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ABC News
ABC News
Emilia Terzon

Volvo won't sell petrol cars here by 2026. Will the likes of Toyota and Ford follow their lead?

Automotive lobbyists are applauding Volvo's decision to stop selling petrol powered cars in Australia within four years, but say this sort of commitment will be tougher for brands that sell cheaper cars en masse.

The Swedish company's 2026 deadline shocked the local automotive industry and comes as the federal government attempts to pass legislation to bring down the cost of electric vehicles (EVs).

Federal Chamber of Automotive Industries (FCAI) chief executive Tony Weber told ABC News that Volvo's announcement to go all electric by 2026 was "wonderful".

"It supports the industry's position to have a CO2 target and a target that creates a floor rather than a ceiling," he said.

Many brands are now starting to sell so-called hybrid vehicles in Australia that use a combination of electric battery power and traditional petrol powered internal combustion engines (ICE).

However, few have committed to a specific deadline for selling only pure electric cars like Volvo.

“There is no long-term future for cars with an internal combustion engine," Volvo Australia's managing director Stephen Connor said.

"Instead of investing in a shrinking business, we choose to invest in the future, which is fully electric."

"I am very confident we can achieve this, and even go beyond to achieve our aspiration of selling 20,000 fully electric cars every year in Australia."

Volvo's commitment in Australia is even four years ahead of what the brand is pledging to do for the rest of the world.

It has seen it bumped up near the top of a list put out today by the environmental advocacy group, the Climate Council.

The list ranks around a dozen brands sold in Australia in terms of what the Climate Council believes have the best to worst policies on phasing out ICE vehicles. 

Polestar – a subsidiary of Volvo's global owner Geely – and Tesla topped the Climate Council's list.

Both brands are pure play electric car companies.

"Excitingly, you've got brands like Volvo moving up the pack quickly," the Climate Council's head of advocacy Dr Jennifer Rayner told ABC News.

ABC News contacted all of the other brands featured on the Climate Council's list and none supplied Australian-based commitments that match Volvo's.

Dr Rayner said brands that don't start setting firm commitments will start "getting lapped by the competition".

The latest report by the Electric Vehicle Council found EV sales jumped 65 per cent in 2022 in Australia.

However, that was off a low base, with EVs still only representing 3.4 per cent of all new cars sold in Australia.

"Australia has been slow out of the blocks," said EVC chief executive Behyad Jafari.

"But this announcement from Volvo shows we still have the potential to be a world leader in the transition to electric vehicles."

Will other car companies match Volvo?

Volvo specialises in the luxury end of the market.

According to new car sales data just released by the FCAI, Volvo did not have a model that made the top 20 sellers in October in Australia.

Tesla slipped down FCAI's sales list to have the 17th top seller in October – with just over 1,000 of its full electric Model Y sold in Australia that month.

Polestar did not make the list.

However, its fleet has started arriving in Australia with around 1,000 sold this year, including some brought here through a global partnership with rental car provider Hertz.

Hertz is also renting out Teslas in Australia.

"We haven't been able to secure as many vehicles in the Tesla range as we'd like. But that's work in progress," Hertz local market vice president Eoin MacNeill told ABC News.

"The demand is stronger than we actually anticipated in the early days (for EVs). I think the transition will go a lot faster than people realise.

"Announcements like Volvo saying only these (cars) by 2026 is a signal that the manufacturers have actually seen this and that's what they're going to do."

The MG ZS also ranked as the fifth highest seller in Australia in October, however it is unclear from the data how many of the 2,293 sold were the electric version of that model. 

FCAI's October top seller list does include many models by the likes of Ford and Toyota.

It also includes many utes and four wheel drive options favoured in more remote and regional locations, where infrastructure for EV charging is also lagging behind major capitals like Sydney or Melbourne.

FCAI's Mr Weber said research shows it is easier for car makers to switch to lower emission technology if they are "playing in the luxury end" of the market.

"Low emission technologies, especially battery technologies, are inherently expensive," he says.

"And that expense can be accommodated in a more expensive price badge than when it can be in a mainstream vehicle which are lower priced.

"To transition your entire fleet (to electric) within four years would be difficult unless you're already a long way down that path."

