Doesn’t time fly. It was more than a year ago since I last poked my head above the parapet and regaled Cats with stories of the electric vehicle (EV) world. In this edition I won’t bother discussing hydrogen fuel cell vehicles because only six were imported into Australia in 2023.

For clarity, I offer up this EV overview only because it intrigues some Cats and irritates others. Also, this review refers to passenger cars only – alternate fuel trucks, trains, ships, aircraft and heavy equipment are another subject. The term EV refers to fully electric cars, not hybrids, unless specifically mentioned.

In 2023, new vehicle sales in Australia hit a record 1.2 million passenger vehicles of which 87,217 were EVs and 11,212 hybrids. EV sales were approaching triple the number sold in 2022. There were 99 different electric variants available in Australia (up from 70 in 2022) made up of 56 EVs and 43 hybrids.

VFACTS reports that the Tesla Model 3 outsold Toyota’s medium sedan mainstay (Camry) again and the Tesla Model Y was the third top-selling SUV of any type. Even Rolls Royce got in the game selling three of their all electric Spectre to Australians at $800k each (excluding owner specified options at additional cost).

What about elsewhere?

In the USA, EVs accounted for about 1.5m (9.7%) of the total 15.5m new passenger car sales for 2023.

It has been widely reported that Biden recently signed an order that will, unless modified, likely cause electric cars to make up the majority of US auto sales by 2032. The Environmental Protection Agency’s ‘Clean Cars’ rule is the strictest federal climate regulation ever issued for passenger cars and trucks — even though it offers manufacturers a slightly slower phase-in of pollution limits than the EPA had first proposed. Whether the regulation survives a Trump Presidency remains to be seen.

In Europe, EVs accounted for about 1.9m (14.4%) of the 13.2m new cars sold in 2023. It is noteworthy that in January 2024, the European Automobile Manufacturers’ Association reported EV sales were up 28% on January 2023.

In the UK, the Government zero emission vehicle (ZEV) mandate became law and by 2030, 80% of all new car sales in the UK must be zero emission and by 2035, 100% of all new car sales must be zero emission. The ban on diesel engine cars was pushed back to 2035 bringing the UK into line with other EU nations.

Canada has the same requirements.

So, that’s it. Officially, after 2035, you won’t be able to buy a new petrol or diesel passenger car in an EU member state. There are sure to be one or two laggards (looking at you, Italy) but the die is well and truly cast. Note that the zero emission passenger vehicle ban does not mean only EVs can be sold – hydrogen cars are also zero emission.

What about charging facilities for those cars I hear you say.

The EU has announced that by 2035 all EU member states must comply with the Alternative Fuels Infrastructure Regulation which mandates that at least one fast charging station of at least 150 kW be installed every 60 kilometres along the trans-European transport network.

That explains why BP recently announced plans to install 10,000 public fast chargers across Europe and the UK. Shell, Total, Repsol and others have similar plans plus the street networks being installed by local authorities in addition to those in commercial shopping centres and other public car parks etc. There is now a headlong rush to install public chargers are every opportunity.

Which brings us to an interesting point – what will happen to all the petrol stations?

It is self-evident that service stations, as we know them today, must diversify because EVs are not re-charged like a petrol car is usually refilled. That is, EVs are recharged like your mobile phone – you leave your car on charge overnight as you do with your phone. As you drive around during the day you give the EV a top up charge, whilst at the shops for example, as opposed to filling your ICE car petrol tank with 500kms of fuel and then driving to near empty over a week or two and then re-filling the tank.

With that change of practice in mind, petrol resellers are preparing to transition their facilities into EV fast-charging locations and hydrogen fuel retailers. In addition, those facilities will have neighbourhood stores, cafes and restaurants, a place to work, online delivery centres, and even small-scale utilities with solar generation and battery storage. Although near inconceivable today, these sites intend to become a destination rather than merely a location for a hasty transaction.

Planning for these changes is well advanced and most of the major petrol resellers have glossy stylised drawings on their websites of how their locations will look and operate in the future. Those companies have no intention of rolling over and dying in the EV onslaught. Of course, petrol and diesel will continue to be retailed (albeit diminishing availability) to serve the millions of ‘legacy’ ICE vehicles on the road.

