Electric car prospects

Electric vehicles – facts and figures

Twinkle twinkle little star what you say is what you are

Averages are not the only facts​​ – the commentary section

This note trys to set out some facts about electric vehicles as they apply in Australia. We draw on ABS, Department of Transport, Greenhouse gas and Energia as our main sources. As there are quite a lot of unit conversions there may well be some errors. And I’d note I still recall a childhood memory of reading vehicle and pronouncing it vechile an enduring (more than 50 year) embarrassment.​​ I don’t plan to spend much time on EVs but the lack of facts in the discussion to date is disappointing.​​ 

My bottom line is that EVs still face barriers. I doubt that cost is the main one, it’s the lack of model choice and the lack of infrastructure and the compromises still required in the few models that are available.

I use​​ my own situation to think about the averages. Apparently 99% of car trips are less than 50 km or round trip of less than 100 km. However even though many of my own trips fall within that range many do not. Charging an EV in a country town is unlikely to be easy right now.

The​​ choice in​​ EV models is still very limited. I drive a compact station wagon (estate if you will). Its perfect for my needs in terms of flat boot, easy city parking and performance. There is no equivalent electric vehicle in Australia. Never mind the​​ price.

Even the newer EVs still require compromises. Look at the Hyundai Ioniq in terms of spare tyres and boot space. So I don’t drive an EV. Despite the readership base of Reneweconomy most reading this article won’t drive an EV either.

The problems are probably going to go away, but its not going to happen in a hurry. This is one industry where Australia depends on the international market to provide supply.​​ Still better , and future proofed charging infrastructure would definitely help local importers to push their offshore bosses. As will the prospect of 25K per year Govt orders.

A ​​ Paywalled economist article ​​​​ notes that its mostly luxury brands moving to EVs because their buyers can afford the premium. Mercedes eg has committed A$16 bn of investment aiming for 20% EV sales by 2025. BMW losing money on i3 hatchback wants to build compromise platforms.

Midmarket car companies are making noises but are a long way from committing to big investments.​​ They don’t make enough margin to just go for it.​​ Its probably at least 4-5 years from ​​ commitment to fully fledged products so this automatically means the model ranges available in Australia will be limited. Toyota for instance is planning 10 models by the early 2020s but is probably still half committed to hydrogen.

The superstar is​​ ​​ VW investing​​ A$ 50 bn on EV manufacturing capacity ​​ and another A$ 80 bn on battery manufacturing capacity (So I’m hanging onto my lithium shares). That investment is expected to result in 22 m EVs over the next ten years with 70 models by 2028. So for Australia, as things currently stand VW historically a mainstream brand is likely to be very important. Its “ID” hatch back will cost Euro 30,000, still expensive in Australia. It also just unveiled an SUV (essential in the Australian and probably USA market). Finally “The Economist” notes that VW has 40 K global suppliers​​ in the value chain​​ so this industry can be disrupted by simpler EVs from the likes of Tesla or say Dyson.​​ 

In short Australia can do much better on EVs in the short term, but mass popularity is unlikely until the model range greatly increases and that will take​​ years. Onto the facts

National aggregates and light vehicle aggregates

Transport in Australia of all forms has carbon emissions of about 100 mt (out of ~550 mt Australian total emissions)

Figure 1 below carries an estimate that cars (broadly defined) ​​ are about half that. The rest is trucks, shipping, air travel.

Statistic

Unit

Australia

Europe

Source

Transport carbon emissions

mt CO2

100

 

Green house gas accounts

Car Carbon​​ intensity

g/km

180

120

National Transport Commission

Petrol fuel efficiency

litres /100 km

10.6

 

ABS

Petrol fuel efficiency

KG CO2/Litre

2.3

 

www.ecostore.be

EV efficiency

KWh/100 km

19

19

Tesla, UBS

Energy equivalence

KWh//litre

1.8

 

ITK calc

Petrol sales ​​ Australia​​ 

bn litres 2018

18.4

 

ABS

Emissions from petrol implied

mt CO2

42

 

ITK calc

Petrol cars share total cars

 

87%

 

ABS

Emissions from cars (diesel & petrol)

mt CO2

48.6

 

ITK calc

100% electrification total consumption

TWh/year

33.0

 

ITK calc

Figure​​ 1Sumary statistics on transport and light​​ vehicles. Sources varied

​​ ALP policy

ALP clean energy policy​​ states the following on transport

Government target of 50% EV sales by 2030.​​ 

Government vehicle purchases to be 50% EV by 2025

20% investment allowance (ITK interpretation) for business EV purchases. The release quote is “immediately deduct​​ 20%”

A $100 m investment on a $ for $ basis to build a $200 m charging infrastructure fund.

