South Australia offered, but Tesla said “no” to Adelaide EV factory

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South Australia makes offer to Tesla to host electric vehicle manufacturing plant, but the world’s hottest brand for EV declined.

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It seems that South Australia has approached Tesla Motors about the possibility of establishing an electric vehicle manufacturing plant in the heart of Australia’s dying petrol car industry, but the California-based company politely declined.

Source: Tesla
Source: Tesla

 

Last week, RenewEconomy wondered if prime minister Malcolm Turnbull, an admirer of the Tesla Model S and who would like “innovation” to be his middle name, should offer Tesla a manufacturing base in Australia to help meet the unprecedented demand (325,000 and rising) for its new lower price Model 3 electric vehicle.

After all, we suggested, France had made a similar offer, proposing to Tesla that it set up shop in an about-to-be-closed nuclear plant, and Turnbull himself had admired Tesla’s ability to turn an industrial relic (an old General Motors factory) into its manufacturing base. And Australia has plenty of industrial relics.

It turns out the Jay Weatherill, the premier of South Australia – where much of Australia’s rapidly fading car manufacturing industry has been based – made such an offer during his own visit to the Tesla factory last month.

“I met with Tesla last month in San Francisco and have expressed that we would be supportive of them establishing a presence in South Australia,” Weatherill told RenewEconomy via a spokesman.

“The company have expressed that they have no intention of setting up operations in Australia at present.”

That’s a shame. South Australia, which is leading the country in its transformation from a fossil fuel grid to one based mostly around renewable energy, is looking for the industries of the future, where Weatherill rightly believes that the jobs and economic growth will be found. He will have to look elsewhere.

RenewEconomy asked Tesla if it was considering setting up shop in Australia and a spokesman said, no, they had no such intention at this time.

Geographic expansion is on the cards for Tesla, however, with founder and CEO Elon Musk talking of his desire to establish a European plant, which prompted the French offer.

Australia, it seems, will have to content itself with companies possibly supplying some parts to the global EV market, such as the Tritium electric vehicle charging stations, although it does have two companies building electric buses, with one receiving a big order for the Asia market.

Probably the biggest impediment to EV manufacturing in Australia is the size of the market. Less than 1,000 EVs were sold up to the end of 2014, although that number will have been boosted by sales of the Model S.

That makes Australia an expensive market. Both Nissan and GM will not bother trying to sell their latest EV models in Australia, even though the likes of Origin Energy says that Australia could lead the world in “solar-powered electric vehicles” by making use of its near 5GW of rooftop solar to help charge the EV batteries.

But as recent reports noted, Australia needs to make several key policy decisions to boost the EV market.

A starting point would be to introduce some sort of fuel efficiency standards (Australia has none). Other options would be to mandate fleet buyers to install EVs, encourage battery charging infrastructure, and to offer other incentives, such as exclusion from import duties, discounts for registration, and priority in parking and peak travel times.

 

 

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25 Comments
  1. Charles 4 years ago

    A query about the 3rd last paragraph – this news article (admittedly, barely a day old) says that Nissan will be selling their “new” Leaf in Australia – http://www.goauto.com.au/mellor/mellor.nsf/story2/4ECCC021CF699447CA257F950012D1F9

    • Miles Harding 4 years ago

      From what I’ve seen, Nissan may be ‘go’, but their dealers aren’t.

      It seems they hate EVs with a passion, which may be their own self-interest coming to the fore:
      Boring, expensive EVs are hard to sell and don’t provide much in the ways of after-sales income. These guys work on a commission basis, so why make life hard for yourself, if you can easily convince the tyre kicker to buy an optioned up SUV?

      The motoring press is hasn’t helped with their fixation on batteries and “raAAAnnge Anxxiety”, has something that any actual EV driver will tell you is not a problem if you use the vehicle within its mission capabilities. (*sigh*)

      • Ian 4 years ago

        I got range anxiety recently driving around the back blocks near Duea NP …in a petrol car getting low.
        Had it been electric i could have charged up on the PV system at my cousins place

        • nakedChimp 4 years ago

          hehehe

  2. David Pethick 4 years ago

    Giles, I know you didn’t write the report referenced but the last paragraph is a cracker. It describes several “starting points” to improve the uptake by consumers of EVs in Australia. Each of these options is nonsense.

