030. 8 In the EU, there are stringent CO2 regulations for cars and vans which push manufacturers towards producing EVs, while China’s New Energy Vehicle mandate requires a certain percentage of new vehicle sales to be electric or hybrid.9
In Australia, there are a number of federal and state subsidies and grants available to help reduce the cost of EVs, while in August 2024 the government announced it had doubled the $250 million ‘Driving the Nation Fund’, which is supporting the national rollout of EV charging stations, as well as the hydrogen refuelling infrastructure.
Johnson says, “Electric vehicle uptake continues to grow in Australia despite broader economic pressures. The total number of BEVs and plug-in hybrid vehicles (PHEV) on Australian roads now exceeds 180,000. As of mid-2024, nearly 60,000 EVs have already been sold this year alone. BEV/PHEV sales represented 9.6% of new light vehicles sold in the second quarter of this year.”
Those economic pressures, however, are potentially slowing down the take-up of EVs. Data shows that in May 2024, 34% of people in Australia were considering buying an EV, compared to 56% in June 2022.10
EVs are forecast to make up 30% of the Australian market by 2027.
Add to that some of the common challenges and questions businesses have – including range anxiety, charging infrastructure and the policies and procedures that are required – and it’s clear that businesses need help, guidance and assistance to develop and implement pilot projects to begin their EV transition in earnest.11
Insuring EVs and getting back on the road
Insurance plays an important role in creating a sustainable future for EVs. Ensuring the vehicle is both protected and can be repaired and back on the road in good time, via a strong network of repairers that specialise in EVs, is critical.
While EVs effectively perform similar tasks to ICE vehicles, they’re very different under the bonnet – and require high voltage qualifications to fix and repair.
Fewer moving parts mean there are fewer things to go wrong, however, repairing EVs requires different skills.
Increasingly, repairers are developing their EV repair capabilities, and within Allianz’s Selected Repair Network a large proportion of repairers are equipped to work on EVs.
On average, EV repairs cost around 20% more than those for ICE vehicles ($8472 vs $7077). While both have a write-off rate of around 9%, EVs were found to require frame repairs less frequently.11
The EV opportunity for brokers
Just as EVs present opportunities for businesses – which we explore further in the articles that follow – they present opportunities for brokers to advise and guide businesses to ensure they’re considering all aspects.
To date, there has – in some quarters – been a ‘wait and see’ position taken by businesses in regard to their EV transition. Sometimes this has been born out of necessity, sometimes out of choice.
Statistically, however, we’re trailing behind other Western countries – and there’s a real risk in doing so when it comes to EVs.
With transport one of the three areas in which Australian emissions are still rising, EVs should be high up the priority list of every business.
Chris Jones, President of the Australian Electric Vehicle Association, says, “It’ll probably take until 2030 or 2035 until 100% of all new vehicle sales are EVs – and then it’ll take another 15 years for the fleet to become mostly electric as vehicles stay on the road for at least 15 years in Australia – so we’re already looking at 2050 before we start making genuine dents in the transport emissions budget.
“That’s why we all need to do a lot more than just electrify our cars – but electrifying our cars needs to happen, and it might as well start now.”
