Electric Car Laggard Australia Prepares to Release the Brake

An impediment to electric-vehicle sales in one of the world’s biggest laggard markets may finally be on its way out.

The absence of fuel-efficiency standards in Australia has long been blamed for making the country a dumping ground for old and dirty models automakers aren’t allowed to sell elsewhere. Australia’s EV fans have meanwhile been left to scrap over the few pricey electric models available.

In a key step, Australia’s government will this month explore ways to introduce efficiency targets. The newly elected Labor administration is seeking carmakers’ views to help develop a strategy to catch up with markets that embraced EVs years ago.

New regulation would go some way to address Australia’s status as an EV anomaly — a developed nation that’s one of the biggest per-capita polluters where electric cars accounted for just 2% of new auto sales last year. As US EV sales break records and President Joe Biden offers tax breaks for going electric, Australia has defied the global shift. Wait times for a new Tesla in Sydney are so long that second-hand Model 3s are going for more than A$130,000 ($88,000).

Australia is the only OECD nation other than Russia that doesn’t have or isn’t developing fuel-efficiency standards, according to Australian Climate Change and Energy Minister Chris Bowen. There are just eight EVs priced under A$60,000 ($41,000) in Australia, compared with 26 in the UK, Bowen says.

Global manufacturing giants Volkswagen AG and Nissan Motor Co. are among those supporting the push for new fuel standards in Australia.

Volkswagen says countries that impose fines for missing fuel-efficiency targets jump up the priority list for EV shipments. “Greater supply inevitably leads to greater affordability,” said Paul Sansom, the German company’s managing director for Australia.

With car production cycles planned years in advance, Nissan says fuel-efficiency standards in Australia would establish certainty about the size of the local EV market.

“Australia does not currently get the range of choice of EVs that other markets enjoy,” Nissan said in an email. Without a long-term goal to decarbonize transport, “Australia will continue to be a laggard in terms of market uptake.”

Fuel-efficiency standards typically penalize carmakers if new vehicles exceed a certain level of carbon emissions. Automakers can gain credits to be traded with other manufacturers when their fleet beats emission targets.

Australia’s government should aim for all new-car sales to be zero-emission by 2035 to deliver on the country’s net-zero commitment by 2050, the country’s Electric Vehicle Council said.

While the scope and timing of Australia’s targets isn’t clear, they’re likely to have teeth. “Standards that lack ambition will leave us at the back of the global queue for longer,” Minister Bowen said last month as he announced the consultation paper for a national EV strategy.

Fuel-efficiency targets would boost EV supply, while the government’s planned EV tax credits will stoke demand, said Diane Kraal, a lecturer in business law and taxation who’s an EV researcher at Melbourne’s Monash University.

“We have to step up and bring ourselves in line with what’s happening in the rest of the world,” she said.