Call for used grey imports to boost EV sales

Australia should pump-prime sales of electric vehicles by grey importing used EVs, according to a new report prepared with funding from the federal government’s renewable energy agency, ARENA.

Compiled by the EV lobby group Evenergi, the report is part of ARENA’s ‘Knowledge Bank’ series.

It says an opportunity exists for the import of used electrified passenger vehicles into Australia from fellow right-hand drive markets Japan and the UK, where EVs have sold in volume for some years.

It cites the Nissan LEAF and Renault ZOE battery electric vehicles and Toyota Prius and Volkswagen Golf GTE plug-in hybrids as candidates for local sale as grey imports.

“The establishment of a viable market for the importation of used electric vehicles represents a significant business opportunity, and is one of the most important ways that the adoption of electric vehicles can be accelerated in Australia,” the report stated

“In the absence of significant legislative and regulatory change in the short term, there is a clear opportunity over the next two-three years to create an opportunity for a ‘player’ to enter the Australian market at scale to establish themselves in the long term value chain.”

Not including Tesla, which doesn’t report to VFACTS, sales of plug-in vehicles (EVs and PHEVs) are up more than 18 per cent in a dramatically reduced Australian auto market in 2020. However, those 1516 sales to the end of June are still only a tiny 0.34 per cent share of the total.

A key impediment to growth is the price of new EVs, which start at best just under $50,000 in Australia and are usually much higher in price. A flow of used EVs would offer potential buyers a cheaper option.

Unsurprisingly, the concept of an EV grey market is not being received with much enthusiasm within the Australian automotive distribution and retailing network, which fought off a push to deregulate personal vehicle importation in 2017.

“We hope that report remains just that and simply gets presented to ARENA and that’s it,” said Australian Automotive Dealer Association (AADA) chief executive James Voortman.

The report used motoring body NRMA as an example of an organisation well positioned to become an EV importer.

“It has the complementary products required to fully articulate the revenue opportunities, and to lend the credibility needed to ensure the initiative is a success.

“Alternatively aggressive and well capitalised start-ups or existing importing incumbents could capitalise on the opportunity.”

The business model the report advocates is for the import of a small number of EVs for test driving, while vehicles are purchased sight unseen overseas and then imported for delivery.

The local sales company would provide warranties and post-sales support, the report explains.

“The supply and diversity of electric vehicles is growing globally and as such a reliable and cost-effective supply can be established. With a strong brand and streamlined process, initial estimates are that a business with strong margins can be established and scaled quickly with little capital,” the report says.

“Work by Evenergi and NRMA has demonstrated that there is significant and growing demand from a range of buyers for electric vehicles that cannot be satisfied by the current electric vehicle supply – primarily due to price or availability.”

The report recommends using the updated Specialist and Enthusiast Vehicles Scheme (SEVS) as the conduit for the import of EVs.

An ‘environmental criterion’ lists ‘environmental performance vehicles’ such as hybrids and EVs as eligible for SEVS. That is the avenue through which the ARENA report says grey imports can be facilitated. Significantly, any cap on import numbers has been removed.

The new interpretation of SEVS is part of the Road Vehicle Standards Act that was due to become law in 2019. But its introduction has been backdated to 2021 and, for now, the federal department of infrastructure is managing an interim version of the scheme.

The report called on the federal government to clear any legislative impediments and give dispensation to a large-scale grey EV import program.

Voortman told carsales that was not what SEVS was designed for.

“The specialist and enthusiast scheme should be used just for that … it should not be used as a backdoor to bring in volume imports,” he said.

He also warned second-hand EV grey market posed many risks for consumers.

“Consumers will lose out with these cars. They won’t be covered by manufacturer warranty. It’s almost going to be impossible for buyers of those cars to enforce any Australian consumer rights.

“Recalls are a concern. That Takata airbag recall included some grey imports and you would think that would be enough reason for any government to walk away from any scheme that looks at used cars.

“Then there’s the battery issues; what’s the health of the battery coming in? They won’t have the warranty other electric vehicles have both new and used when they get passed on.”