Summary for brokers
1. Transport is one of three areas in which emissions are still rising in Australia.
2. EVs are forecast to make up 30% of the Australian EV market by 2027.
3. Federal grants and subsidies are incentivising businesses to transition.
4. There are challenges however, and brokers need to be aware of these to have informed conversations.
1. https://www.iea.org/reports/global-ev-outlook-2024/trends-in-electric-cars
2. https://www.iea.org/reports/global-ev-outlook-2024/trends-in-electric-cars
3. https://www.iea.org/reports/global-ev-outlook-2024/trends-in-electric-cars
4. National Electric Vehicle Annual Update 2023-24 (dcceew.gov.au)
5. EVC-Australian-EV-Industry-Recap-2023.pdf (electricvehiclecouncil.com.au)
6. https://electricvehiclecouncil.com.au/wp-content/uploads/2024/03/EVC-Australian-EVIndustry-Recap-2023.pdf
7. National Greenhouse Gas Inventory Quarterly Update: March 2021 - DCCEEW
8. Pathway for zero emission vehicle transition by 2035 becomes law - GOV.UK (www.gov.uk)
9. Policies to promote electric vehicle deployment – Global EV Outlook 2021 – Analysis - IEA
10. The current state of EV consideration among Australian consumers - business.carsales.com.au
11. Damning figures expose inflated EV repair costs | CarExpert
Transitioning to an EV fleet: the business case
Moving to EVs requires careful planning – and it begins with a pilot project.
Today’s business environment – both in Australia and globally – is tough.
From supply chain difficulties and labour shortages to inflation affecting consumer spending and price rises making almost everything more expensive, margins are tight and challenges are plentiful.
Add to that an increasingly litigious business landscape, and it’s easy to understand why projects that don’t appear day-to-day urgent – such as the transition to an EV fleet –can fall down the list of priorities.
However, the role of a business and risk adviser is to keep a focus on the medium-long-term, too – and for businesses with fleets, that includes the transition to new energy vehicles.
Not every business will be ready to transition right now, so it’s important to identify the most opportune organisations in the portfolio.
“There are definitely businesses that are easier transitions and those that are more difficult to transition right now,” says Georgina Turner, Divisional Sustainability Manager –Customer and Operations at Allianz.
“For example, businesses that drive locally every day, and return the vehicles back to base every night, are prime candidates to transition now.
“However, businesses that rely on light commercial will find it difficult as the right vehicles aren’t necessarily available yet, as will businesses that have vehicles that travel long distances each day and don’t return to one central location every night.”
The transition to EVs
The use of EVs in Australian businesses is growing, with a 2023 report finding 40% of business fleets are now ranked as ‘mature’ on the EV adoption index.1 While making a positive contribution to the planet is a great motivator, there’s also customer demand to consider.
Research shows that when Gen Z and Millennial customers believe a brand cares about its impact on people and the planet, they are 27% more likely to purchase it than older generations. 2
“We are in an increasingly conscientious marketplace, and the customer sentiment to brands and businesses that prioritise ESG is extremely positive,” says Anastasia Martinez, Senior Environmental Specialist at Allianz.
“Consumers are becoming more aware regarding the impact of their purchasing decisions, and are actively seeking out companies that demonstrate a commitment to sustainability.”
Of course, there are other factors at play, too, with government incentives and disincentives across the globe encouraging individuals and businesses to transition to EVs.
In Australia, the EV Discount policy – pending eligibility – means EVs purchased by companies and/or through salary sacrifice are exempt from Fringe Benefits Tax (FBT). 3
“We are in an increasingly conscientious marketplace, and the customer sentiment to brands and businesses that prioritise ESG is extremely positive.”
“Bringing electric vehicles into the vehicle fleet makes sense for businesses that are looking for ways to lower costs and reduce their environmental footprint,” says Samantha Johnson, CEO of the Electric Vehicle Council.
“EVs have significantly lower fuel and maintenance costs compared to petrol and diesel vehicles, and attract government financial incentives that can offset upfront costs. EVs also produce lower carbon emissions, helping businesses demonstrate their commitment to sustainability.
“On top of this, offering EVs as company vehicles can be an attractive perk for workers that can help businesses differentiate themselves.”
The EV sector continues to evolve rapidly, so businesses that are prime for transition would be smart to start making plans.
There’s a lot to consider, and a pilot scheme can help identify issues, evolve thinking and establish policies and procedures for the future.
Preparing for change
At Allianz Australia, Turner has been heavily involved with Allianz’s own transition to EVs, and says there are a number of key considerations for every business.
Choosing the right EVs for the business
While over recent years the EV market in Australia has been relatively slim pickings when it comes to variety, availability and affordability, things are changing. More than 40 new models are becoming available in Australia during 2024,4 adding to the 99 that were available at the end of 2023. 5 By trialling different vehicles with drivers, businesses can identify the models that will best suit the needs of both the company and the drivers themselves.
