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The rise and fall of the plug-in hybrid – exploring the evolving landscape of electric vehicle charging.

The electric vehicle landscape in Australia has evolved since its development in the early 2010’s. The early landscape was marked by the introduction of plug-in hybrid electric vehicles (PHEV), which were viewed as a cleaner alternative to traditional internal combustion engine vehicles (ICEV).

At this time, the adoption of battery electric vehicles (BEVs) faced barriers such as range anxiety and charging infrastructure availability. PHEVs were perceived to circumvent these challenges. The ready availability of PHEVs and green marketing saw strong initial sales of PHEVs compared to BEVs.

In 2018, PHEVs and BEVs shared an equal 50% of EV sales in Australia . However, since then, there has been a noticeable shift in the EV landscape, with BEVs taking the lead. As of May 2023, PHEVs accounted for only 8% total EV sales in Australia, with just 2006 units sold this year to date. In contrast BEVs dominated the market, comprising an overwhelming 92% of EV sales.

This shift towards BEVs can be attributed to improvements in battery technology to improve range and accelerate charging times. Additionally, the increasing range of models and lower prices have further contributed to BEVs’ popularity. On the other hand, PHEVs have faced uncertainties in recent years, related to doubts about their environmental performance, potentially impacting their market appeal and resulting in a reduced share of the EV market.

Plug-in hybrid emissions in real-world driving conditions

In recent years, several studies have suggested that PHEVs are significantly less environmentally friendly than previously believed. Reports from The European Federation for Transport and Environment (E&T) found that in real-world driving conditions, PHEVs only reduce automotive emissions by a quarter (26%), whereas BEVs slash emissions by more than two-thirds 69%.

This finding reveals the limitations of PHEV technology, suggesting that consumers may not be getting the financial and emission savings they anticipated.

Life cycle emissions of PHEV

A 2022 study by The Renewable and Sustainable Energy Reviews has investigated the life cycle emissions of ICEV, PHEV and BEVs. This measure extending beyond just operational emissions to encompass the entire life cycle, including manufacturing and disposal.

The study found that petrol and diesel ICEVs (marked blue and orange) have significantly higher life cycle emissions than other types of cars. On the other hand, BEVs charged on renewables (marked purple) are shown to have the lowest life cycle emissions.

Interestingly, PHEVs charged from non-renewable resources (marked yellow and light green) were found to surpass the life cycle emissions of the least polluting ICEVs. This insight highlighting a critical limitation in the perceived environmental benefits of PHEVs.


Classification of Plug-in hybrids as an electric vehicle

The classification of PHEVs as electric vehicles is a subject of ongoing debate for the government, in terms of whether PHEVs should qualify for tax incentives under Labor’s EV policy. The outcome of this debate therefore having significant implications for stakeholders – which would make them cheaper for employers when included in a salary package for an employee — and exclude EVs from import tariffs, which would slash the retail price for consumers.

In 2022, Greens and independent senator David Pocock argued against classifying PHEVs as EVs, pointing out that half the kilometres travelled by PHEVs use the petrol engine rather than the battery. This led to amendments that limit government support for PHEVs, including the legislation that will come into effect in 2025, which will see PHEVs no longer be exempt from the fringe benefits tax.

Where studies reveal the limitations of PHEV technology and the real-world discrepancies with advertised emissions, it is expected that PHEV subsidies will be increasingly withdrawn.

However, some car manufacturers disagree with this viewpoint. Those heavily invested in PHEV technology argue that in countries like Australia, where electricity is predominantly sourced from burning coal, PHEVs may have lower emissions than BEVs, which consume more electricity.

The future of PHEVs in Australia

The planned introduction of the fuel efficiency standards by the Government will significantly influence the direction of PHEVs in Australia. Whilst no specific details have yet been finalised, the Federal Government expects to release a draft by the end of the year.

Under fuel efficiency standards, car manufacturers will be required to meet a set figure of carbon emissions for all new vehicles. Fuel efficiency standards incentivise the production of lower or zero-emission vehicles to meet set figures and avoid financial penalty.

If the official assessment of PHEV emissions in Australia is lower than in other markets with fuel efficiency standards, manufacturers will be incentivised to sell more PHEVs in Australia. This could lead to an influx of relatively cheap PHEVs into the market, a similar trend seen in China.

Ultimately, car buyers have the final say in shaping the market. The acceleration of BEV’s popularity reflects that range anxiety, which once pushed some buyers away from BEVs and towards PHEVs, is becoming a thing of the past.

As the automotive industry continues to evolve, the landscape for electrified vehicles may undergo significant changes, impacting the market share of PHEVs in the country.


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