ACT to ban sale of petrol cars by 2035: is Australia ready to embrace electric vehicles?

The ACT government has announced that from 2035 it will ban the sale of new petrol cars. But with several pressure points stopping Australians from switching to electric vehicles, will Australia be ready to embrace eco-friendly cars?

Not everyone is convinced Australia is ready to make the switch, with real concerns around affordability and interstate-workarounds flagged by Industry experts. However, the ACT would be the first state or territory to join in a movement already taking off across the globe, reducing fears Australia would be “left behind” in terms of fuel efficiency standards.

Banning petrol cars: a win for the environment

The Australian capital is preparing to transition away from internal combustion engine vehicles by announcing a ban on new registrations of these vehicles from 2035. It does not currently include heavy vehicles, but is narrowed in on personal transport vehicles, like passenger cars and light trucks.

ACT’s Minister for Emissions Reduction, Shane Rattenbury, will publish The ACT Zero Emissions Vehicles Strategy 2022-2030 in full today with more details on transitioning to electric vehicles (EVs) as the standard.

It is part of a greater global move to phase out fossil fuels due to the impact of petrol emissions on the environment, as well as health risks from pollution. According to the United Nations Paris Action Agenda transport contributes almost a quarter (23%) of the current global energy-related greenhouse gas emissions and is growing faster than any other energy end-use sector. International agreements, such as the Paris Agreement, have set targets around pivoting to EVs.

"This 2035 goal is about being really clear that from that date we don't intend for any new petrol vehicles to come onto the market," said Minister Shane Rattenbury.

"We're about setting an early message now, being clear about where things are going and giving people time to organise the transition.”

"The exact legal mechanism is yet to be determined, we'll need to work closely with the federal government and with other states and territories, but our view is that by 2035 you should not be able to put a new petrol vehicle on the road,” he said.

Affordability pain

The affordability barrier of switching from petrol cars is still the biggest factor stopping ordinary Australians purchasing an electric vehicle. Where a lower-cost new petrol vehicle could cost you anywhere from $15,000 - 20,000, the most affordable EVs in Australia start from $45,000. The coveted Tesla Model 3 is the most affordable Tesla sold in Australia, but its price starts from $65,550.

The Australian Automotive Dealer Association (AADA) CEO James Voortman raised concerns that customers in lower socio-economic groups could be left in the lurch, unable to afford a car if EV prices do not become more affordable by the 2035 deadline.

"We know that electric vehicles are more expensive, and we hope that will change in the future, but what we're seeing at the moment is that electric vehicles are not becoming cheaper," he said.

"Critical minerals that are needed to manufacture these cars are scarce and they need to ramp up the mining of those minerals — such as lithium and cobalt — to ensure the price point that we need does emerge."

"If they are affordable and available en masse, people will buy them… I don't think a ban is the right way to do this. We are really locking ourselves in at a time where we really don't know what the future holds,” said Mr Voortman.

Hoarding older models, pressure on used car market

Another issue that has been raised by Industry is the concern that people looking for a new car could simply purchase a used model interstate, resulting in increased pressure in the used car market.

AADA CEO James Voortman also flagged concerns that the move will have “adverse consequences” for the automotive industry, the people they employ and consumers in the ACT.

While the affordability barrier of EVs and “distinct lack of choice” in available markets could improve by 2035, it’s still likely that Australians will simply “hold onto their more polluting cars for longer, which will do nothing to reduce emissions”

“It is unclear how the ACT will enforce this ban and prevent consumers from simply purchasing an ICE vehicle across the border and re-registering it here as a used car,” said Mr Voortman.

The used car market is currently experiencing a significant boom, with pandemic-related supply chain delays for new vehicles, and a growing consumer interest in travel via vehicle, causing values to skyrocket. The latest figures from Moody’s Analytics Used Vehicle Price Index shows increases in used car prices since early 2020 (start of the pandemic) are at a whopping 79%

This is likely to resolve by 2035, assuming supply chain issues are managed, and no more COVID-19-related restrictions occur. But the used car market could see a resurgence of this sharp rise in demand and prices, if more buyers are seeking petrol cars – especially with a finite amount being delivered to Australia

This could put many Australians in a harder financial position to save up for a car if an EV is unaffordable or undesirable for them.

Not the first or last country to ban petrol cars

The phase-out of fossil fuel vehicles has already been announced by a multitude of countries across the globe. The ACT is simply keeping up with shifting priorities towards reducing carbon emissions.

For example, last month the European Union (EU) announced a 100% reduction in “tailpipe emissions” from 2035 for all new cars and vans. At this time last year, Britain revealed its ban on the sale of smaller new petrol and diesel trucks from 2035, and new petrol and diesel heavy goods vehicles from 2040.

In October 2020, China announced a ban on the sale of new petrol and diesel cars by 2035. Japan followed suit in December, announcing a more immediate ban timeline by 2030. And in Canada, not only are they looking to ban these cars by 2035, but also see all petrol and diesel vehicles off the road by 2050. The most ambitious ban has come from Norway, with the sale of new petrol cars to be prohibited by 2025.

Manufacturing hubs Germany, Italy, and Japan have lobbied against these changes, with the EU agreeing that low-volume manufacturers responsible for new registrations of 1,000 – 10,000 cars annually, such as Lamborghini, would not need to abide by this ban

The ACT’s ban on new petrol cars is just the latest in the global initiative to stop climate change, and it’s safe to assume that the entirety of Australia could soon follow suit. While this is optimistic news for reducing carbon emissions, Australian car buyers will be hoping that these major barriers to switching to an EV, like affordability, are worked out in the next twelve years.

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