Neil Parker, Head of Automotive at Allianz, says that supply is still an issue for certain types of businesses.
“At the moment, there’s very low supply of commercial EVs in comparison to, for example, sedans, and that’s something to be mindful of when speaking with businesses.”
Identify your ambassadors
A select group of drivers should be invited into the pilot scheme – and these drivers should be the most likely advocates. For a successful EV transition, businesses need EV ambassadors when the vehicles are introduced more broadly, and by bringing key people ‘along for the journey’, businesses recruit the ambassadors that can help make the project a success.
Driver familiarisation
While EVs are vehicles and driving them is a largely similar experience, the torque and the lack of engine noise are two significant differences, which require familiarisation. Having a structured program in place to ensure drivers are comfortable behind the EV wheel is important.
The charging network
Many of the questions businesses need to answer about introducing EVs revolve around charging. Is the business a ‘back-to-base’ operation with shorter, more local journeys? If so, an on-site charging network where vehicles can be charged overnight is straightforward.
It becomes more complex when employees have vehicles full time, or take them home overnight – or travel and have overnight stays. Do you install chargers at employees’ homes? What happens if they move to another company? What about if they rent, or they live in a strata building, or an inner city home with no off-street parking?
From an insurance perspective, where does indemnification start and end?
Clients should start with the more easily solvable scenarios. For example, build policies for full-time employees that own their own home and have been with the company for more than 12 months, and recruit the pilot team from that cohort.
Once those policies have been established, more complex scenarios can be tackled.
The key here is incremental transition.
Reimbursement policies
Similarly, how do businesses track and reimburse employees that charge at home?
Making the business case
The business case for introducing EVs has to be linked to environmental, social and governance (ESG) targets and reduced emissions, and these will differ from business to business.
Upfront costs (once the sale of the fleet vehicles the EVs are replacing are taken into account) need to be offset against:
• savings in fuel costs
• maintenance savings
• other costs, including insurance.
When it comes to fuel, it costs the average Australian driving a petrol or diesel car around $0.20/km, while fuelling an EV costs $0.04/km. If travelling 12,000km per year, it would cost an EV driver $500, in comparison to the $2500 for a petrol or diesel vehicle.6
That means that with a fleet of 10 vehicles, a business could immediately save $20,000 on fuel alone.
Turner says, “As time goes on, things will become easier, and the opportunity now is to tackle all of these little challenges so by the time we get to 2030 we’re actually in a great position, and we’re only just having to transition the last few really hard use cases, rather than starting the transition process.”
Part of the business case is telling the sustainability story – and businesses need to be careful to avoid accusations or perceptions of greenwashing, as things aren’t always as linear as they may seem.
Chris Jones, President of the Australian Electric Vehicle Association, says, “The emissions savings in operation are
vast, and it only takes about three years for the EV and the petrol or diesel vehicle to come out equal in terms of emissions – and then from there the EV is better.
“It’s important, however, to also consider the emissions associated with manufacturing the vehicles. Like anything in modern life, it takes emissions and energy to produce something, and to produce EVs, the emissions are up to about 40% higher than a petrol equivalent.”
For brokers, the opportunity is to help those clients who have not started their EV journey to identify opportunities for a pilot EV project.
For those that have begun, the challenge is to learn, evolve and plan the next steps of EV transition.
1. Australian Business Fleets Driving the Transition to Electric Vehicles - AfMA
2. Research: Consumers’ Sustainability Demands Are Rising (hbr.org)
3. EVC-Australian-EV-Industry-Recap-2023.pdf (electricvehiclecouncil.com.au)
4. Best Electric Cars Australia 2024 - 34 New EVs Arriving Soon | CarsGuide
5. EVC-Australian-EV-Industry-Recap-2023.pdf (electricvehiclecouncil.com.au)
6. Will I save money by owning an electric vehicle in the long run? - Electric Vehicle Council
Tips for brokers
1.