    Why does Australia need fuel efficiency standards? Consumer self-interest has lead to lighter and smaller vehicles, hybrids, fuel-efficient engines, premium fuels etc. Is there any evidence that fuel efficiency standards would change the mix of vehicles on our roads? Does anyone honestly believe that the guy driving the Ford F150 is going to switch to a Nissan Leaf?

    Why do fleet buyers need a “mandate” to install (I assume you mean purchase) EVs? They are free to choose any vehicle that meets their needs. They already select vehicles that have a low lifetime cost of ownership. If EVs want to compete for the fleet buying market, this is the metric that is most important. With their low ongoing operation and maintenance costs then they are well positioned once the upfront cost comes down. Effectively, the report argues to subsidise Tesla by removing Toyota from the fleet buyers consideration.

    Battery charging infrastructure is relatively easy to have installed. There are few barriers, other than cost. There is ample space and access to infrastructure to allow charging stations in convenient locations. In fact, I can have one installed in my own home very easily. What further encouragement is needed?

    Electric vehicles are already exempt from fuel taxes, which flow into general revenue which is then used to fund important infrastructure such as roads. Excluding them from other taxes and duties applied to motor vehicles is a subsidy. It would be helpful if every time somebody argued in favour of government intervention they just said “more subsidies”, because that’s what it usually boils down to.

    Finally, why should EV’s be given priority access to parking and HOV lanes? Is it because their drivers are morally superior? Why don’t we offer the same incentive to people who volunteer their time to deliver meals to the elderly? Will the extra legislation and regulation necessary result in a single additional EV being sold.

    EVs will become the next drivetrain for small vehicles because (eventually) the total cost of ownership will fall below that of a vehicle powered exclusively by fossil fuels. EVs are great to drive and easy to maintain. There is no need for unnecessary laws and subsidies to encourage consumers to do what they do best – exercise choice.

    Dave P.

    • Petra Liverani 4 years ago

      Hi Dave,

      I agree with you on the ease of installing battery-charging infrastructure but not on the lack of need for EV subsidies.

      Norway, with a population of 5 million, has all the subsidies you could wish for and last month alone EV (including all types but significant number pure EV) sales were 4,684! http://ev-sales.blogspot.com.au/2016/04/norway-march-2016.html I see no reason to be coy about the phenomenon of a “subsidy”. Obviously, as is the case in Norway, a subsidy can be a fantastic mechanism to transition to something we need to transition to. EV subsidies only need be very short term and cost very little. In fact, long term they can cost less. The more we buy ICEs now, the more eventual wastage of those cars. Not only that, the transition will need to be stretched out for supply to meet demand so best to get onto creating the demand ASAP. For goodness’ sake – how hard is it to implement a few judicious subsidies for EVs? We’re very good at implementing unending subsidies for fossil fuels – this type of subsidy is simply corporate welfare. Norway will have a much smoother transition to EVs than we will.

      Apart from the common-sense factor of applying subsidies, shouldn’t we, a rich country, do our bit for climate change when we are one of the largest per-capita emitters … and not wait like babies for other countries to do the subsidy-applying required to bring the prices down?

      I think having our very own EV would do wonders. I’m sure Australians would feel very proud to have their own EV and would buy it as long as it was a good car.

      There’s a new indigenous renewables company, AllGrid Energy, which is making three impressive products: WattGrid 10, a gel-based on or off-grid battery system (the reason they give for making it gel-based is that it’s cheaper than lithium-ion and they believe both types will eventually be superseded so more sensible to go with gel-based for now), PortaGrid, a portable solar generator and BioGrid, a biogas generator. I really hope they do well.
      https://medium.com/future-crunch/renewing-the-land-with-the-help-of-technology-fa78ebe1ac22#.ibnuhoohg.

