At the end of September, the Australian Government launched a consultation program seeking input on the development of policies that will encourage the take up of electric vehicles (EVs), improve charging infrastructure, the reduction of transport emissions, and increasing local manufacturing in the sector.

For the nation’s automotive industry, it is another important step in grappling with the challenges posed by the transition to electrification. And that transition is one that Australia must embrace. All developed nations are moving toward an electrified, zero emission, transportation future, with governments legislating the shift and supporting it through subsidies and other incentives. Just as importantly, the manufacturers that produce the vehicles we all drive are in on the move.

Cajoled by governments to meet rigorous emissions standards, and persuaded – in part perhaps, by the performance of such companies as Tesla – that EVs are what the public wants, they are, from the big legacy companies to new start-ups, pumping billions into EV development and production.

If Australia wants to play any significant part in this electrified future, then those that have ‘skin in the game’ – be they national, state and local governments; energy providers; business groups; environmental advocates; business owners or, of course, automotive associations – must be involved in the larger conversation and provide their insight and wisdom into developing a national electric vehicle plan that works.

The urgency of this work has become even more pressing given the new national Labor Government’s assumption that 89 per cent of all vehicles sold in Australia by 2030 will be electric. Following the passing of the Climate Change Bill in September this year, the Australian Government effectively has a mandate to act quicker towards meeting their 2030 and 2050 CO2 emissions targets.

Automotive associations such as MTA Queensland will be crucial to the success of any plan and in September, MTA Queensland’s CEO Rod Camm, along with leaders from the MTAs in NSW, SA/NT, WA and Victoria’s VACC, travelled to Europe to get a get a close-up look at the state of play in the zero and low-emission vehicle (ZLEV) sector there. Europe has long been at the centre of the ZLEV revolution, with some countries, particularly Norway, having started the transition more than a decade ago. To tap into the knowledge of these markets and learn what the European experience might mean for the automotive industry in Australia just makes sense.

The delegation visited automotive industry associations, individual repair shops, dealerships, manufacturers and government policy makers across Norway, Sweden, the Netherlands, Germany, and the UK. The level of engagement was, said Mr Camm, broad and detailed enough to provide a basis through which the motor trade associations could take an informed position and advise their members and government accordingly.

A handful of major talking points emerged from the delegation’s trip.

THE TRANSITION

Europe, and indeed other nations such as the US and China, are much more advanced than Australia in their transition to ZLEVs and Australia is probably around 10 years behind the leaders. However, more than one industry commentator during the delegation’s tour suggested Australia had a great opportunity to leapfrog many of the challenges faced by those countries and could become a leader in the Asia Pacific region.

“This is the opportunity for Australia,” said Mr Camm. “As long as we learn, and we observe closely, we can see what stimulus worked, and what hasn’t.

“We are way behind, but we can certainly position ourselves to lead the Asia Pacific very comfortably, and we should.”

TECHNOLOGY, GREEN POWER, THE GRID & INFRASTRUCTURE

An example of the ‘leapfrogging’ opportunities highlighted to the travelling delegation was that Australia can begin its transition by installing higher output charging stations. In countries that moved early towards electrification, older, lower output charging stations are already having to be upgraded. Australia can skip that step.

Norway – widely considered the leading EV nation and which can boast an astonishing 65 per cent of new car sales being electric – provides the insight as to why this is a good step to make. Norwegians, the Australian delegates discovered, were not at all concerned with ‘range anxiety’ thanks to well-located charging infrastructure. They were, however, encountering ‘queue anxiety’, a phenomenon that results from large numbers of EVs waiting for extended periods at the numerous but lower-output charging points. Recognising this issue and installing, for example, 350kW fast chargers from the start, will enable Australia to effectively clear the queue anxiety hurdle.

Policy makers around the world often look at Norway as the benchmark against which to grade itself regarding its EV and renewable energy credentials. It is a tough act to follow. Not only are its EV sales extraordinarily strong, but the Scandinavian country generates more than 95 per cent of its electricity via renewable energy projects. Thanks to its peculiar topography of steep valleys and fjords, along with its abundance of water, hydropower plays a huge part in the nation’s power generation.
While Australia does not have that advantage, solar power is plentiful, and it was the view in Europe that Australia’s solar power opportunities could replicate Norway’s renewable energy advantage.

Green energy is, said Mr Camm, essential to the overall EV plan, and in the current era in which energy prices are rising – to extreme levels in Europe – it is even more essential to have reliable, renewable energy sources.

“What they’re finding is that because electricity prices are escalating – five or six increases in the last year or so across Europe – the cost benefit of an electric vehicle, if you’re using public charging stations, is not there,” said Mr Camm. “You’ve got to charge at home and, absolutely if you can, you’ve got to be charging off renewable energy.

“So it’s really important that we get that infrastructure right. Australia’s got a great opportunity, because we’ve got a lot of sun and a lot of roof panels. But we’ve got to get the infrastructure right in houses so people can charge their vehicles at home and store power at home.”

There was a shared view in the delegation’s discussions that public electricity and hydrogen power charge points be near each other. Existing industry infrastructure was also consistently raised in discussions.

While it appeared logical for service stations to have EV charging points, other opportunities – where facilities could have been funded by government to provide a better charging infrastructure – were overlooked. Vehicle dealerships and vehicle repair shops were an example of this.

It was also considered that bi-directional power, that effectively transforms cars into mobile power plants, would be a game changer in transitioning drivers into ZLEVs given the capacity to charge cheaply and upload power into the home. From a grid management perspective, this provides government with huge flexibilities given it can contract car owners to upload and download power to the grid when it is needed.

