According to figures from Australia’s Federal Chamber of Automotive Industries, 3.1% of all cars sold in 2022 were electric vehicles (EVs). Dominated by Tesla, this brand alone outsold such long-standing manufacturers as Honda, Volvo and Audi.
The uptake of EVs is destined to grow rapidly as cheaper models arrive and consumer demand rises. Australia still lags the rest of the world in EV purchase; last year nearly 17% of all new car sales[1] in the UK were EVs, and around 80% in Norway[2].
Local demand will be further underpinned by federal and state governments, who are actively promoting EV purchase through a range of rebates, tax discounts and registration benefits, as a key plank in moves to lower emissions, hit net zero targets and increase environmental awareness, although Victoria ended its $3000 subsidy for zero-emissions vehicle purchases on 30 June 2023.
The transport sector makes a significant contribution to Australia’s total emissions. Statistics released by the Department of Climate Change, Energy, the Environment and Water show that currently, the sector contributes around 19% of Australia’s emissions, of which passenger vehicles account for 10%.
The National Electric Vehicle Strategy, released this year, reveals that transport is projected to be Australia’s largest source of emissions by 2030. The report says:
“EVs powered by Australia’s abundant renewable energy resources will contribute to achieving our economy-wide emissions reduction target of 43% below 2005 levels by 2030 – and net zero emissions by 2050. Australia also has the capability and capacity to develop manufacturing opportunities to support EV supply, including in component parts and batteries.”
The strategy framework is not only designed to get more EVs on Australian roads but has a focus on what is needed to support the transition. One of its new initiatives is the development of a national mapping tool that underpins “optimal investment” in and deployment of EV charging stations. This builds on some already announced initiatives, partnerships and funding around the country supporting the expansion of charging infrastructure. Entrepreneurial organisations have a clear opportunity to take advantage of the growth, but can they get insurance?
Across Australia, insurers are busy and under resourced; this often leads to a default response from underwriters in offering capacity to a new or emerging risk – high minimum premium levels. Without a detailed understanding of the risks, insurers are reluctant to deploy capital into the sector (which would then help to lower premiums).
Insurers have significant concerns, not the least of which is being satisfied that what is being built operates on proven technology. Beyond that, they will look closely at such aspects as:
Organisations already operating, owning or seeking to develop EV charging stations need to address some crucial questions:
While there are some solutions currently applicable to EV charging stations, they are not fit for purpose. The values for charging stations vary greatly, depending on their configuration, so the right approach to deductibles and terms and conditions must reflect this. After considerable work to understand their particular risks and exposures WTW has been able to find bespoke solutions with experienced and secure markets to insure charging stations at competitive premiums.
Helping facilitate the development of this critical infrastructure is not only a way that insurers can grow their book of business but also to showcase their own sustainability journeys. As they review their own Environmental, Social and Governance commitments, they can take the opportunity to address an immediate need for innovative solutions to support the path to net zero.
Kishan has over 15 years insurance experience and has been at the forefront of some of the region’s largest construction and energy projects. Kishan is responsible for strategic growth for construction and natural resources across Australia and New Zealand. He works with clients offering his strategic expertise to manage risks during all phases of the project life cycle from Early Words, Construction to operational and eventually decommissioning.