Help clients start with a small pilot project –covering about 5-10% of their fleet.
2. Select users based on ease of transition – for example, those who return the vehicle to base every night, or those who own a property with off-street parking.
3. Consider which employees will be the best ambassadors for the pilot project.
4.
Form a working group to establish policies and procedures, and identify any aspects that need to be addressed as the pilot progresses.
Addressing E V concerns
While there are many positives to EVs, there are still concerns about batteries, range and repairs. How big a problem are these issues in reality? And what are some of the other blockers?
For many businesses, introducing EVs into their fleet will make sense.
Prices are coming down, running costs are more efficient, and then there’s the positive ESG story to tell to customers, stakeholders and shareholders alike.
However, there are some concerns which, regardless of where you are on the EV spectrum, need to be addressed.
Common risks that lie ahead
One of the most-talked about risks linked to EVs – and consequently one of the talking points broker clients and their teams will likely raise – is surrounding battery fires.
Statistics show that from 2010 to June 2024, there have been 511 verified EV traction battery fires globally,1 and in Australia there have been six EV battery fires from the 120,000 EV vehicles on the road as of 2023 – three of which were due to ignition from a fire nearby. None of the fires occurred when the vehicles were charging. 2
Chris Jones, President of the Australian Electric Vehicle Association, says, “I think our current battery technology is very good. It’s also quite mature in that we know how to make it work. We know how to get the most out of it.
“The battery of an EV is incredibly tough. You would have to have a very serious, life-threatening crash for the battery to be genuinely traumatised. At that point, you’ve got a whole bunch of other problems that are more important than the battery.
“Now the only exception is driving over a very large metal object – there is a genuine risk that the battery will be permanently damaged when that happens. There’s also a very genuine risk that your regular petrol car might be seriously damaged if you did exactly the same thing.
“They put six-millimetre bash plates, solid metal bash plates, underneath the batteries, to ensure that it would have to be a very extraordinarily, exceptional intrusion for a fire to start.”
A different driving experience
Another concern for drivers revolves around a different driving experience, as well as range and charging anxiety.
As far as driving experience goes, however, it’s limited to subtle differences.
“Electric vehicles are as simple and intuitive to drive as petrol and diesel vehicles,” says Samantha Johnson, CEO of the Electric Vehicle Council.
“They are not complicated and do not require specific knowledge other than how to charge, which is very simple. Basic training on charging and owning an EV should be part of any EV handover.”
Matthew Millener, Head of SME and Dealer Commercial at Allianz, agrees, and highlights the need for familiarisation sessions when introducing EVs into a fleet.
“While EVs are very similar to ICE vehicles in terms of driving experience, there are some subtle differences.
“The lack of noise, for example, can take people by surprise, as can the instant torque – while regenerative braking is a different experience to driving an ICE vehicle.”
Chris Wood, Emerging Risks Manager at Allianz, says that according to anecdotal evidence from across the global Allianz Group, EVs are most likely to be in a collision within the first three months of ownership.
“However, it’s often not the primary driver who’s behind the wheel when an event occurs,” explains Wood. “It’s typically someone else from the business who’s not familiar with the vehicle, and they’ve experienced a different reaction to what they’re used to when they’ve put their foot on the accelerator.”
Range and charging anxiety
Range and charging anxiety are very real issues for drivers contemplating an EV purchase – however, a number of studies show that anxiety decreases with ownership.
Johnson says, “Range anxiety and upfront costs are often cited as hurdles to EV adoption, but these concerns are easing as average commutes are well within the range of all EVs available, charging networks have expanded, access to home solar and time-of-use tariffs have improved, and more models at more affordable prices have become available.”
“Electric vehicles are as simple and intuitive to drive as petrol and diesel vehicles.”
The charging infrastructure in Australia continues to grow – there was a 75% increase in charging locations from 2022 to 20233 – and by focusing on those businesses whose fleet does shorter journeys and returns to base every day, those issues can be managed effectively.
