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Venture Insights recently conducted a national survey focuses on the Australian electricity retailing, solar panels, household batteries, electric vehicles (EVs), smart home and climate change. It sampled 1,009 households across all states and territories in Australia. The survey includes only respondents that have chosen a provider or are responsible for paying the electricity bills. A more detailed analysis of the demographics can be found in the Appendix.
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Key Takeaways
/ Venture Insights believes by 2050, 98% of cars will be EVs. Although the EV penetration rates in Australia are currently lower than 0.1% of new car sales, we believe that there is a strong case for full adoption of EVs within a 15 to 20-year period. Despite the upfront investment, the average cost of running an electric vehicle is far lower than running an ICE car. However, the impact of EVs on electricity demand remains uncertain.
/ Venture Insights survey shows that environmental reasons and the lower cost of maintenance were the main determinants of an EV purchase. The combined groups of people who currently owned or would consider purchasing an EVs accounted for 57% of respondents, of which 35% of respondents would purchase within the next 10 years. Research shows that each battery electric vehicle that replaces a fossil fuel vehicle could save around $2,400 in health costs.
/ Venture Insights survey confirms that key barriers of EV adoptions were the lack of charging infrastructure and the high cost of purchase, cited by 80% and 74% of the respondents respectively. Currently, there are 1,930 charging stations (AC and DC) in total in Australia. Venture Insights believes that the range anxiety is no doubt short-lived as the charging infrastructure network will be mature in the next 3 years.
/ Venture Insights survey shows that Tesla (45%), Toyota (42%) and BMW (20%) were seen as leaders of EVs, followed by Hyundai (16%), Honda (16%), Mercedes Benz (14%), Audi (14%) and Ford (12%). EV sales have experienced strong growth and we believe that if the model availability continues to increase, particularly in the $60,000 or lower segment, EV sales will continue the growth in the following 5-10 years.
/ Venture Insights survey suggests that autonomous vehicles (AVs) had gained interest but the way forward is uncertain. We believe that business partnerships are crucial to the success of the commercial acceptance of AVs. Manufacturers, financiers, technology and communications providers, ride-sharing and ride-hailing service providers and energy suppliers and even potentially insurance providers need to work collaboratively to develop a fully integrated solution.
/ The Federal and State governments have an important role to play in accelerating the transition to electric cars. We believe that the Government should establish a national EV target for the federal government vehicle fleet, introduce incentives to reduce EV upfront cost and develop a roadmap for the national charging networks that direct private investment in charging infrastructure. The state governments policies should also supplement the broader federal policies.
Introduction
Venture Insights recent survey revealed the consumer interest in renewable technologies and willingness to adoptions. In this report, we will focus on electric vehicles (EVs) including the penetration rate, key determinants and barriers of adoptions, the global leadership of EVs and how the governments can accelerate the transition from internal combustion engines (ICE) cars to EVs. While vehicle manufacturers invest in research, authorities are working to improve charging infrastructure to support consumers' growing interest in the sector.
98% of cars in Australia will be EVs by 2050
The EV penetration rates in Australia are currently lower than 0.1% of new car sales.[1] The low take-up is partially resulted from EVs being marginally more expensive to purchase and the range anxiety. However, it’s just a matter of time before EVs eventually replacing ICE cars. Venture Insights anticipates the tipping point being when the manufacturer stops producing ICE cars as the economic value of an ICE car becomes lower than an EV. We believe that there is a strong case for full adoption of EVs within a 15 to 20-year period meaning that 98% of Australia’s fleet of cars might be electric by 2050 (except classic cars). A decline in batteries price is expected, and hence, it will drive down the cost of EVs. Despite the upfront investment, the average cost of running an electric vehicle is far lower than running an ICE car.
However, the impact of EVs on electricity demand remains uncertain. The mass adoption of EV potentially will put pressure on the grid and accelerate greenhouse gas emission as currently, coal and gas account for 85% of the electricity generation. Consequently, the adoption of EV might worsen the emission from burning fossil fuels until we transit to renewable energy sources.