Again at the luxury end of the market, brands like Mercedes Benz are pledging to boost the number of EVs for sale here within just a few years.

Legislative action on the agenda

Volvo's commitment came as the federal government's legislation to bring down the cost of electric cars in Australia stalled in the Senate last week.

Price and limited supply are some of the most commonly cited reasons for lagging uptake of EVs in Australia.

Labor's election promise could make popular EV models, such as the Nissan Leaf, up to $2,000 cheaper for some individuals and $9,000 cheaper for employers who run fleets.

To get the electric vehicle bill through the Senate, Labor has to negotiate with the Greens and crossbenchers, because the Coalition is opposed to the bill.

However, Greens leader Adam Bandt and ACT Senator David Pocock are calling for plug-in hybrids to be removed from the legislation, because these vehicles still have internal combustion engines.

Labor argues plug-in hybrid cars will help ease "range anxiety" among some people in regional areas.

Many car companies are indeed already pledging to sell hybrid vehicles in Australia within years or are already doing this now.

For instance, Mazda told ABC News that it's goal is to have 100 per cent of its fleet with "some level of electrification" by 2030.

Toyota told ABC News that it will be offering an electrified powertrain across all of its models in Australia by 2030 – excluding performance cars.

"Australians have vastly different motoring needs, including varying passenger, cargo and towing capacity requirements," Toyota said in a statement.

"And significantly differing levels of access to infrastructure throughout urban, rural and remote Australia."

"Toyota is not limited to a single technical solution.

"Since Toyota first introduced the Prius in 2001, Australians continue to buy Toyota hybrid vehicles in record numbers."

It added that it is also investigating hydrogen-powered vehicles.

Hyundai said it couldn't put a commitment on when it would phase out ICE cars in Australia, and shared data with ABC News showing that electric and hybrid cars currently make up less than 4 per cent of its sales here.

In the year to date, Hyundai said it has sold more than 43,000 petrol vehicles and almost 17,500 vehicles that run on diesel.

Fewer than 2,300 of its sales were for hybrid or full electric.

"In Australia, when it comes to EVs, we're limited in terms of the scale impact we can make, because we have significant supply challenges – at least in the short term," a Hyundai spokesperson said.

"But that scale impact is not a function of our lack of willingness to get to zero emissions as quickly as we can.

"The Genesis luxury brand will be fully electrified by 2030 – globally and in Australia."

Meanwhile, the company that sell's Australia's top selling car said it'll bring at least five "electrified" vehicles to the Australian market by 2024.

"We’ll look at each vehicle through the lens of how each customer will benefit," Ford said in a statement. 

As well as the EV car discount, the Labor government is also canvassing fuel efficiency standards.

Energy Minister Chris Bowen has made it clear that he's a fan of introducing them, and released a discussion paper canvassing options in September.

Efficiency standards are put on the entire fleet of cars automotive manufacturers sell in a country.

The tougher they are, the more this encourages car-makers to sell additional electric or low-emissions options into a market, which should increase local supply and helping drive down the overall price.

ABC News has previously reported on this issue and has found that a lack of efficiency standards in Australia has seen allegations of the market becoming a last resort dumping ground for older ICE models.

'Difficult to get hold of stock' for Australia

Polestar's local head of communications Laurissa Mirabelli told ABC News that the emissions targets were a major factor behind supply constraints of the Swedish brand in the Australian market.

"We're competing with the UK for example which have already introduced a mandate to stop internal combustion engine vehicles being sold from 2030," she said.

"It does make it very difficult for us to get hold off the stock to bring into this market.

"We'd like to see the mandate come into play. We'd like to set our framework around all of that.

"It's fair to say that Polestar is committed to the Australian market. We've come here without any incentives in place, without a carbon scheme here.

"But we really need progress from the government to ensure that we can really get our hands on the stock that's required in order to meet the demand."

FCAI's Mr Weber believes this situation is more complicated than this, and that Australia's regional and remote populations make transitioning to fully electric more complicated than in densely populated parts of Europe.

However, he backed calls for policy change.

"Everything we can do to assist the (energy) transition, I believe should be done, if we are serious about addressing climate change."

You can watch the full version of this story on tonight's episode of The Business.

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