      • David Pethick 4 years ago

        Hi Petra

        I appreciate the time you spent on this response. If subsidies are small, temporary and targeted then they can obviously help a company to cross the chasm of the technology adoption life cycle.

        Far too often though, subsidies are huge. For example, the ludicrous solar bonus scheme in NSW with a payment to householders of $600/MWh, approximately 10x the value of this generation.

        Subsidies are rarely temporary, instead becoming entrenched within an industry as a substitute for a viable business model. For example, no wind farm would be built in Australia without the subsidy of renewable energy certificates (LGCs). Take away the subsidy and the entire industry, which has been operating in Australia for 30+ years, would fail immediately.

        Finally, rarely are subsidies well targeted. Many buyers of the Tesla Model S would purchase that particular vehicle regardless of the price. A subsidy like easy parking in the city for EVs can actually result in the unintended consequence of a second vehicle being purchased rather than public transport being utilised. Poorly targeted subsidies often lead to widespread rorting of the system, such as is happening in France with French taxpayers subsidising the purchase of EVs which are immediately exported to another part of Europe (including Norway!).

        I’m not against subsidies. I’m against the idea that all subsidies are good. Most are terrible.

        Finally, from a moral perspective, why on earth would we choose to spend taxpayers dollars subsidising a private car maker such as Tesla? There are, in my mind, a few more worthy causes. Please find below a link to my personal favourite…

        http://www.hollows.org/au/home

        Kind regards,

        Dave P.

        • Petra Liverani 4 years ago

          Hi Dave,

          Tesla doesn’t receive subsidies as a “private car maker” but as a producer of EVs (and only very recently in the business of car making) as do other producers of EVs. I don’t know much about car makers but haven’t there been massive bailouts of ICE makers who’ve been in the business for years?

          Tesla’s latest Model 3 actually could sell without a subsidy but in his launch speech, Elon Musk, thanked the buyers of the previous models for, in effect, funding the R&D of the Model 3. If the previous models had not had subsidies the funding ability would have been lower – Tesla used their subsidy probably more effectively than any subsidy ever. I really don’t think we should begrudge Tesla, a very recent entrant into the car industry making wonderful cars, for some well-used subsidies.

          EVs will not be subsidised forever – even for much longer – as it’s obvious they’re going to become cheaper to make than ICEs. Where you have to transition from one technology to another subsidies are generally called for – it’s just a matter of implementing them correctly. Obviously, you don’t want rorting of the system but that doesn’t invalidate having a subsidy, it just has to be implemented correctly.

          But let me ask you, Dave, do you think Norway’s doing the wrong thing by subsidising EVs which is pushing their EV fleet up measurably each day and Australia is doing the right thing by providing virtually none?

          • David Pethick 4 years ago

            Hi Petra

            Yes, I do think Norway is doing the wrong thing by subsidising EVs. Why is a large EV fleet an inherently good thing? Why is this goal more worthy of attracting government resources than other policy objectives?

            Assuming the goal is to reduce carbon emissions, then the EV needs to be judged against all other technologies that offer the same benefit (reduced carbon emissions).

            So, what subsidy would I pay to encourage an Australian car buyer to purchase a Tesla EV instead of a Ford Mondeo?

            Using a very generous price of $25 per tonne of CO2 emissions. That works out to be about $75 per year for the average vehicle per year, based on 15,000 km and 200 grams of CO2 emissions per km. Over a 15 year vehicle lifetime (once again, very generous) the carbon emissions avoided have an NPV of about $700 using a 7% discount rate. Hence, I’ll reduce the sales tax on the EV by about $700 at the time of sale.

            Of course, we’ll have to work out a way to ensure the car buyer always uses 100% renewable energy otherwise I’m paying for reduced carbon emissions that didn’t actually occur.

            If the objective is something other than reduced CO2 emissions then I’m happy to consider the societal benefit from having a large EV fleet. I’m just not sure what else it could be.