Environmental reasons and the lower cost of maintenance were the main determinants of an EV purchase
The first part of the survey asked respondents to consider if they would buy an EV as their next car. 17% of respondents indicated their willingness to purchase. The majority of them nominated environmental reasons, low cost of maintenance as the main determinants.
The combined groups of people who currently owned or would consider purchasing an EVs accounted for 57% of respondents, of which 35% of respondents would purchase within the next 10 years. A survey by the Electric Vehicle Council report supports our view, which shows that 53% of participants currently owned, currently researching for EV options or would consider buying an EV, a steady increase from 48% last year.[1] It is clear that consumers have a growing interest in the ownership of EVs and are looking for EVs that well-suited their needs.
EVs has a significantly lower running cost
“The cost of recharging an electric vehicle is significantly less per kilometre than the cost of refuelling with petrol, even during periods of high electricity prices and low petrol prices. Electricity prices are also more stable from week to week, compared to petrol prices which fluctuate daily.”
Source: Electric Vehicle Council
Whilst EVs are more expensive to purchase than their equivalent petroleum alternatives, they are substantially less costly to run over the life of the vehicles. The table below illustrates a simple side-by-side comparison of electric vehicles and petroleum cars, showing that EVs are significantly less expensive in the longer run. This is mainly because petroleum cars require regular engine maintenance every year as well as fuel costs that consistently fluctuate with oil prices. In contrast, EVs has fewer components and therefore the costs associated with maintenance or replacement are relatively lower. Further, owning an EV allows consumer to reduce costs by choosing to charge the vehicle during off-peak periods.
Battery electric vehicles (BEVs) adoption brings health benefit
The other benefit of BEVs is the reduction of air pollutions, and the consequential negative health impact. Vehicles emission accounts for 21,000 serious health impact annually and has caused 60% more deaths than motor vehicle crashes.[1] BEVs produce zero-emission and its wide adoptions will no doubt improve the air quality in Australia.
[1] Electric Vehicle Council, Cleaner and safer roads for NSW 2019
“Air pollution from motor vehicles kills over 1,700 Australians per year.”
Source: Scholfield et al. 2017
“Each battery electric vehicle that replaces a fossil fuel vehicle could save around $2,400 in health costs.”
Source: Electric Vehicle Council
Key barriers of EV adoptions are the lack of charging infrastructure and the high cost of purchase
Venture Insights survey asked participants who would not consider buying EVs about their reasons. The price of electric vehicles remains one of the key issues for consumer, cited by 80% of the respondents. Another major concern is the high cost of EVs on purchase (74%). Currently, the average price of EVs is US$55,600.[1] Although it has declined by 13.4% on average since the previous year, it is more expensive than its equivalent ICE cars (median price of US$36,600).[2] In addition, inadequate range of selection and long charging time were also seen as disadvantages of EVs.
Source: Venture Insights residential energy survey
Note: Participants are asked to select all that apply
Range anxiety will no doubt be short-lived
Investment in a national EV charging infrastructure network is necessary to allow for a smooth transition to the electrification of the transport sector. Infrastructure Australia has identified the delivery of a national electric vehicle fast-charging network as a high priority initiative.[1]
“It is essential to plan for electric vehicles along highways, in new developments, in regional Australia, and in urban centres.”
Source: Infrastructure Australia 2019
“The increase in electric vehicle charging infrastructure is significant to electric vehicle adoption in Australia, given the positive correlation between the number of publicly accessible chargers, and the number of electric vehicles sold.”
Source: European Automobile Manufacturers Association 2019
Australia has seen a dramatic upward trend in the number of charging stations with a 143% increase in the number of public charging stations in FY19.[2] Since 2017, the number of charging station has increased by over 400%.[3] This rapid increase is due to strong investments from the private sector.
There are two different types of charging stations, DC and AC. Charging using direct current is done at DC charging stations. This process is precisely controlled by the instructions and parameters of charging and battery control system. Charging is therefore not limited, by the performance of the onboard charger and you can charge at significantly faster rates. Whereas, AC charging uses alternating current through an "onboard" charger, which is integrated into most electric cars. It takes incoming AC and transforms it into DC. The power of on-board (integrated) charger defines and limits how fast it can be charged at AC charging stations.
