$5m Budget spend to encourage Australian EV manufacturing

The Federal Government wants Australians to start manufacturing cars again – specifically electric cars.

Included in the 2020-2021 Federal Budget announced on Tuesday by Treasurer Josh Frydenberg, the Federal Government assigned $5 million to invest in the manufacturing of EVs.

Buried deep within the 290-page budget papers is mention of $5 million to go towards an Advanced Manufacturing Facility to be based in South Australia.

The facility is designed “to facilitate the manufacturing and assembly of electric vehicles, and for a bi-directional vehicle-to-grid trial in South Australia to examine the concept and operation of systems which support solar home charging, grid services and virtual storage infrastructure”, according to the Government.

Exactly how the Government plans to kickstart the manufacturing industry it turned its back on in the early 2010s with a measly $5 million investment is unknown.

If such a manufacturing facility was to hire people on the salary of the MPs who created it they’d have a staff of about 10 people.

To put that $5 million spend in perspective, the world’s largest producer of electric vehicles, Tesla, is investing around 4 billion Euros ($6.6 billion) in its new German manufacturing facility and spent something like US$5 billion ($7.1 billion) on its battery factory in Nevada.

And that’s before the design and engineering that can add many more billions to creating a vehicle.

The $5 million allocation from the Australian Government likely wouldn’t pay for the shovels to dig the dirt…

But the industry will no doubt see it as a positive that EVs are on the radar for the Federal Government – in a good way rather than being used as a political stunt.

Plus, the fast evolving electric car industry has plenty of small players, some of which are remarkably efficient at creating viable business cases from modest budgets. The tiny Croatian technology company and car maker Rimac is one example.

And Australia’s once vibrant and innovative car industry was known for doing plenty on small budgets.

Adelaide-based startup ACE-EV is planning a range of low-volume EVs, with many of the major components sourced from China. Even so, it’s planning a $295 million Australian manufacturing facility and a $20 million research and development facility.

• 

• 

Ambitious newcomer H2X also wants to play with the big boys with its planned hydrogen vehicles.

The $257 billion budget cash splash designed to revive the flagging Australian economy focused on jobs and tax cuts.

But electric cars and EV infrastructure had several other mentions in a document that projects a decade-long recovery to heal the economic scars of the Covid-19 pandemic.

The Government has also set aside $74.5 million between 2020 and 2025 to create a Future Fuels Fund.

The Fund is partially designed to encourage the uptake of “new vehicle technologies” such as plug-in hybrid (PHEV), battery electric vehicles (BEV) and fuel cell electric vehicles (FCEV).

That $74.5 million – about $18.6 million annually over four years – is also to enable businesses to “perform integration analysis and develop improved information on electric vehicles and charging infrastructure”.

That could include new charging systems or integration within electricity networks to help spread the electricity load or utilise EVs as a power source for businesses.

While miniscule in the scheme of the monster $213 billion budget deficit, the investment in electric vehicles and the infrastructure that surrounds them is a step forward compared with Australia’s long-running hands-off stance regarding electrification.

The Government has also allocated $2 million “for enhanced monitoring and analysis of voluntary vehicle recalls in Australia, including a strategic analysis of vehicle airbag safety”.

Clearly in response to the Takata airbag recall – the first mandatory vehicle recall in Australia – the small investment appears to be about ensuring car makers meet the strict compliance measures surrounding the world’s biggest ever recall.

Update: Investigations by EV Central have revealed the recipient of the $5 million government grant is ACE EV. Click here to read the full story.