We’re constantly being bombarded by the media with stories on climate change, the impact fossil fuels are having on the air we breathe and the water we drink, supposed links between our current monstrous fires and stacks of issues other than the drought and the gas “guzzling” cars we drive to get around our vast country.

One group of disruptors and a heavily fortified and financed group of marketers (usually with vested interests, such as vehicle distributors and motor magazine writers) has extended that thinking on to a programme of information aimed directly at urging us, the consumers of Australia, to ditch our combustion engine vehicles forthwith and buy electric vehicles instead.

As a practising Chartered Accountant, number cruncher and a person of considerable experience with petroleum driven vehicles across multiple industries including the resources industry, it comes to a point when many of the positive aspects of electric vehicles need to be countered with real and definitive negatives before buyers sell their shares in quality oil and gas companies and buy depreciating assets like electric cars.

The realities of today’s need for transport vehicles

Based exclusively on facts provided by the NRMA in NSW and the Confederation of Australian Industries, we know the following as given and not imaginary creations:

• There are approximately 17 million vehicles presently registered for use on public roads and operating in Australia today.
• The life cycle of a typical combustion engine vehicle (excluding those written off in car accidents) is between 12 and 15 years.
• The current level of new registered vehicles in Australia today has varied over the last three years between 370,000 and 390,000 vehicles per annum and dropping in trend.
• SUVs make up approximately 60% of all new registered car style vehicles in the current market.
• Electric vehicle imports such as Tesla, Nissan Leaf and Hyundai Ioniq presently are around the 2,500 vehicles per annum.
• The number of electric vehicle charging stations available for electric cars (outside of personal residences and equivalent facilities in office blocks) within 200 kms of Sydney is around 140 (see www.plugshare.com).
• The current range for electric vehicles presently available on the market is between 200-300 kms and that is heavily influenced by driving conditions, drivers’ techniques in the way they operate their vehicles and the age of the batteries within the electric vehicles.
• An expected and usually guaranteed life of the battery within a new electric vehicle purchased today is between seven and 10 years, assuming the vehicle is properly maintained, serviced and the batteries themselves are adequately monitored and protected.
• A normal cost expectation for a battery in a current Tesla or BMW is between $12,000 and $15,000 and for a Nissan or Hyundai of $7,000 to $10,000. We have no records for older vehicles replacing their batteries today, or whether the older styles of batteries have lasted the seven years and whether an adequate recycling facility has been established to deal with these exhausted batteries.

We have had electric vehicles operating as motor cars for several years in Australia. There are websites that now operate as marketing outlets for quality electric vehicles such as www.carsguide.com.au. These typically show the original Tesla model, Jaguar I-pace and Nissan Leaf vehicles with depreciation rates in market value terms of around 20% p.a. for well-maintained vehicles.

The web also establishes new vehicle prices for electric vehicles in their very basic configurations for:

Tesla Model 3 $ 75,000 (considered to be the EV of the Year)

Jaguar I-pace $ 162,000

Nissan Leaf $52,000

Hyundai Ioniq $ 49,000 (as per NRMA Oct 2019 magazine)

Tesla does not manufacture a combustion engine vehicle, so there is no equivalent to compare performance or prices. However, the Nissan Leaf and the Hyundai Ioniq listed prices from the NRMA magazine are roughly double the equivalent combustion vehicle from the same manufacturers. We do not have statistics from Nissan or Hyundai that we are prepared to quote as being the import expectations for their local distribution arms into Australia over the next 12 to 18 months. Based on current demands for such vehicles of being less than 1% of all vehicles imported into Australia on average over the last three years, it is not unreasonable to expect between 2,500 to 3,000 electric vehicle imports in that time zone.

There are presently no subsidies available in the Australian markets to assist buyers in the purchase of electric vehicles. Our searches have not established any form of specific discount available to owners of electric vehicles over the cost of electricity supplied to recharge batteries in those electric vehicles.

In effect, barring some substantial involvement by the Federal and State Governments that causes massive market changes, those limited numbers of imported electric vehicles are likely to remain the importation expectations for some extended time frame.

One seriously important statistic not readily available is the number of vehicles sitting in dealer’s yards awaiting sale to the consuming public. Another is the number of combustion engine vehicles on the production lines of the multitude of manufacturers or on their way to Australia via those massive container vessels, compounded by the un-amortised payback periods manufacturers have on their current tooling for their existing vehicle streams. They have a vested interest in standing still.