Currently, Australia has 251 DC charging stations and 1,679 AC charging stations. Venture Insights believes that the charging infrastructure network will be mature in the next 3 years. With the number of charging stations in place and to come, range anxiety will no doubt be short-lived. Forward-thinking organisations have committed investments and will continue to take the lead in driving the country to its electric future.
Tesla and Toyota are seen as leaders of EV
Venture Insights asked participants to nominate their top three choices of manufacturers who would be leaders in EVs. The result showed that Tesla (45%), Toyota (42%) and BMW (20%) were the front runners, followed by Hyundai (16%), Honda (16%), Mercedes Benz (14%), Audi (14%) and Ford (12%). This indicates consumer confidence in the EV technologies of these manufacturers and their potential market share in the era of electric transportation.
Currently, there is a limited range of BEVs available in Australia, a total of 9 models; however, this is set to begin changing (expected to increase to 15 by the end of 2020). It evidence that Australian consumers have a growing interest in EVs. We saw a 90% growth in sales in the first half of 2019 compared to the same period in 2018 (excluding Tesla).[1] Venture Insights believes that if the model availability continues to increase, particularly in the $60,000 or lower segment, EV sales will continue the strong growth in the following 5-10 years.
Driverless cars have attracted interest but the way forward is uncertain
Despite EVs, autonomous vehicles (AVs) appear to be the other major shakeup in the transportation industry. Venture Insights asked participants about their views on the driverless car. 50% of the respondents thought it won’t become a reality for more than 10 years, and 43% thought it’s likely to launch in the near future but would be common in 5-10 years time. While 24% held the opposite view and predicted app-based transportation networks will have this service within 5 years.
“Business partnerships were recognised as crucial to the success of commercial acceptance of AVs.”
Source: Norton Rose Fulbright
Globally, manufacturers started to partners with technology providers. Renault-Nissan-Mitsubishi alliance partners with Google; Mercedes partners with Google, Amazon and Baidu (China’s Google); Uber teams up with Daimler. Partnerships are inevitable in order to provide full-integrated solutions for AVs. Manufacturers, financiers, technology and communications providers, ride-sharing and ride-hailing service providers and energy suppliers and even potentially insurance providers need to work collaboratively on this matter.
The Federal and State governments have an important role to play in accelerating the transition to electric vehicles
Similar to the renewable energy space, Australia continues to have no national electric vehicle policy that could have given consumers and businesses certainty and, as a result, boosted the EV adoption rates. The growing frustration of the government’s inaction and lack of leadership has hindered EV sales. A survey carried out by the NRMA, RACV and RACQ shows that 33% of the respondents were willing to pay more if there were supports and incentives in place.
“(Globally), markets that have been successful at encouraging electric vehicle uptake have policies focused on reducing upfront purchase costs through rebates or tax reductions.”
Source: The International Council on Clean transportation 2016
“Australian governments should prioritise the development of a national EV strategy and an inter-governmental taskforce to lead its implementation.”
Source: Parliament of Australia Senate Inquiry 2019. P. xv
We agree with the Electric Vehicle Council that three main areas of policy that governments could use to accelerate the EV adoption are “overarching EV policies, consumer policies, and industry support policies”.[1] Specifically, we believe that the Government should establish a national EV target for the federal government vehicle fleet, introduce incentives to reduce EV upfront cost and develop a roadmap for the national charging networks that direct private investment in charging infrastructure. The state governments policies should also supplement the broader federal policies.
Conclusion
We believe that Australia is positioned to transit to electric transportation. This is supported by the growing consumer willing to purchase and the maturity of the charging infrastructure networks. To facilitate this transition, governments need to become increasingly active and provide a pro-electric- transportation policy.
Gating questions
· N=1009
· Gating question around being the person in the household that pays the power bill or chose the electricity supplier
Demographics
About Venture Insights
Venture Insights is an independent company providing research services to companies across the media, telco and tech sectors in Australia, NZ and Europe, with a special focus on new disruptive technologies.
For more information go to www.ventureinsights.com.au or contact us at info@ventureinsights.com.au
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