Australian drivers could save $20 billion by 2030 in rapid switch to electric cars

Australian drivers could save more than $20 billion in petrol and maintenance costs by 2030 if fuel emissions standards were introduced and helped drive a rapid uptake of electric vehicles.

New analysis released by Climateworks Centre, ahead of a landmark EV Summit to be held in Canberra on Friday, says the $20 billion saving assumes a 76 per cent share of new car sales by 2030, and would represent cost savings of $1,300 a year for individual drivers on fuel and maintenance costs. It will also deliver significant climate and health benefits.

The new study shows Australians could save $19,500 on running costs over the 15-year life of their vehicle if they have the opportunity to purchase an electric car rather than an internal combustion engine (ICE) vehicle.

And key to this is the setting of fuel efficiency standards – likely to be the main focus of Friday’s EV summit that will feature many state and federal ministers, EV industry leaders, and the likes of Mike Cannon-Brookes and Tesla chair Robyn Denholm.

The lack of fuel efficiency standards has emerged as a dead weight on the EV transition in Australia, with tens of thousands of aspiring EV owners already frustrated by the lack of supply, as most major car manufacturers send stock to countries that do have standards.

Other key policy recommendations include relaxing restrictions on used car imports, and setting strong targets for commercial and government car fleets.

The new report by Climateworks, called Accelerating EV uptake: Policies to realise Australia’s electric vehicle potential, shows raising Australia’s ambition to 76 per cent of new vehicle purchases being electric by 2030, and 100 per cent by 2035, would benefit consumers and cut transport emissions.

This table below highlights the significant savings – in both fuel costs and emissions – from the differing scenarios.

The 76 per cent target is important because it is consistent with a 1.5°C target, while current policies by state and federal ministers will likely only deliver a 46 per cent share of EV in new car sales, falling short of even a 2°C scenario.

The federal government’s most recent stated assumptions – in 2020 under the former Coalition government – assumed only a 26 per cent share by 2030 (in 2021 the share of EVs in Australian new car sales was just 2 per cent).

However, Labor has also assumed, in its climate modelling, an 89 per cent share of EVs in new car sales by 2030, although this is not an official target. But then, neither was the assumption of an 82 per cent share of renewables in the main grid, but that is now so widely discussed it is now assumed as a defacto policy setting.

Helen Rowe, the transport program manager at Climateworks, says governments need to introduce fuel emissions standards, and they need to set EV sales targets. So far, the only government to do so is the ACT, which has recently announced a ban on new fossil fuel passenger car sales from 2035, in line with the EU.

Rowe argues that the standard should be set at 95g CO2/km, consistent with Europe, and well below the voluntary standard set by the main car makers lobby, who – it has been confirmed – have been working on strategies to try and frustrate a binding standard in order to protect the sales of dirty and inefficient cars in the Australian market.

‘While EVs currently have higher upfront costs, these are falling,” Rowe says. ” With the right mix of policies to boost the supply of vehicles to Australia, our analysis shows EVs and their cheaper running costs will soon be within reach of Australians.

‘The majority of Australians see an EV as their next vehicle purchase to reduce their emissions and save money on operating costs, but the reality is they simply can’t get their hands on one,’ she said.

Australia’s transport emissions were 94MtCO2e in 2020, comprising 18 percent of Australia’s national emissions. reaching 76 per cent EVs of new car sales by 2030 would save 24Mt, with more savings as the ageing petrol and diesel cars were retired over the next 15 years.