Regulations and electricity connections

While we haven’t contacted multiple Councils about regulations covering charging of electric vehicles, a number of obvious issues arise before there can be any substantive increase in available charging points:

• No Council will allow any electric cable to cross the public verge over a gutter and into the coupling point of an electric vehicle parked in the street or in a driveway on public land;
• Existing buildings do not have the current electrical cabling that will enable electric vehicles to be charged at anything other than a very slow voltage charge (roughly 8 hours);
• Assuming building owners can be encouraged one way or another to install greater and more specific fast charging cabling, the buildings will also need substantial electronic upgrades through their main boards and if required, external sub-stations; and
• On the assumption that the substantial uptake of new electric vehicles will principally be focused on high net wealth areas, Councils will also need to substantially upgrade electricity delivery capacities into those same high net wealth areas or cause massive disruption and/or blackouts when the multitude of users return home and put their cars on charge at or about the same time of an evening.

Presently there are 11 different coupling mechanisms to connect electric cars to charging points. In Australia, there are two principal coupling appliances including adaptors. Tesla has the huge majority of charging points within say 300 kms of Sydney and Tesla has no interest in supplying electricity to vehicles other than Tesla vehicles, so they have their own coupling connection. Owners need to buy adaptors that will work with their vehicles on the alternative supply points.

Obviously, if there is to be a major increase in the number of electric vehicles in a concentrated area like Sydney, that fact is going to cause a major increase for required electricity generation. And that in itself must drive up electricity prices for everyone, including those people who do not have an electric vehicle. So why would the mass population be comfortable with such a fact?

Overseas experiences and issues

Our motor magazine writers all take great pleasure in identifying that all major manufacturers are presently conducting research and have “plans” to introduce a range of electric vehicles soon (e.g VW now spending several billion US$’s in their research and design works in Germany). When you approach the local distributors of such vehicles they have been informed not to consider any changes to their business models, facilities or staff training before 2023.

Ford will be making an electric Mustang and BMW will be producing an electric Mini, but what we are not going to be told in what volumes, over what time frames and when they will be available in Australia.

The simple question that should be on every buyers lips will be why would a major manufacturer of motor vehicles be interested in large volume manufacture of electric vehicles until they wind down their stock of unsold vehicles and have paid off their investment in tooling for petroleum combustion vehicles?

The next question would be we have so many vehicles on the road today or in second-hand car dealer’s yards, do we suddenly just junk all those vehicles that all have years to run before their 12 to 15 years cycle ends. That is not going to happen, but smart people will be interested.

If it is correct that electric vehicles will start to seriously impact new vehicles sales volumes, will the existing manufacturers have pricing policies to get their stocks of existing combustion engine vehicles out and off their books and what will that do to the second hand car markets? Just by selling a non-electric vehicle that keeps open the dealer’s market for parts and servicing and perpetuates the normal person’s expectations of what vehicle they can afford to drive.

The European Union has legislated emissions controls requirements over any new vehicles to be manufactured in Europe or distributed in Europe. Those emissions controls regulations work in such a way that manufacturers achieve reductions in emissions based on averages and average improvements. In effect those same manufacturers will be playing the game of controlling the numbers of their different vehicles manufactured each year while still keeping the price points around where they can sell enough vehicles to make a profit.

We are also bombarded with how price competitive electric vehicles have become in Europe. Fact is that is mainly via Government subsidies. Denmark did actually subsidise the purchase price of electric vehicles until very recently and when they removed those subsidies sales dropped by 80%.

Conclusion

There is a massive shortfall in infrastructure that will eventually be dealt with to support the electric vehicle industry, but just how many years that’s going to take is beyond my imagination. It took us 100 years to get where we are today with combustion engine vehicles.

The Federal and State Governments are disinterested in subsidies and without very substantial subsidies, the current situation of very low market penetration isn’t going to change.

Cost is a real issue for electric vehicles. While it is up to consumers to determine price quality considerations, the current price of the mass market end is too high to attract the average Australian, the leasing companies or the big fleet owners.

If you ask what companies have a vested interest in heavily talking up issues like climate change, the quick answer will be new manufacturers like Tesla who are market disruptors and also the Chinese, who have the ability to manufacture large volumes of new styles of vehicles without having to worry about patents and dumping.

Technology is going to expand dramatically on all types of vehicles, including hybrids, hydrogen and petroleum driven vehicles over the next 10 years, so is there sense in investing in today’s technology unless forced?

The price of a hybrid vehicle is roughly 20% more than a standard model vehicle like a Toyota Camry and it would do virtually all that an electric car would do, excluding hoon values for that 200 metres off the lights. You do not need to spend $75,000 plus to buy an electric vehicle and still substantially achieve the reduction in emissions (e.g. Toyota Rav 4 Hybrid is said to operate under normal conditions at 5.8 litres per 100k and costs between $35,000 and $39,000).

DON’T SELL YOUR OIL AND GAS SHARES to buy an electric vehicle.

If you have around $75,000 to buy a new passenger vehicle, you are green conscious, have access to good safe power at your personal residence, have a daily transport requirement of less than 250 kilometres, you need a new (or near new) vehicle today and love the instant power off the lights, you may choose an EV like a Tesla Model 3 but good luck.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.