If there is one thing Australians are good at it’s underestimating the speed of technology transitions.
We were caught out with the speed of uptake of rooftop solar, and despite decades of warnings and scenario planning, seem yet again caught out by frailty of aging coal plants. Could it be that the next big shock around the corner is the rapid uptake of Electric Vehicles (EVs) and all that entails?
In the last two years we have witnessed what happens when local and global events such as pandemics, bushfires, floods, wars all collide into a giant tidal wave of disruption.
Who would have thought in 2019 that Australians wouldn’t travel overseas for 2 years, or that large parts of the workforce would be working from home and moving out of cities, or that we would be eating cabbage instead of lettuce in a KFC burger because of flooding on the east coast of Australia?
Transitions are happening everywhere, and rarely are they the planned, steady scenarios we like to presume in modelling exercises. Just ask anyone in the energy industry who are witnessing the unprecedented intervention of the Australian Energy Market Operator (AEMO) suspending the electricity market for the first time ever.
EVs and the petrol cliff
The petrol cliff is what our society drives off when it fails to anticipate a sudden sharp rise in EV uptake at a pace much faster than our governments and industry have been modelling and planning for.
It’s in these moments where scenario planning goes from being an abstract idea to something grounded by reality. Suddenly we are caught out by the ancillary chaos we failed to consider in our siloed thinking about risks and projections.
The ingredients for this sharp rise in EV uptake seem to be coalescing over the the near term horizon; sustained high petrol and diesel prices, higher than ever before levels of climate change concern, increased availability and approaching price parity of electric vehicles and then, general FOMO (fear of missing out).
But aren’t governments and industry preparing for this transition? Yes and no. Local, state and federal governments have a range of policies, targets and programs designed to facilitate and support the uptake of EVs on our roads.
For example, the Victorian Government has a target of 50% of new car sales to be EVs by 2030, and the Federal Government is modelling a scenario of 89% of new cars by 2030 as part of its emerging suite of electric vehicle policies.
These targets are argued by many to be conservative, but I would argue they are radical in that they may just be wildly underestimating the speed of change.
Even if our scenario models are accurate, often its that we fail to act comprehensively and adequately on the scenarios. We may consider certain aspects like ensuring the grid can handle the uptake, or adhoc government funding for public charging infrastructure but more often than not we are responding reactively to change as it happens.
What should the EV transition look like?
Let’s consider for a moment a scenario where in 2023, global supply chain blockages ease, EVs approach price parity and the Federal Government has stimulated demands for EVs in fleets by exempting them from import tariffs and Fringe Benefits Tax (a real promise).
What does that look like in qualitative terms? Now I am prone to thinking positively about the future and I definitely see the benefits of the EV transition happening quickly, but there is value in taking the rose coloured glasses off for a moment to fully understand the implications.
Well for one, a lot of the rollout of public charging infrastructure may suddenly come under enormous strain as demand skyrockets.
As someone who has driven an EV for two years, I have already witnessed significant congestion on both metropolitan and regional chargers, and that’s with less than 2% of new car sales being EVs.
Sure there are plans underway and funding from local, State and Federal governments and private industry to improve this, but is it at the pace that the demand uptick will require?
Having worked on rolling out fast charging infrastructure through the Charging the Regions project in regional Victoria, installing new EV chargers takes time and involves considerable complexity.
How will more EVs impact the electricity grid?
What happens to our local electricity networks when all of these new EVs connect to the grid and shift substation demand profiles significantly.
Sure there are emerging tariffs to encourage charging at the right times, and some networks are planning for EVs better than others. However, many are still planning for this to be an issue sometime in the later half of the decade.
For example, one Victorian electricity network argued in its pricing submission to the Australian Energy Regulator in 2020 that:
“It is not possible to obtain reliable EV uptake forecasts or likely usage patterns, which in turn precludes us from being able to forecast the likely demand on our network or identify any new obligations we may become subject under. Thus, it is not possible to provide for these events in our expenditure forecasts.”
In short, the future is uncertain so we can’t prepare for it.
Should mechanics and electricians upskill for EVs?
Of all the elements of the EV transition that I have seen and witnessed, it feels like the greatest area of lag is the upskilling of trades and technicians required to service the new wave of electric vehicles. This has implications across the industry.
Small business mechanics may suddenly be faced with having to work on an entirely different kind of car, but as EVs require less maintenance may see a downturn in servicing income.
Roadside assistance and insurance may be better prepared, but I was surprised recently to have to explain to a man on the phone from AAMI that you did not fill an electric car up with petrol.
Obviously, small franchise petrol stations are going to be highly vulnerable, and despite value adding and diversify their business with food and drink offerings they may struggle if there is a sudden dramatic shift in the car market.
Of course, they could install EV charging too but the business case is vastly different and is not a simple technological substitution for a business to make.
Who can afford EVs, anyway?
Then there is the big issue of social equity and access. As people who can afford to make the shift to EVs, lower-income demographs may find they are faced with rising costs for accessing, and maintaining a petrol car.
For example, as those who can afford to electrify their homes disconnect from the gas grid, then the ‘shared costs’ of the gas grid are proportionately higher for those who can not afford the shift.
Obviously, the higher price tag of EVs currently limits the opportunities for lower-income demographics to make the shift.
But in addition to the price tag, what are the social implications of those who can not afford the shift being left to pay potentially higher prices for servicing petrol and diesel cars or over time access to supporting infrastructure. Kind of like the inverse problem that EV drivers currently face. (Caveat; I’m not hinting that EV taxes are the panacea to address this!)
The bigger zero emissions picture
There are enormous environmental, economic and social benefits to be gained from a rapid transition to electric vehicles. Especially if the transition happens in conjunction with a substantial rethink of transportation more broadly and a shift away from the dominance of private ownership.
All of the issues I have raised here have solutions and many of them are being worked on by different elements of society. But the key question is, are we ready to roll out these solutions at the speed required should a tectonic shift in the EV transition catch us unaware?
Extracted in full from: The petrol cliff is coming. Are we ready for the EV transition? (thedriven.io)