IIf you’ve been catching any headlines about Australia’s potential to re-energize local manufacturing and rise from the ashes like a phoenix to become a powerhouse producer of electric vehicles, chances are you’re getting a little excited. . I know I was.
The news first broke in February when a paper from the Australia Institute argued that our unique combination of mineral reserves, a highly skilled workforce and existing manufacturing sites meant Australia could start building EVs. Ideally placed.
The idea has been gathering steam ever since and recently exploded into the national psyche when federal Energy Minister Chris Bowen said at a global clean energy forum in Pittsburgh: “We can build electric vehicles in Australia. Not just me.” I think so, but so do electric vehicle manufacturers.
On this second point, it seems that Bowen is right. A few weeks ago, Australian Ruben Den Holm, the chair of Tesla’s board, told the National Press Club that Tesla sees many advantages in making cars in Australia. It won public support from Infrastructure Minister Catherine King and Queensland Premier Annastacia Palaszczak and then, shortly after, the federal government released a national EV strategy paper encouraging a return to local manufacturing. was listed as one of its five main goals.
It’s evocative stuff and with the five-year anniversary of Holden ceasing production just passed, it’s hard not to get caught up in the emotion of it all. Who wouldn’t want to see thousands of Australians back in jobs? And if given the choice to buy a Tesla made in China or Australia, I know which way I’ll jump. It is also hoped that manufacturing EVs locally will help bring down costs, help us grow EVs and reduce our dependence on global supply chains.
But can it really happen? Or is it just a well-intentioned pipe dream? Or worse, empty promises for political gain? Let’s look at obstacles with a level head.
First, none of this would be possible without government support. Australia Institute report author Dr Mark Dean said ABC “The amount of money we need to spend to get the industry going on its own is really just peanuts, I think… $5-10 billion to restart auto manufacturing in Australia seems like a small ask. Think…”
Even calculating the potential return on investment rebooting manufacturing might bring, I would politely suggest that seems like a big ask.
Then there is the issue of industrial policy. Dr Dean argued that if local manufacturing is to be brought back, strong political leadership is needed to develop “a comprehensive, integrated and strategic industry policy”. Given how long it’s taken to get anything resembling a national strategy on electric vehicles, give me some skepticism. Even Dr Dean admits Australia lacks the “political will” to harness its EV-building potential.
The idea of just firing Holden and Ford’s closed factories also has some holes. In addition to the fact that they have been decommissioned and decommissioned, the retooling of a plant that converted internal combustion cars into modern electric vehicles.
Paying thousands of Australians to staff these factories is another problem. Australia has one of the highest minimum wages in the world and, according to Ford’s analysis, the cost of making a car in Australia is about four times higher than in Asia and twice as expensive as in Europe. Robin den Holm countered this point by saying that Tesla makes cars in California, where it’s also expensive, but that’s like saying one case of COVID-19 is better than another. They are both evil.
And how many cars would an Australian factory need to produce to be globally competitive and viable for the export business? Hundreds of thousands, surely, if not more.
Can these barriers be overcome? Anything is possible with the right buzz and funding, but it’s hard to shake the feeling that a return to the halcyon days of Australian manufacturing is anything but a moonshot. There are too many moving parts, too many question marks and too much complexity to get everything aligned.
But maybe building cars from the ground up isn’t the answer. Reducing focus on component manufacturing or focusing on manufacturing and exporting batteries seems a more achievable goal. Reemerging as an EV-producing superpower, though? I give that one buckle.