One challenge that will need to be addressed is a common one affecting many businesses across the country. Namely, the skills shortage, which is impacting EV repairs.
Jones says, “The difficulty right now is also when it comes to getting a repair done, you might be waiting six months because we’ve got a shortage of skilled workers who can panel beat any vehicle, never mind workers who’ve done the EV depowering and repowering course.”
Millener says that’s a key reason to partner EV clients with insurers who have a reliable repair network.
“Getting vehicles back on the road quickly and safely after an incident is a key part of the insurance value proposition, and by partnering with an insurer with knowledgeable assessors and a reliable, quality repair network, brokers can help clients manage that element of risk.”
In general, there is misinformation circulating about EVs, and Johnson says, “Misinformation is hampering the electric vehicle transition. The facts are that EVs are cheaper to own and run than petrol and diesel vehicles, they reduce air pollution and they’re essential to reducing our carbon emissions.”
1. JUNE 24 EVFS Stats (evfiresafe.com)
2. How many EVs have caught fire in Australia? (youtube.com)
3. EVC-Australian-EV-Industry-Recap-2023.pdf (electricvehiclecouncil.com.au)
EV mythbusting
The Electric Vehicle Council helps us bust some EV myths.
Myth Reality
EVs don’t have enough driving range
EVs are not more environmentally friendly than petrol or diesel-powered cars
Today’s EVs have enough battery range to meet the average Australian’s driving needs for over a week.
Background: Current EVs have an average battery range of around 400km but the technology is advancing so rapidly that some new models can drive for over 600km on a single charge.
The average Australian drives 38km per day, so an EV owner can go for at least 10 days without a recharge. Unlike petrol cars, you can recharge at home or anywhere with access to electricity.
When considering the entire lifecycle emissions of making, owning and recycling a car, EVs produce fewer emissions than petrol, diesel or hybrid vehicles.
Background: There are emissions associated with the making of any vehicle. Emissions from building EVs is generally higher than petrol and diesel vehicles, when including the battery. Despite not having a combustion engine and all the other related components, batteries are energy-intensive to produce. These processes continue to improve and these additional emissions are more than offset over the life of the vehicle.
Unlike petrol, diesel or hybrid vehicles, EVs have zero exhaust emissions, and even when charged using the current electricity grid in Australia, produce fewer lifecycle emissions. The emissions from EVs sold today will continue to improve over their lifetime as more renewables are introduced to the electricity grid.
It’s also important to recognise that EV batteries can be used after their useful life in a vehicle (expected to be around 15 years). EV batteries can find a second life powering homes, buildings or even the grid, and are expected to last around another 10 years in these applications. After around 25 years in total, these batteries can then be recycled to create brand-new batteries, moving us closer to a circular economy.
Check out the EVC’s Life Cycle Emissions Calculator Tool to compare emissions from different vehicles.
In the long run, motorists can save thousands of dollars in fuel and maintenance costs when they own a fully electric vehicle compared with petrol or diesel cars.
EVs won’t save people money
There isn’t enough charging infrastructure to support EVs in Australia
Background: Battery EVs don’t need any petrol or diesel but are instead charged with electricity. The average Australian drives around 12,000km per year and spends around $2500 on petrol. This equates to around $0.20/km.
On average, an EV travelling 12,000km each year would cost around $500 to charge ($0.04/km). Further savings can be made by an EV user with access to home solar or off-peak tariffs, which could reduce annual energy costs to as little as $200.
It is important for prospective EV owners to consider their driving habits, government incentives, taxes and charging availability to fully understand the savings of driving an EV compared to a petrol or diesel vehicle.
EVs have lower running costs than petrol, diesel or hybrid vehicles since they have fewer moving parts, and have fewer components that require servicing.
For some EV models, owners are estimated to save between $300-$400 every year in maintenance costs compared to an equivalent combustion engine vehicle.
While most charging generally takes place at home or work, there is still an important need for public charging infrastructure so it’s encouraging to see the national network is rapidly expanding.