So, what of Australia? Well, we are almost a decade behind Europe and the USA. Our take-up of EVs is reasonably strong (at ~8%) but we lag well behind with public re-charging facility rollout. Various sources estimate 1.5 million EVs will be on Australian roads by 2030 requiring 150k+ public charging facilities. We have some catching up to do because by the end of this year, the total number of public charging stations will be less than 2,500 across the country. Several organisations (NRMA etc) and businesses (EVX, Jolt, Evie etc) have plans to roll out many thousands more, but the roll out programs look relatively weak compared to the numbers required and the time scale.

Recent Australian data suggests that 90% of EV charging occurs at home and the number of public charging facilities need only be 10% of the total number of EVs – but the data is only a snapshot and will prove insufficient in the future. With most EVs in Australia costing well over $50k, those vehicles are mainly purchased, at the moment, by those with stronger personal finances and who are almost certainly homeowners who can afford the cost of a home DC charger.

One aspect Australia shares with Europe and elsewhere is that millions of Australians live in apartments and/or rent their houses. Some apartment dwellers or renters may have access to standard AC electricity for charging their EV, but this re-charge method is painfully slow. To date, building owners or landlords are reluctant to install charging ports and of course there are issues of general safety, and most catastrophic, fire. Thus, as affordability, acceptance and market penetration of EVs increases, fast power top-ups via public charging stations will be vital.

Australia is also slowly mirroring the EU and elsewhere with EV purchase subsidies. Every Australian State offers some form of subsidy and even the Commonwealth has a modest scheme. Therefore, subject to limitations, some buyers should be able to claim a rebate worth a few thousand dollars off their new EV purchase.

Over time of course, it remains to be seen whether rebates will continue to be offered. Governments reason that Australians will effectively be forced to buy EVs because manufacturers will cease to offer ICE cars (or at least, much of a selection). For example, in 2035 you may go to your Toyota dealer and find 17 EVs and only two ICE vehicles on offer. The ICE vehicles will be very basic as Australia is small in terms of global new car sales and, as our cars are right hand drive (RHD being only 25% of the global market anyway), it will simply be too expensive to manufacturer cars that comply with our design rules for the very limited sales volume. One of those ICE design rules refers to vehicle exhaust emissions which are being tightened progressively from 2028.

It is almost certain that by the late 2030s (and maybe before), new ICE passenger vehicles will be unavailable in Australia. From that point, EVs will represent well over 1 million sales per year.

Thus, buyers will be compelled to buy an EV and from the government’s perspective, there is no reason to continue offering a subsidy when they don’t need to. Moreover, second-hand EVs will also be readily available. For the recalcitrants, the sting in the tail will be they can expect ICE cars to be subject to heavy registration and insurance surcharges and petrol will be more heavily taxed. It is even possible (probable?) that all ICE passenger vehicles will be unregistrable from about 2050 except for limited use such as motoring club displays and other special purposes.

Finally, where will all this electricity come from? With an ever increasing population and millions of EVs on our roads, will we have the infrastructure to support the electricity demand? This is a topic that has been discussed at length on the Cat without resolution although many have voiced very valid concerns.

A CSIRO report from 2021 for the Australian Energy Market Operator concluded that EV energy consumption would reach 120,000 gigawatt hours if, by the mid-2040s, Australia’s (forecast) 18 million passenger cars were all electric by that time. That EV milestone is not certain to be achieved but 85% EV take-up by 2045 is definitely possible and the government’s stated goal is 100% passenger EV fleet by 2050.

I can only guess (and it is a guess), that government foresee many millions of dwellings with rooftop solar systems and apartment buildings with those clear solar panel windows. Those private systems will feed into the grid to support thousands of windmills and vast solar arrays. I can’t imagine what they will cost.

As it stands, governments of all political persuasions are determined to continue the advance towards EVs. I expect ICE cars will be a diminishing sight on our roads over the next twenty years with very limited petrol/diesel fuel being available from 2045, or you may even need specific ‘approval’ to buy it. But there can be no doubt a cultural shift is underway. Over the coming years the switch to zero emission passenger cars is a given and if you’re an investor, I respectfully submit you should already be looking where to invest your money to take advantage of the change.