Labor’s much-anticipated cornerstone electric vehicle policy – aimed at stoking supplies from global car makers into Australia of zero-emissions vehicles – is set to be delayed amid internal concerns the idea lacks enough community support.

The government is understood to be concerned about the level of complexity involved in the introduction of a so-called fuel efficiency standard, which would penalise importers for selling internal combustion engines (ICEs) to encourage greater shipments of EVs and low-emissions vehicles.

But mounting fears of a potential cost-of-living backlash against the policy, which would drive up the price of many of the nation’s biggest selling medium-sized cars, SUVs and utes, are also weighing on deliberations.

Labor in April committed to introducing a European-style fuel efficiency standard with a view to introducing legislation before the end of this year.

It is understood that timetable is at risk of being significantly revised, according to sources inside and outside the government.

EV makers and a range of political players led by the teal independents and the Greens have been the most vocal supporters of an efficiency standard as a way to trigger an early end to the sale of ICEs in coming years.

By contrast, car dealer and some motoring club associations are urging Labor to take a more cautious approach, recognising the need for an efficiency standard to drive greater supplies of EVs while acknowledging that the global industry is still some way off making electric and battery versions of vehicles required by Australian buyers at current prices.

Modelling extension
Critics of rapid action point to Norway, where heavy subsidies and regulated high prices for ICE vehicles pushed sales of battery electric and plug-in hybrids to more than 90 per cent of the market.

At the same time, Norway’s overall new car market has plunged 29 per cent this year, a sign drivers are holding on to their ICEs, particularly heavier models.

With legislation for a fuel efficiency standard now at risk of slipping towards the next election, the Department of Transport in September quietly extended a now $748,545 contract with ACIL Allen for modelling work that was due to finish in late August to January 30.

“The government is committed to introducing a strong fuel efficiency standard (FES) as soon as possible,” a spokeswoman for Transport Minister Catherine King told The Australian Financial Review.

“To deliver a successful FES that results in more modern, cheaper to run and cleaner cars, the government is ensuring it takes the time to get the design right.”

Speaking at an Australian Chamber of Commerce and Industry event in Canberra last week, Climate Change and Energy Minister Chris Bowen said the fuel efficiency standard was a “big deal” and had “taken a lot of my focus over the last couple of months”.

“The transition to EVs is under way,” he said, suggesting global car makers would end ICE production at some point, perhaps in 2035 or 2040. “We have to make that transition as quick as possible. It is happening”.

Sales of EVs in Australia are up more than 7 per cent this year, with two-thirds of EVs on the roads added since July last year.

Behyad Jafari, chief executive of the Electric Vehicle Council, said the lack of an efficiency standard meant Australians were paying more for transport than they should be.

“This is technology agnostic. It certainly does lead to more affordable EVs coming to market, but this is a fuel efficiency standard, which means no matter what you drive, you benefit from it. But the standards need to be put in place.

Mr Jafari said the government remained very committed to the policy and “see it as a major element in reducing the cost of living burdens”.

“Australians don’t start seeing those savings until the standards are in place and we haven’t achieved that yet.”

Tony Weber, chief executive of the Federal Chamber of Automotive Industries, cautioned that unless the public is brought along for the change the politics could fall apart.

“The fuel efficiency standard represents the most significant change to the automotive landscape in this country in decades,” he said.

“It’s absolutely essential that we get this right, and that means getting consumers to make the transition.

“Fundamental to this will be the price of the products and having products available in all market segments so that all Australian consumers can make the transition.”


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