However, many European countries found major challenges in ZLEV drivers gaining access to charging stations. In Norway, the Netherlands, Sweden, and Germany around 40 per cent of drivers have no capacity to charge their vehicle at home. This is often due to people living in apartments and in body corporates where the costs of facilitating charging points is not fully supported.

To support an ZLEV roll-out then, it is seen as essential that sufficient public charging stations are available to people from across the community. A leading European industry group suggested that a reliable arrangement of public charging stations for EVs would include at least one charging station for every 10 EVs and charging banks of between 6 to 8 chargers every 50 to 75kms along major highways.

As well as charging infrastructure, discussions highlighted the state of a country’s national power grid as being central to support any vehicle transition plan. This didn’t mean countries must wait to start their transition until the power grid and connection points for EVs were all in place, but more that a coherent and funded plan to develop infrastructure be in place to parallel ZLEV vehicle uptake. This idea was raised repeatedly as a key principle of any transition plan.

INCENTIVES & VEHICLE SUPPLY

Incentives have been crucial to encourage the uptake of EVs across Europe, although for car buyers in Norway, Sweden and Germany they are slowly being removed – a move that could lead to more drivers keeping their older internal combustion engine (ICE) cars.

Vehicle carbon taxes are used in some countries to pressure people out of their ICE vehicles. However, there are those who cannot afford a ZLEV and have little choice but to hang on to their old car. This could lead to global car fleets getting older and dirtier. While this scenario isn’t the worst outcome for the vehicle service and repair industry – older vehicles generally need more maintenance and repair than newer ones – it also reinforces that longer-term incentives are vital for ZLEV take-up.

Across Europe, it’s clear that the degree of incentivisation had a direct correlation to the speed at which consumers purchased ZLEVs. The length of time a financial incentive was available also played a key role with longer-term regimes providing purchasers with the confidence to time-out their ICE vehicles and arrange the finances to transition into a new or used ZLEV.

Regarding vehicle supply, Europe has much better access to ZLEVs than Australia. Currently, ZLEVs imported to Australia are low in number and mainly at a price range too high for many motorists. Whether governments like it or not, manufacturers ship cars into markets where they are likely to be sold. If other nations are incentivising ZLEV vehicles or creating cheaper running cost regimes, then these markets will be more attractive.

INDUSTRY SECTORS

For automotive workshops, there is much change ahead.

Across Europe, it was noted that EVs have less service and maintenance requirements than ICE vehicles, and in regions where ZLEV fleets were large, dealerships reported the need to cycle more vehicles through their service areas.

With less service and repair work required, EVs would often spend less than an hour in the dealership with vehicle owners timetabled to strict time slots to reduce storage back-ups and the cost of continually moving cars around parking bays.

The speed of ZLEV turn-around and the constant moving of ZLEVs in and out of a workshop has ramifications for the independent repair market where smaller workshops in built up areas often already have parking challenges.

In a ZLEV market, where there is less work and less margin in service and maintenance, dealerships and independent repairers are already looking to either bring back previously outsourced work into their workshops, or to value-add where they can. An independent workshop in Sweden that services ZLEVs reported that the days of free advice and helping customers for free were over. In a market where a change of technology meant thinner margins, everything would need to be timed and paid for. The business owner reported ‘we will need to become more like dentists and doctors, billing for every minute’.

The observations of the Australian delegation indicated that body repairers would be less affected by the growth of the ZLEV fleet. While adapting to the technology and safety requirements of working with EVs – including the recalibration of sensors and handling high-voltage batteries – would necessitate a considered approach, the fundamentals of the sector would remain – cars crash, repair is needed and, once the battery is depowered, the process is essentially the same as it has always been.
Regarding ZLEV batteries, in the majority of cases, European automotive business owners would not get involved in the repair of high-voltage components or batteries. Repairers suggested that there were business opportunities, however, and indications are it would be in the repair and repurposing of vehicle batteries.

In markets where ZLEV uptakes were significant there was already the emergence of such enterprises engaging in the changeover, diagnostics, and repair of batteries.
Both independents and dealership are adapting to the changing market. Service offerings they might not have considered in the past, such as windscreens, tyres, and detailing are now becoming part of the servicing package. One approach from dealerships has been to offer a monthly subscription payment plan to cover the servicing of used cars they sell – cars that, in the past, they would likely not have seen again once they had been driven off the lot, but which now offer a revenue stream they cannot ignore.

While this innovation in work means adapting and perhaps reabsorbing traditioinal jobs, it is EV batteries where a truly new avenue of business can be identified. The battery packs that power EVs are expensive as a whole package, but they consist of cells stacked together, and therein lies the opportunity.

“They’re are expensive, but they can be repaired. That’s what they’re learning,” said Mr Camm. “In Norway, they’ve learned that independent mechanics can specialise in unpacking a battery, diagnosing the failing cells and replace them. And they think that’s definitely an opportunity.”

All manner of other opportunities will emerge over time – from adjusting and streamlining working practices to identifying new avenues of income – as Australian businesses adapt to the ZLEV transition.

THE NEXT STEP

As the Australian government begins to formulate its national electric vehicle policy, the experiences of other nations will be essential. A tremendous amount was learned by the industry delegates on their European visit and a full report on their findings will be made available to members in due course. This will also be used to frame the Associations’ submissions to the national consultation conversation.

“National leadership is the only way we can get to lower emissions and ultimately zero emissions, so that consultation paper is really important,” said Mr Camm. “If we can land the framework right, so that manufacturers suddenly look across and go ‘this is now an interesting market’, I think we can get there.”

Source: Motor Trader e-Magazine (October 2022)

14 October 2022