Background: Most people do the majority of their charging at home, but access to public EV charging is necessary for most drivers some of the time, and for some drivers all of the time.
Private companies and Local, State and Federal Governments are investing in and co-funding the construction of an expansive charging network right across the country.
The number of high-power charging locations increased from about 800 at the end of 2023 to over 1,000 by mid-year 2024. This represents an increase of 25% in six months and a deployment rate averaging better than one new high-power charging site every day.
Based on continued investment from the public and private sectors, we are confident that the rollout of public charging equipment will keep pace with the uptake of the vehicles and that the EV driver experience of public charging will continue to improve.
To get further insight into where public chargers have already been installed around Australia, take a look at PlugShare.
EVs are incredibly safe to operate and charge, with tens of millions of EVs being driven globally.
EV fires are very rare, with global evidence showing that petrol/diesel vehicles are at least 20 times more likely to be involved in a fire.
EVs are not safe
Background: EVs contain high-quality lithium-ion battery cells and sophisticated battery management systems. Importantly, most EVs have also been awarded five stars under Australia’s ANCAP crash testing program.
The path forward –and the roadblocks to overcome
There are still questions that we need to find answers to – and businesses across Australia have a key role to play.
Australia’s New Vehicle Efficiency Standard comes into effect on 1 January 20251 and in some respects, marks the beginning of the next chapter of electric vehicles in Australia.
The standard will reduce emissions from new passenger vehicles by more than 60% by 2030, and roughly halve the emissions from new light commercial vehicles, too. It will also provide $95 billion in fuel cost savings, and reduce CO2 emissions by approximately 321 million tonnes by 2050. (Globally, the widespread use of EVs is projected to eliminate 2 Gt of CO2 by 2035. 2) “The New Vehicle Efficiency Standard will provide Australians with more fuel-efficient car options,” says Samantha Johnson, CEO of the Electric Vehicle Council.
“By 2050, motorists are projected to save about $95 billion in fuel costs, and greenhouse gas emissions are set to reduce by about 321 million tonnes.”
With the new standard being introduced, availability of EVs – which has been growing significantly over recent years – is expected to increase, while public charging stations have almost doubled in just 18 months.
Building that infrastructure is crucial, as is incentivising people and businesses to use EVs as opposed to the petrol or diesel alternative, if the desired environmental benefits are to be realised.
Where does the power to power EVs
come from?
One of the big questions that needs to be answered to achieve the projected benefits of mass EV adoption surrounds energy: namely, the capacity of the grid – and production of the power.
Each year, an average EV travelling 12,000km per year will use 2000kWh of energy. Every house uses around 4000-8000kWh per year. With more than 20 million vehicles on the road3 – and a growing population4 – it’s a major challenge.
“By 2050, motorists are projected to save about $95 billion in fuel costs, and greenhouse gas emissions are set to reduce by about 321 million tonnes.”
“There’s going to need to be significant consideration with regards to stabilising the infrastructure for electricity in this country,” says Andy Doran, General Manager –Underwriting at Allianz.
“Every country will face that challenge, but it may not be as problematic elsewhere given the appetite for renewable energy elsewhere in the world.
“In Australia, we’re still attached to coal-fired power generation, which isn’t going to help realise the environmental benefits of using EVs. It’s going to take strong alignment between federal, state and local governments to resolve.”
Chris Jones, President of the Australian Electric Vehicle Association, says it’s important to remember vehicles are only as clean as the energy that supplies them.
“The good news is that our energy is becoming increasingly renewable, but the government does have a large role to play in making sure that future grid generation is coming from zero or low-emission sources.
“Businesses and households have some control over that, too, in that they can have solar on the roof, or choose to charge their car during the middle of the day when we know that the grid is dominated by renewables.”
A dual fuel future?
For those businesses that rely on large vehicles undertaking significant journeys, electric vehicles may not prove a solution. Although manufacturers – notably Toyota and Hyundai – have developed hydrogen models, they’re yet to make an impact here in Australia. However, they
could play a major role for many businesses in the future.