Based on the above announcements we estimate as follows:

ALP policy implications

 

 

Car sales per year

m

1.2

Fleet/Commercial sales

m

0.49

EV sales

per year

3000

Federal Govt car purchase

000 per year

50

Average new car price

$ 000s

30

Hyundai Ioniq price

$ 000s

43

Electric premium

$000s

13

Tax deduction ALP 20% accelerated

$000

8.6

After tax benefit

$ 000s

2.6

Budget cost ​​ tax deduction on ​​ 0.25 m cars

$bn/year

0.6

Total fuel tax levy

$bn/year

10.8

Incrementa lfuel tax levy foregone 0.25 m cars

$ bn ​​ 

0.14

Figure​​ 2​​ ALP EV policy economics. Source ALP website, ITK

Note: This table estimates an after tax value of $2,600 based on an electric car costing $43,000 and assumes there is no claw back of the 20% depreciation allowance. That’s clearly an incentive but EV’s will still be more expensive​​ in capital cost.​​ See below for a lifetime NPV calc. Secondly we estimate the cost to the fuel levy once 50% of fleet sales are EVs at just $141 m each year, but of course that is the annual growth in the reduction of the fuel levy so in 10 years its $1.4 bn per year​​ if there are 2.5 m EVs on the road. If 50% of fleet vehicles were EV its roughly 25% of ​​ total car sales. Also if 50% of ​​ Federal Govt car purchases are ​​ EV that’s about 25 K per year. A decent contract​​ for someone, I’m guessing Hyundai are in pole position right now.

For the fuel tax levy we calculate:

Annual Impact on fuel levy of 0.25 m EV​​ 

 

Litres per car​​ per year

1378

Levy per litre $

0.43

Electric cars

250000

Total cost $m

148

Figure​​ 3​​ Impact of just 0.25 m EV on fuel tax levy Source: ITK

EV v Petrol fleet purchases​​ 

Comparing cars seems more complicated than comparing wind and solar farms. There are various tax rules and in some years there are investment allowances, private/business uses, log book methods blah blah. Our comparison is as simple as we can make it. The cars are owned for 8 years with 25% reducting balance depreciation. Only fuel and service costs and tax benefits ​​ are allowed for. We compare a supposedly equivalent $30 k petrol car with a $43 k electric car. We use a discount rate of 8%. Each car is assumed to be traded in at the end of 8 years for its book (depreciated) value. In the case of the electric car ​​ where Hyundai warrants the battery for 8 years or 160 k km we ​​ really should allow for a replacement battery. ​​ If we did we estimate it would reduce the net trade in to about zero. That’s on the assumption that battery costs fall 15% per year for the next 8 years.​​ ​​ You can also make an argument that both the electric and petrol cars will be technologically obsolescent in 8 years and neither should have a trade in value. Perhaps we will all use autonomous vehicles. For rural dwellers the idea of autonomous vehicles running round farm tracks would seem to offer cartoon possibilities but lets not worry about that. Lets imagine that TV ad of ​​ 4WD cresting the mountain top showing off its suspension then the faces of passengers as they realise its not an ad but they really are off not only the beaten track but any track….

I look forward to reader comments pointing out all the assumption and calculation errors I’ve no doubt made. No inflation is allowed for in either electricity or petrol. We can make an argument that supports that assumption but its not critical. Each car does 13 k per year.

 

First the electric car.

