Electric cars ‘a non-starter’, says industry

Former Business Council of Australia president Tony Shepherd dismissed Labor’s plan, saying the cost and energy requirements involved in making electric vehicles domestically were prohibitively high. Picture: Sam Ruttyn
Bill Shorten’s plan to revive carmaking in Australia through electric vehicles has been attacked by captains of industry who say the nation’s high manufacturing and energy costs have made the industry unviable.
Other elements of Labor’s plan to reduce carbon emissions came under fire as trade-exposed industries said the opposition was poised to hand rival metal producers in China and the Middle East a competitive advantage.
As part of Labor’s revised policy, Mr Shorten this week unveiled a suite of measures to boost electric ­vehicle uptake from its current low base of 0.2 per cent of new car sales to 50 per cent by 2030, saying the country could sustain an electric car manufacturing industry.
“It’s about time that this country decided that we can make electric vehicles in Australia, that we can also help create a set of circumstances, create a market for electric vehicles, which makes them affordable for household users,” the Opposition Leader said.
Former Business Council of Australia president Tony Shepherd dismissed Labor’s plan, saying the cost and energy requirements involved in making electric vehicles domestically were prohibitively high.
“We don’t make any cars in Australia any more,” the former Transfield chairman said.
“Our manufacturing costs are very high, and our cost of energy is amongst the highest in the Western world.
“The manufacture of any automobile, regardless of its engine, requires significant energy.”
But Labor industry spokesman Kim Carr said the shutdown of large-scale vehicle production in Australia was “not inevitable” and a Shorten Labor government would work with industry to ­develop an electric vehicle innovation and manufacturing strategy and create jobs in the sector.
“The strategy will support the establishment of manufacturing, assembly and retrofitting capability in EV vehicles, transportation and supporting infrastructure and services,” he said.
The close of the Holden factory in Adelaide’s northern suburb of Elizabeth in October 2017 marked the end of more than a century of car manufacturing in Australia.
Automotive manufacturing firms received more than $30 billion in transitional assistance between 1997 and 2012, according to Productivity Commission figures, which found they could not compete internationally.
Senator Carr blamed the Liberal government for the closure, saying that manufacturers were “goaded into leaving the country” and that automotive construction underpinned Australia’s advanced manufacturing capacity.
He did not directly address questions about whether an electric vehicle industry would require government subsidies to be viable.
Energy Minister Angus Taylor attacked the Labor plan, saying it had “no strategy” to achieve its target of 50 per cent electric ­vehicle sales by 2030.
A key plank of Labor’s EV policy is an emission target of 105g of CO2 per kilometre for light vehicles.
A spokesman for Mr Taylor cited Centre of International Economics figures showing the target would increase the price of cars by up to $4863.
He said that when the greenhouse gas emissions required to charge electric vehicles from the national energy grid were taken into account, the vehicles emitted more carbon dioxide per kilometre than other light vehicles.
“The reality is Labor’s EV ­policy is expected to deliver around 10 million tonnes of abatement by 2030, which is a fraction of 1 per cent of the 1.3 billion tonnes they need,” the spokesman said.
Electric vehicle entrepreneur and former Victorian Labor MP Evan Thornley said both parties had missed the opportunity for the Australian car industry to take a leadership position in the global industry.
“Neither party covered themselves in glory. It’s great that we have targets for EVs, but unless we have a charge-network solution to go with that, it’s unlikely we’ll meet those targets,’’ Mr Thornley said.
“The target is one component, you need an infrastructure target as well.”
Institute of Public Affairs spokesman Evan Mulholland said Labor’s policy would come at a huge cost to the taxpayer and have little impact on the climate.
“Not only do Labor want to resurrect an automobile industry funded by the taxpayer, it will ­almost certainly need to be funded by the taxpayer for decades to come,” Mr Mulholland said.
Mr Shorten has proposed that under the enlarged emissions plan, Labor would help energy-intensive­, trade-exposed­ industries, such as alumin­ium, to meet their obligations with a $300 million reserve fund under the banner of a “strat­egic industries taskforce” to ensure they remained inter­nation­ally competitive.
But aluminium producers including Rio Tinto, Alumina and Alcoa say they were concerned the policy may in fact represent a fresh impost compared with their international rivals who faced no carbon pricing.
“There’s a huge amount of work to do and it’s going to be pretty hard to reconcile ambition with the competitiveness of industry,” Australian Aluminium Council executive director Miles Prosser said.
“Our two big competitors are China and the Middle East. Now the Middle East has very little carbon cost in their economy and China have a number of policies that at a national level are addressing the issue but when you look at an industry and facility level they’re fully exempt.
“They’re not impacted in any ­financial way. So when you do these comparisons you need to do them at a genuine level of a facility comparison not at a national level.”
The aluminium industry will be eagerly looking for policy detail to learn of any new costs it may have to shoulder, Mr Prosser said.
“You’re not sure what you’ll be paying compared with your competitors overseas. The broader it’s spread the fairer it is,’’ he said.
Iron ore giant Fortescue Metals Group, which yesterday approved the $3.6 billion Iron Bridge project in West Australia’s Pilbara, said it was also looking for detail on Labor’s proposal.
“We’ve always taken a responsible approach to dealing with the environment and we will look for clarity in terms of policy settings,” chief executive Elizabeth Gaines said. “Once we have that clarity we will take all the necessary actions we need to take to meet those requirements.”