            Cheers.

            Dave P.

          • Petra Liverani 4 years ago

            I don’t think you can look at a subsidy based on one generation of a technology. In time you won’t need the subsidy – but you have to get the cars produced and sold to get the price down – that’s where you need the subsidy.

            There are other factors to consider. Although it’s outdated, we are continuing to use aged coal-powered plant to produce our electricity which we have an oversupply of. This means less push to renewables – if we electrified our transport that would create greater demand for electricity and help the push to renewables to supply it.

            We have ample renewable sources to meet our energy needs if we electrify but we have to import most of our oil. Our oil reserves are very low – http://www.theaustralian.com.au/opinion/weak-links-in-fuel-supply-chain-threaten-defence-capabilities/news-story/3b2daec35d196951bbbd21f860fa896c. Rather than waiting till our electricity supply is all renewable and justifying the delay on moving to EVs because the carbon emissions are no better than ICEs we need to move on all strands together – they all help push each other along.

          • Giles 4 years ago

            How about smog, other air-borne pollutants, and energy security. $25 carbon price “generous”. US EPA uses price of $US37/tonne for social cost of carbon, Stanford says this should be more like $US220.
            As for imposing standards. Why? For the same reason we set standards for other aspects of our life, and to meet a market failure that does not price damage caused by pollutants.

          • David Pethick 4 years ago

            Hi Giles

            The market also sets a price on carbon. It’s about 1 euro at the moment. But let’s take a look at what our friends in Norway are paying:

            “Norway typically pays €3-4 per credit for LDC-based CERs, according to Sigurd Klakeg, an official in Norway’s environment ministry. This is around eight-to-nine times higher than the secondary market price for CERs in Europe.”
            Source: http://carbon-pulse.com/18349/

            So, I think my $25 estimate was pretty generous.

            Do we have a problem in Australia with smog/SOX/NOX etc? If so, what’s the best way to deal with it? We have vehicle emission standards legislated and regulated. They seem to do a pretty good job of managing this particular problem.
            Source: https://infrastructure.gov.au/roads/environment/emission/

            I’m in favour of effective legislation. I’m in favour of effective subsidies. I’m 100% against defining every market outcome we don’t like as a “market failure” and therefore requiring intervention.

            If you like EVs, buy one. That’s how it’s meant to work…

            Dave P.

          • Giles 4 years ago

            You quote prices from markets which have failed because they have no ambition. The EU market price is that low because the scheme has pretty much met its target 5 years early, and has a huge overhang.
            Which is why Norway imposes a carbon tax of $US69 on some sects. Why don’t you quote the carbon price on UK electricity industry, 23stg, or around $45; or the Sweden carbon tax, which is $US168/tonne in 2014, or the French carbon tax which rises from 22 euros to 56 euros by 2020, and 100 euros by 2030, Brisitch columbia $C31; Denmark $US31. Finland 35 euros; ireland 20 euros, Mexico $US10-$US50 depending on sector, or SwitZerland $US68. That’s why governments and businesses have a “shadow” carbon price vastly higher than yours.

          • David Pethick 4 years ago

            We seem to have ventured into the territory of “what’s the right price for CO2 emissions reduction?”. That would be a long discussion….

            I’m happy to agree that every country is free to place any value they like on reduced carbon emissions. Some countries have high prices with a narrow base, others have low prices and a broad base. I’d argue that all countries have an obligation (to their citizens) to get the best “bang for buck” and pursue lowest cost reduction measures first.

            Cheers.

            Dave P.

          • Giles 4 years ago

            No we haven’t, we’re just challenging your assertion that $25 carbon price is very generous and therefor makes the EVs unjustified. I’m just pointing out that a carbon price of $25 is probably very cheap. The IMF suggests that fossil fuels benefit from implicit and direct subsidies of $5 trillion a year, including health impacts. If you so emphatically against subsidies, then get rid of that one and we won’t need counterbalancing subsidies for renewables and EVs.

