Why Bother Selling EVs In Australia?

Electric Vehicles and Fleet Management (Part 3):

Last week I talked about why automakers are building EVs (electric vehicles). And a lot more of them.

And not just “more” in quantity. But why more vehicle models are being offered with electric powertrains.

And it brings me to the question at the top of the page:

“Why do these car brands bother selling EVs in Australia?”

I hear this a lot.

After all, Australia’s big.

We’re a land of wide-open spaces, big distances, and long highways.

Our country’s not overrun with congested cities.

Australia’s not like London or Paris.

But before I get to the answer, I need to address some comments people often make about the new vehicles offered for sale in Australia. It’s likely you’ve heard them – or even said them.

“They should build that SUV with a V8 engine. That’s what buyers want.”

“If they put their turbo-diesel V6 into that model it’d sell like hot cakes.”

“Nobody’s going to buy that ute with a 4-cylinder engine in it.”

There are plenty more I could share. But you get the drift.

A big part of the reasoning why automakers don’t build vehicles to satisfy these buyer types is simply this:

THE STRICT RULES GOVERNING EXHAUST EMISSIONS I TALKED ABOUT LAST WEEK.

Automakers probably could build them. At least most of them.

For example, they could offer lots of different models with big engines that make truck-loads of power. But building them to meet these tight emission rules (especially the future ones) would cost a fortune.

And that’s assuming they could meet these difficult-to-achieve exhaust gas targets.

And if building these vehicles is expensive, they’ll have an expensive retail price. Which means fewer people will buy them.

Which means fewer of them will be made. Which means the cost to build each one becomes higher.

Which means they become even more expensive.

You get the picture.

There’s no business case for this kind of stuff. So automakers don’t build them.

But I can confirm this:

I spent more than 20 years working in car companies. And for 20 years I was a vehicle importer and distributor. If the buying public wanted a 6-wheeled SUV wrapped in purple suede with only 1 seat – and it met ALL regulations and financial criteria, and there was enough demand – automakers would build it.

They’re in business to make money.

Carmakers typically build and sell what customers want to buy.

But ever-tighter environmental rules have stopped a lot of so-called “cool” and “exciting” ideas getting past the concept stage. And this isn’t necessarily a bad thing.

So, back to the original question: Why bother selling EVs in Australia?

Here’s the first part of the answer.

The official importers of the new-model vehicles that are sold in Australia have some say in the models they sell here. Their overseas head offices have a big say.

And if they need Australia to sell a certain model, it often ends up being sent here for local showrooms.

And these overseas head offices are gearing up to sell A LOT MORE EVs to major markets like the US, UK and Europe.

Because, as I explained last week, these places have set strict rules for future vehicle emissions.

FOR EXAMPLE, THE UK IS CONSIDERING A BAN ON FOSSIL-FUELLED VEHICLES FROM 2030. AND THE EUROPEAN UNION(EU) IS TARGETING 30 MILLION ZERO-EMISSION VEHICLES ON ITS ROADS BY THE SAME TIME.

30 million: that’s more than 30 times the TOTAL number of new vehicles sold in Australia every year (before COVID-19).

And the carmakers are falling in line.

For example, Volvo has said it will make only EVs by 2030. And Hyundai has announced it will launch 23 electric vehicle models globally by 2025.

That’s only four years away.

These EVs will need homes.

So, more EVs are coming.

(A quick tip: if you ever want a hint about what’s headed for the Australian new-vehicle market, just look to the northern hemisphere.)

ONE EFFECT OF ALL THIS IS EVs HAVE BECOME POPULAR IDEA WITH AUSTRALIAN GOVERNMENTS.

Some governments now offer consumer incentives to encourage people to buy EVs.

Some just say EVs are a good idea for the environment.

And there’s a LOT all government levels need to do to help Australian new-vehicle buyers put EVs at the top of their shopping lists. Here’s a selection:

  • Purchase incentives such as rebates and tax breaks (places like California and Norway have used these to good effect);
  • User incentives (such as free or cheaper parking for EV drivers);
  • Background infrastructure support where it’s needed;
  • And helping make possible a much larger EV recharging network across the country.

But despite not much being done so far to really drive the uptake of EVs in Australia, the time will come when they get a kick-along here.

AND WE ALL NEED TO BE READY. ESPECIALLY EVERYONE IN FLEET MANAGEMENT.

So as much as Australia’s buying public won’t all race out tomorrow and buy an EV of some kind, the largely external forces driving EVs into Australia are growing.

Government rules from major overseas markets are getting tighter. These are driving global automakers to produce vehicles that meet these super-tight exhaust emissions rules.

Australia’s own new-vehicle emissions regulations are heavily influenced by these ever-tightening overseas rules.

Australia’s local official new-vehicle importers (most of them are owned by the automakers themselves) have only some influence about the models they offer local customers.

And when you put all of this together, the conclusion is pretty clear:

More EVs are coming.

SO, NOW YOU HAVE THE BACKGROUND TO THE EV STORY – AND HOW WE GOT TO THIS POINT.

But I want to emphasise this: the topic of electric vehicles isn’t a reason to worry.

Because the changes EVs will bring are likely to be gradual.

So there’s time to do research.

And time to prepare for any choices or changes you need to make in the future.

In the next instalment, I’ll show you how fleet operators and managers can prepare.

Grant Andrews
Managing Director
Uniqco

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