How will Australia manage the EV transition as the UK and Japan make their move?

May 14th, 2022

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Japan recently joined the growing ranks of countries that are set to move towards a ban on petrol and diesel-powered new cars, emphasising the need to shift towards a new generation of fuel technology.

With the framework for a transition by the middle of the next decade looking set to be a priority for the Japanese government, it is clear that Japan is ramping up its efforts to achieve a goal of being net carbon neutral by 2050. This means the sale of new cars with internal combustion engines could be at an end by the mid-2030s.

As mentioned above, Japan is merely one of a number of countries making the switch.

European lawmakers have been on the frontline in terms of making changes. And those changes are only coming up quicker, as countries accelerate efforts to meet net zero goals. In the UK, the sales ban on new petrol and diesel-powered cars is now targeting 2030 as opposed to the original timeline of 2035.

How might this impact new cars in Australia?

By now, and after a federal election where a green mandate has been given, you’re probably either chastising our politicians for not following suit, or alternatively, you might be wondering what does this all have to do with Australia?

The ramifications for motorists down under are more complex than you might believe. The UK and Japan are the largest markets in the world for right-hand-drive vehicles. Even Singapore, another right-hand-drive market, has pencilled in a 2040 deadline for the transition away from the internal combustion engine.

While the local government has yet to make any significant inroads as far as incentivising drivers to take up cars powered by electric or hybrid means – in fact, some state governments have introduced road user charges that are hardly helping the cause – this absence is quite stark when compared to overseas markets where motorists have a number of incentives and the infrastructure in place to consider buying a vehicle powered by ‘green’ energy. And of course, EV prices are far more affordable overseas. Uptake is picking up quickly in a number of international markets, with the building blocks in place to encourage drivers to make the switch, and pioneers like Tesla changing the game.

With Australia no longer in the picture as a car manufacturer, nor is it ever likely to be one in the future given the prohibitive costs associated with the industry down under, the prospect of the world leaving Australia behind shouldn’t be ignored.

Not only could Australia be left behind as other countries transition to more efficient and technologically sophisticated vehicles, but the cost of supplying Australia with right-hand-drive vehicles could increase as economies of scale begin to dissipate if not evaporate for car manufacturers. If this happens, you better believe that those companies will be passing on the costs to local motorists in the form of higher prices – as if manufacturers haven’t been increasing prices a number of times over the last couple years already.