          • David Pethick 4 years ago

            I’m against all inefficient use of taxpayers funds Giles. I’ll be happy to stand with you any day of the week and argue for the abolition of subsidies on the use of fossil fuels.

            What are the direct subsidies in Australia that encourage a purchaser of a light vehicle to favour a traditional (powered by an internal combustion engine) car instead of an EV?

            Let’s get rid of inefficient subsidies together…

            Cheers.

            Dave P.

          • Giles 4 years ago

            The nearly $1 billion offered to the three bid manufacturers to continue manufacturing in Australia, the absence of emissions standards which means australia becomes a dumping ground for vehicles with high emissions (often in same models), absence of any pricing of vehicle emissions and its impact on health. Yes, I’d imagine you’d rather we had a small government, if any at all, but then we’d be left victims of the market and the short term profit imperative.

        • Barri Mundee 4 years ago

          We would not be subsidising Tesla we would be subsidising the buyer, to encourage a much faster change over of technology than would otherwise occur.

    • nakedChimp 4 years ago

      Make subsidies fade out when they are put into existence.. no exception.
      Make them fight to reintroduce subsidies each time they run out.
      Make everything fight for it, never let it settle down.
      Never let it become a status quo.
      Never let them automatically tick over.

      Same with politics.. all those laws and stuff.
      I think that is what is causing stalemate in the end and causes all sorts of problems.
      There is no renewing mechanism built into anything in that area.
      I don’t have this thought through well yet, otherwise I would have more poignant words, but I think you get the basic idea.

  3. solarguy 4 years ago

    Lack of charging infrastructure is one obvious impediment to anyone considering an EV purchase when range is only 150-200kms on affordable models. For instance, if you were driving from Newcastle to Sydney, you would need to have a rapid charging point to get back. If the rapid charging points are there, then people will part with $45- 60k for an EV.
    No point spending that sort of money and being ham strung on range, because rapid charging points aren’t available. They must be there in the first instance, then EV sales will get better, perhaps a lot better.

    • Phil 4 years ago

      Yes second or city based cars that do less than 100km per day the obvious “First wave” of volume EV sales in Australia.

      E-Buses would be a standout for Australia. Especially on the Inner city routes.
      We are world class for the population density of our capital cities.

      I can’t believe that many of the Sydney buses are still diesel.
      Not much fun as a pedestrian at street level in peak hours.

      Sydney airport is looking at going 100% E-Bus.

      • solarguy 4 years ago

        That’s a good start for the airport. I’d like to see all buses go electric in the near future!

  4. Robert Comerford 4 years ago

    I’m sure Tesla made a wise commercial decision. We need to get off
    our butts and make a car for our needs. Judging from what I have
    observed over the last few years, the SUV seems to be the weapon of
    choice. A pity, as the pan that can have a sedan, ute, wagon or panel van body
    (using a commonality of parts) placed on top seemed to be the sensible choice for a small market.

    It would make sense that charging stations need to be rolled out so that electric cars can be attractive to a wider audience. But when has common sense been the determining factor ?

    However what we don’t need is a multiplicity of charging formats. The charge point should charge any electric car sold in Australia and be upgradable for faster charging capable cars that may come along in the future. How many more times do we need to be stuck with multiple formats to do the same job? Get it right at the start.

    • solarguy 4 years ago

      Your right, standardised plugs is the only way to go. Let’s see if the manufacture’s agree.

  5. Geoff Newport 3 years ago

    I think that Tesla need to look at this a little more seriously. The fact that in 12 months, all shipping car carriers will be coming to Australia fully loaded then returning empty surely is an opportunity for Tesla. We could hold manufacturing for the right hand drive market??
    And lets not forget the Australia is on track to host the world’s two biggest lithium mines as soaring sales of electric vehicles and mobile phones in China drives demand for the rare metal

    Read more: http://www.afr.com/business/mining/why-australia-will-be-at-centre-of-lithium-boom-20160803-gqkmjo#ixzz4e7LoI8tT

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