❖ AFV purchase price
The purchase price of an AFV normally is higher than a traditional petrol vehicle for its more advanced technology. This incremental cost for alternative powertrains is regarded as a significant drawback on AFV’s attractiveness. Consumers who are sensitive to vehicle price will be more reluctant to choose an AFV despite their possible fondness of the technology.
Purchase price is regarded as one of the most influential variables in AFV adoption. In Australia, the purchase price gap between AFVs and traditional powertrains has been reduced gradually. Especially for diesel powertrain, the price gap has been nearly eliminated or even reversed for some vehicle models (for example, Volkswagen Passat and Audi Q5). The price drop of diesel vehicles in Australia leads to increase in overall diesel vehicle performance and therefore higher possibilities of diesel powertrain getting selected by consumers.
Accordingly, the incremental price of HEVs also decreased gradually making the powertrain more accessible to general consumers. Take the most popular HEV model in Australia Toyota Camry Hybrid for example, the incremental price of the hybrid version has been deducted from 7000AUD in 2009 to 2300AUD in 20181. The relatively
significant price drop of this HEV model also secures its predominant place in Australian
HEV market. However, for most of the HEV models, the reduction in incremental price has been slow. The price gap between HEVs and petrol cars still exists and keeps impeding the adoption of the hybrid electric powertrain.
For the two more recent powertrains, the incremental price of EVs and PHEVs are still prominent. Combined with limited model variety and price range, the market shares of these two powertrains remained extremely low.
❖ AFV operating cost
Vehicle operating cost depends on multiple factors including the vehicles’ fuel efficiency, the fuel price, and the distance travelled. Unlike the other two factors, the fuel price is the only variable over which vehicle consumers as individuals have no control. For vehicle consumers, they can mindfully include fuel efficiency as one of their evaluation criteria while making purchase choices or consciously adjust their travel distance and driving habits to minimize the vehicle operating cost. However, they are not able to actively control the energy price of different powertrains as individual consumers. The fuel price is an objective factor to operating cost for consumers. It is also more straightforward for consumers to access when it comes to the overall cost of different vehicle powertrains. Therefore, instead of the operating cost, fuel price is chosen for the historical trend observation.
The comparison of petrol, diesel and LPG retail prices from 2000 to 2014 is presented in Figure 4-14. Retail fuel prices including taxes in Perth was chosen as one example to show the price differences between petrol, diesel and LPG2. Dash lines are used to show
the fuel price after converting to price per energy unit to standardize the energy density of petrol, diesel and LPG. When the energy density of petrol is set as 1 unit J/L, the energy
2Because Australian petrol and diesel prices are based on the Singapore fuel price AUSTRALIAN
INSTITUTE OF PETROLEUM. Australian Market Snapshot [Online]. Australian Institute of Petroluem. Available: http://www.aip.com.au/pricing/snapshot.htm [Accessed 23/12 2015]. and LPG price is based on the Saudi Aramco price AUSTRALIAN COMPETITION & CONSUMER COMMISSION 2012. Fuel facts: Automotive LPG ACCC: Australian Competition & Consumer Commission., the fuel price fluctuations in all major cities are consistent across Australia. Although the national retail prices of these fuels are not the same as retail prices in Perth, Perth fuel price can still be representative for fuel price fluctuations and price differences between different fuels.
density of diesel is 1.155 units J/L, and the energy density of LPG is 0.758 unit J/L (U.S. Department of Energy).
Figure 4-14 Historical fuel retail prices in Perth
In Figure 4-14, the prices of diesel and petrol fluctuated together. In general, diesel price is always slightly higher than petrol price. However, because diesel energy density is higher, the standardized diesel price turns out to be slightly cheaper when compared to petrol. The LPG price was about 50% cheaper of the petrol and diesel price. Even with energy density conversion, LPG price is still much cheaper than the other two. In recent years, LPG price has increased. The price gap between standardized LPG price and petrol price was shrinking, making the LPG fuel less attractive to consumers.
If adding AFV market shares to the figure, the link between fuel price and the AFV market shares can be observed. Figure 4-15, Figure 4-16, and Figure 4-17 present fuel price trends and the corresponding AFV market share changes. Petrol price is added as a dashed line as a reference for diesel and LPG prices.
0 50 100 150 200 250 Cents/Liter Petrol Price Diesel Price LPG Price
Diesel Standardized Price LPG Standardized Price
Figure 4-15 Petrol price trend and HEV market share
Figure 4-16 Diesel and petrol price trends and diesel vehicle market share
0 0.4 0.8 1.2 1.6 2 0 40 80 120 160 200 % Cents/Liter
HEV Market Share Petrol Price 0 4 8 12 16 20 0 40 80 120 160 200 % Cents/Liter
Diesel Vehicle Market Share Petrol Price
Figure 4-17 LPG and petrol price trends and LPG fuelled vehicle market share
The overall market shares for LPG fuelled vehicles, especially pure LPG vehicles dropped when the LPG price increased in Figure 4-17. In the early years of 2000s, the market shares of LPG fuelled vehicles increased slightly while the LPG prices dropped. Although LPG price decreased during that time, there was no significant changes in the relative differences between the prices of petrol and LPG fuel. After mid-2000s, the LPG price increases have reduced the relative advantages of LPG fuelled vehicles relative to petrol vehicles and thus the market shares of these powertrains decreased. However, for HEVs and diesel vehicles in Figure 4-15 and Figure 4-16, the links between their market shares and petrol or diesel fuel prices are insignificant to observe. Other factors such as the number of vehicle models, vehicle technology performance may be more influential than fuel prices.
