Australia EV sales seen at 50pc of new vehicles by 2035

Sales of electric vehicles (EVs) in Australia are forecast to reach 50pc of new vehicle sales by 2035 from the current 0.3pc, with such sales rising to 8pc by 2025 and 27pc by 2030 as prices fall and battery ranges increase.

Forecasts of battery prices are showing that battery cost per kWh is to more than halve by 2025 from $189/kWh to $72/kWh and to continue falling, said the Australian government's Bureau of Infrastructure, Transport and Regional Economics (BITRE) in a report.

Battery prices have fallen from around $290/kWh two years ago and from around $1,000/kWh earlier this decade. Battery costs have fallen by an average low 20pc/yr for the past few years.

Battery sizes and vehicle ranges are to more than double by 2025 from 60kWh at present to 154kWh before topping out, BITRE said.

"This means that the outlook is for a fairly constant battery price for EVs out to 2025 before the price starts to decline," BITRE said. The forecast price fall of EVs is expected to stimulate a lift in sales from 8pc of new vehicle sales in 2025 to 27pc in 2030.

EVs' share of global new sales is predicted to reach 18pc by 2025 and 36pc by 2030, said BITRE, which included a detailed study on the take-up of EVs in 22 countries.

The take-up of EVs is important for policy makers as more EVs in the total road transport fleet affect revenue from taxes, especially as those on fossil fuel such as excise taxes and carbon taxes, will drop.

"These taxes are currently used to fund a substantial part of the cost of road construction and maintenance, funding which will have to be replaced," BITRE said.

The faster the increase in the EV fleet, the faster the growth in demand on the

electricity supply and the more urgent the needs for system reconfiguration, it said. The faster the spread of EVs, the slower the increase in fossil fuel emissions from transport, it added.

The forecast take-up by BITRE is more or less in line with forecasts made by Australian resources firm BHP, which forecast under its "highest plausible" global EV penetration rates of new light vehicle sales have risen to 36pc in 2035 and 75pc by 2050.

The Australian coalition government has no policy to encourage EVs, with Australia having one of the lowest levels of EVs in its total vehicle fleet in the developed world.

The BITRE study did no analysis on the impact of crude or oil product consumption from a higher take-up of EVs. Australia consumes about 1.04mn b/d of products and imports around 1mn b/d of crude and products.