A new report highlights the difference in sales of battery and hybrid vehicle uptake in the Northern Hemisphere compared with the Southern Hemisphere where countries like Australia are failing to adapt to change
The global deployment of Battery Electric Vehicles (BEVs) is geographically split: the passenger vehicle fleet in the Global North is rapidly decarbonising through deployments of zero tailpipe emission vehicles.
Conversely, new and used BEV sales volumes in the Global South remain at present insignificant. This is largely to be expected in the short-term, as most new vehicle sales are in developed countries; while the Global South continues to be predominantly an export destination for used internal combustion engine (ICE) vehicles from the Global North.
The new report by Carbon Tracker claims countries in the ‘Global South’ – regions outside Europe and North America – are at greater risk of receiving cars with worse emissions due to a lack of emissions standards targets.
It says “This state of affairs has reduced the Global South – where new vehicle sales are limited to companies operating in the region and wealthy private individuals – to a passive role in the overall automotive market, with limited accessibility to affordable vehicles.”
Approximately three million used vehicles are imported into the Global South annually after they have reached the end of their useful life in the Global North. Reliance on ICE vehicles is not economically benefitting the Global South and has:
- Transformed the region into a net importer of transport fuels (Figure 1), a significant
capital and foreign exchange outflow, despite the presence of sizable oil producing
nations in the Global South. For instance, Africa’s annual expenditure on transport fuels
equates to approximately $80bn or 2.5% of the continent’s GDP. The Global South is
expected to be a net importer of transport fuels beyond 2030. - With some exceptions, reduced the Global South to a mostly passive role in the
automotive sector, offering limited economic opportunities.
The report warns “There are significant barriers standing in the way of this opportunity, in part because car manufacturers who have been grounded in a fossil fuel-based transport system (and as they see new ICE sales decline in the North) may transfer their target markets for new ICE products to the South.”
African and Asian nations that import used cars from other wealthier countries are ending up with higher polluting vehicles while the Global North – he USA and Europe – see huge reductions in the negative emissions of its vehicles.
Australia – where coal is still the main source of electrical energy – is a developed country, with hige distances between major population centres, that is falling behind comparable nations and Drive.com.au highlights the country’s concerns where, unlike Europe, there is no plan to phase out internal combustion vehicle sales.
The online Drive.com.au review says: “The Australian Capital Territory is the only jurisdiction to announce its plans to ban the sale of new petrol and diesel passenger vehicles by 2035.
“Criticisms about Australia’s lack of an emissions target have circled for years, with then-boss of Volkswagen Australia, Michael Bartsch, saying in 2018 local showrooms could become a dumping ground for dirtier cars.
“While the Federal Government announced a plan to begin working on a motor vehicle emissions reduction scheme in April 2023 – largely through encouraging the uptake of electric cars – it is yet to implement any changes to legislation.
The announcement came on the same day that a report into new motor vehicle emissions in Australia found the car industry failed to meet its voluntary targets for the third year in a row.
The Carbon Tracker warns that there is a “risk of fossil fuel lock-in: Changes in the Global North Fleet will exacerbate Global South’s dependence on fossil fuels.” As the Global North fleet is gradually substituting ICE vehicles for BEVs (Figure 3), as policy, reducing costs (vehicle purchase price and operating costs), and changing consumer sentiment increases adoption of zero emission vehicles. The evolution of the Global North fleet will likely follow two phases, impacting the Global South:
- Short to mid-term: as the transition to BEVs gains momentum, the Global North could have a glut of used ICE vehicles for export to the Global South. This increasing supply will lower the equilibrium price of used ICE vehicles and increase the quantity of ICE vehicles demanded. This supply of used vehicles could lock the Global South into the path dependency of fossil fuels into perpetuity.
- Long term: the pool of vehicles available for export from the Global North to the Global South may dwindle. The proportion of ICE vehicles in the Global North fleet will decrease, replaced by a growing share of BEVs. Furthermore, Global North governmental policies promoting circularity/ recycling could restrict the supply of used electrified vehicles to the Global South market.
But the Carbon Tracker report believes they may be an opportunity for governments who recognise the risk of failing to act now:
For many countries in the Global South, there is trade deficit for refined petroleum products to meet demand for road transportation. As domestic oil refining capacity cannot meet fuel demands in many countries in the Global South, net fuel imports are likely to remain a significant expenditure and an on-going dependency.
The Global South net importers are a price-taker of transport fuels, with prices dictated by market factors outside of their control (global oil prices, OPEC, etc.).
“Eventually the ICE vehicle fleet in export destinations (in the Global North and Global South) for transport fuel net exporters of refined petroleum products will be substituted by BEVs. This is a significant risk for these transport fuel exporting nations and diversifying to opportunities in the Battery Electric Vehicle Value Chain is recommended as oil refining assets could quickly become economically stranded.
- The Global South can leapfrog to BEVs: BEVs lower barriers to entry for domestic manufacturing, for market and country participants, and opens other opportunities across the value chain. Electric vehicle technology has already progressed to a stage where the Global South can remove its dependency on fossil fuels and effectively leapfrog to BEVs.
- Taking advantage of BEV technology improvements now means Global South countries can reap financial/ economic rewards, as well as lower costs for consumers (vehicle purchase price and operating costs). Delaying the switch to BEVs would be detrimental to Global South countries and a missed opportunity that could be lost indefinitely if swift action is not taken.
- For the leapfrog to BEVs to occur (point 3) and for the Global South to benefit from the transition to zero emission mobility, first there needs to be a policy environment conducive to enable widespread adoption of BEVs. Policy actions include an emissions policy to phase out ICE vehicle sales, both new and used, alongside a comprehensive industrial strategy to facilitate involvement in the BEV value chain and infrastructure, including incentivisation of domestic BEV manufacturing and sales.