Professor John Rose from the University of Sydney, says one of the missing key policy areas is around freight.
“At the moment, we don’t have battery technology to be able to move long-distance trucks. The larger the vehicle, the bigger the batteries you need, the heavier the vehicle, the less distance it can travel. The likelihood of seeing electric heavy articulated trucks going from Sydney to Melbourne or Brisbane to Melbourne anytime soon is near zero.
“If you look at the bus industry, they’re split 50/50 between hydrogen buses and electric vehicles.
“So the question then becomes, are we getting into a position where we’re going to be having two sets of infrastructure? We need to set up infrastructure around charging for electric vehicles, and infrastructure around hydrogen for some passenger vehicles, but also heavier vehicles.”
Given the government’s investment in the national charging network has also seen it announce plans for ‘hydrogen highways’, the government seems to believe this is a more than likely scenario. However, CSIRO’s Rapid Decarbonisation scenario assumes more than half (56%) of long-haul road transport is electrified by 2050, with the remainder using low or zero-emission hydrogen. 5
Can we access the data to make the transition successful?
Data is critical for many things in the world today, and it’s critical to the evolution of EVs.
Independent research into EV usage is relatively scarce, says Rose.
While manufacturers collect and harvest every last fragment of information from each EV, it’s closely guarded. This makes it challenging for other stakeholders to deeply understand certain aspects, which consequently has implications for many stakeholders – owners, businesses, repairers, manufacturers and insurers alike.
Rose says, “The companies that have all the data are the manufacturers, so they monitor every movement, but they never release it.
“We have very, very limited data on EV usage, which is going to pose a potential challenge as EVs evolve. We could see a scenario in the future where you pay as you drive on an individual level, for example, because the manufacturer understands the driver’s risk profile, when and where you travel, and everything about how you are and what you do behind the wheel.”
Do businesses have a moral obligation to switch to EVs?
The general public often takes cues from businesses. By seeing more EVs on the road, the concept is normalised, demand is increased and subsequently so is production.
And, while governments and authorities have a major part to play in achieving mass adoption, businesses have an opportunity to take the lead.
But do they also have an obligation – albeit a moral one –to help the EV transition build further momentum?
Quite possibly.
“In years gone by, a strong environmental, social and governance (ESG) policy and the achievement of ESG goals was a nice to have – today it’s a must-have.
“Businesses are now a lot more deliberate around how they build their businesses – good businesses make sure they’re doing the right thing, and act as a good corporate citizen, in terms of how they treat employees, treat stakeholders and treat customers.
“So, yes, I do think businesses have a moral obligation to start this transition, because the general public will see businesses moving that way and see that it’s probably a good thing to follow them, too.”
Generating revenue through EVs
Professor Rose says a number of trials are in progress that put power from EVs back into the grid – potentially turning every company into an energy company.
“A lot of the electric vehicles today enable you to take power from the electric vehicle and put it back into the grid – you can set it up so it draws power from the grid when it’s off-peak and cheap, and when it’s peak and more expensive, it can put energy back into the grid.
“For example, a winery in South Australia had a simple electric vehicle. Their electricity bill was $6000 a year, and by using their EV to put electricity back into the grid, they went from a $6000 spend to making a profit of $50 per week.”
The implications for transport companies, for example, could be significant.
“If you think about a bus company, where you might have buses sitting in a depot not doing anything for a significant period of time, they could actually be putting energy into the grid and providing income sources.
“In five years time, they may no longer be a bus company – they will be an energy company.”
1. Annual Climate Change Statement 2022 (dcceew.gov.au)
2. Outlook for emissions reductions – Global EV Outlook 2024 – Analysis - IEA
3. Motor Vehicle Census, Australia, 31 Jan 2021 | Australian Bureau of Statistics (abs.gov.au)
4. Population | Australian Bureau of Statistics (abs.gov.au)
5. https://www.csiro.au/-/media/Environment/Net-zero/Infographics/CSIRO_ TransitionsReport_ElectricitySector.pdf
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