In this section, electricity price and PHEV or EV are not included. The energy costs for one full charge of a pure EV are much less than refuelling a petrol vehicle tank from empty to full. The relative advantages of EV and PHEVs on operating costs are significant enough that it is reasonable to argue that fluctuations of electricity price will not notably change the advantages. However, for EVs and PHEVs, there are still serious challenges 0 1 2 3 4 5 6 0 50 100 150 200 250 300 % Cents/Liter
LPG Dual Fuel Vehicle Market Share Pure LPG Vehicle Market Share Petrol Price
such as long charging time and lack of refuelling facility in the operating phase, which will be discussed in later sections.
❖ Financial incentives
As concluded in Section 4.3.1, specific incentives for AFVs are limited in Australia. The only targeted incentives for AFVs are the LPG vehicle scheme that applied to LPG fuelled vehicles exclusively3. This policy setting provides a good opportunity to isolate the
influences of incentives and compare the adoption of AFV powertrains with and without incentives.
The LPG vehicle scheme, available from August 2006 to July 2014, was designed to encourage private vehicle owners to buy LPG powered vehicles or convert existing petrol or diesel vehicles into LPG dual fuel vehicles (Australian National Audit Office, 2009). The grant detail for LPG dual fuel vehicles and pure LPG vehicles are listed in Table 4-2. The first grant type can be only applied to consumers converting their already registered petrol or diesel vehicles to LPG operating system, which is not within the scope of this study. The second and third grant types are targeted to new LPG dual fuel or pure LPG vehicles.
3The Green Vehicles Stamp Duty Scheme in the state of Australian Capital Territory is another financial
incentive that can be applied to AFVs. This differential duty scheme for new vehicles provides an incentive for the purchase of lower operating emission vehicles and disincentive against the purchase of vehicles with higher operating emissions (ACT GOVERNMENT Duty payable upon registration or transfer of a motor vehicle. In: ACT GOVERNMENT (ed.) Transport Registration. Access Canberra.). However, this scheme is not designed specifically based on vehicle powertrains. Furthermore, the annual vehicle sales volume in ACT represents only 0.15% of the total Australian new vehicle sales (AUSTRALIAN BUREAU OF STATISTICS 2014. 9309.0 - Motor Vehicle Census, Australia. Australian Bureau of Statistics.). The small market share of this state means the majority of new vehicles sold in Australia are not under any financial incentives that favours AFV powertrains.
Table 4-2 Grants for LPG fuelled vehicles
Grant Type Grant Amount Date of Purchase
LPG Conversion of registered vehicles
$2000 From 14 August 2006 till 30 June 2009
$1750 From 1 July 2009 till 30 June 2010
$1500 From 1 July 2010 till 30 June 2011
$1250 From 1 July 2012 till 30 June 2012
$1000 From 1 July 2012 till 30 June 2014
LPG Dual Fuel Vehicles
$2000 From 14 August 2006 till 30 June 2014
Pure LPG Vehicles $1000 From 14 August 2006 till 9 November 2008
$2000 From 10 November 2008 and 30 June 2014
From 1 July 2011, the LPG vehicle scheme was capped at 25,000 eligible claims in each year. Up to 30 June 2015, there were a total of 3696 claims paid for the second and third grant types, while the claimed payment for the first type was 315, 828 cases (Australian Government Department of Industry, 2015). The LPG technology has moved from new LPG fuelled vehicles towards self-converted LPG operating systems after vehicle purchase. This could be one possible explanation for the LPG fuelled vehicle market shares shrinkage.
Incentives for LPG fuelled vehicles and LPG fuelled vehicle market shares are presented in Figure 4-18. The market shares of LPG dual fuel vehicles and LPG vehicles increased at the inception of the LPG vehicle scheme. However, after the initial market shares boost, the market shares kept dropping regardless of the incentive growth in 2008.
Figure 4-18 LPG vehicle scheme grants and LPG fuelled vehicles market share
Compared with other powertrains that are not entitled to any financial incentives, financial incentives for LPG fuelled vehicles did not significantly boost their market shares. Powertrains like diesel and hybrid electric vehicles surpassed LPG fuelled vehicles in market share when the financial incentives were effective. The incentives benefited their adoption for a short time but the influence was easily counteracted by other relevant factors, such as AFV model availability, AFV technological performance, and AFV driving experience.