Electric car ownership NPV

 

 

 

 

 

 

 

 

 

 

 

Yr1

Yr2

Yr3

Yr4

Yr5

Yr6

Yr7

Yr8

Hyundai Ioniq electric price

$

43000

32250

24188

18141

13605

10204

7653

5740

Depreciation reducing bal

25%

-10750

-8063

-6047

-4535

-3401

-2551

-1913

-1435

Closing balance

 

32250

24188

18141

13605

10204

7653

5740

4305

Fuel​​ 

 

 

 

 

 

 

 

 

 

Unit electricity price

$/KWh

0.15

0.15

0.15

0.15

0.15

0.15

0.15

0.15

Annual electricity consumption

MWh

2.5

2.5

2.5

2.5

2.5

2.5

2.5

2.5

Fuel cost (13 k per year)

$

370.5

370.5

370.5

370.5

370.5

370.5

370.5

370.5

 

 

 

 

 

 

 

 

 

 

Tax deductions

 

 

 

 

 

 

 

 

 

Fuel

 

371

371

371

371

371

371

371

371

Service cost

 

160

161

162

163

164

165

166

167

Depreciation

 

10750

8063

6047

4535

3401

2551

1913

1435

Investment allowance

 

8600

 

 

 

 

 

 

 

Total tax deductions

 

19881

8594

6579

5069

3936

3087

2450

1972

Tax ​​ saving @ ​​ 30%

 

5964

2578

1974

1521

1181

926

735

592

 

 

 

 

 

 

 

 

 

 

Cash flow

 

 

 

 

 

 

 

 

 

Purchase price

 

-43000

 

 

 

 

 

 

 

Fuel

 

-371

-371

-371

-371

-371

-371

-371

-371

Service cost

 

-160

-161

-162

-163

-164

-165

-166

-167

Tax savings

 

5964

2578

1974

1521

1181

926

735

592

Trade in

 

 

 

 

 

 

 

 

4305

Net cash flow

 

-37566

2047

1441

987

646

390

198

4359

NPV @ 8%

-28002

 

 

 

 

 

 

 

 

Figure​​ 4​​ EV total cost of ownership. Source: ITKe

Then the petrol car

 

 

Petrol car ownership NPV

 

 

 

 

 

 

 

 

 

 

 

Yr1

Yr2

Yr3

Yr4

Yr5

Yr6

Yr7

Yr8

Hyundai Ioniq ​​ petrol

$

30000

22500

16875

12656

9492

7119

5339

4005

Depreciation reducing bal

25%

-7500

-5625

-4219

-3164

-2373

-1780

-1335

-1001

Closing balance

 

22500

16875

12656

9492

7119

5339

4005

3003

Fuel​​ 

 

 

 

 

 

 

 

 

 

Petrol price

$/litre

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

Annual petrol consumption

000 litres

1.4

1.4

1.4

1.4

1.4

1.4

1.4

1.4

Fuel cost

$

2080.5

2081

2081

2081

2081

2081

2081

2081

 

 

 

 

 

 

 

 

 

 

Tax deductions

 

 

 

 

 

 

 

 

 

Fuel

 

2081

2081

2081

2081

2081

2081

2081

2081

Service cost

 

320

320

320

320

320

320

320

320

Depreciation

 

7500

5625

4219

3164

2373

1780

1335

1001

Investment allowance

 

0

 

 

 

 

 

 

 

Total tax deductions

 

9901

8026

6619

5565

4774

4180

3735

3402

Tax ​​ saving @ ​​ 30%

 

2970

2408

1986

1669

1432

1254

1121

1020

 

 

 

 

 

 

 

 

 

 

Cash flow

 

 

 

 

 

 

 

 

 

Purchase price

 

-30000

 

 

 

 

 

 

 

Fuel

 

-2081

-2081

-2081

-2081

-2081

-2081

-2081

-2081

Service cost

 

-320

-320

-320

-320

-320

-320

-320

-320

Tax savings

 

2970

2408

1986

1669

1432

1254

1121

1020

Trade in

 

 

 

 

 

 

 

 

3003

Net cash flow

 

-29430

7

-415

-731

-968

-1146

-1280

1623

NPV @ 8%

-29362

 

 

 

 

 

 

 

 

Figure​​ 5​​ Petrol car cost of ownership. Source: ITK

Regarding charging

A detailed and excellent study of charging was prepared by​​ Energeia for ARENA and CEFC. ​​ We reproduce a table from section 1.4.1. Its column 3 you want to focus on which shows a 5 minute charge, or less for the electric car in this study at a cost of less than $10.

Figure​​ 6​​ EV charging models NV gas stations means electric gas. Source: Energeia

 

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