The next session, An Industry in Motion, will be chaired by Tim Washington, the chair of the Electric Vehicle Council. The last time I saw Tim was about a year ago in Parliament House when we were all involved in a Parliamentary Friends of Climate Action briefing, where we had to scrape together a few MPs in order to talk about electric vehicles and clean transport, and a year later now, we have to knock people back from getting into the room. Things have certainly changed. With that, I’ll pass it over to Tim to chair the next session.
Thanks, [inaudible 00:00:35]. Hello, everyone. It’s an absolute honor to be in this room. I still was telling a few people today I still remember the days when they had a number of people in this room and I were on a phone saying, “Hey, we should start this EV Council thing because we think the EV industry is probably going to need a body to represent it,” and I don’t know, it feels like my life’s flashed before my eyes and, all of a sudden, we’re in a room with the industry, and it’s just amazing, so thank you, all of you, for being here. Couldn’t have imagined it several years ago, to be honest.
So I think Jane’s just getting mic’d up. So I’d like to welcome a really great panel today, so feel free to come up. So Jane Hunter is the CEO of Tritium. Tritium’s a world-leading designer and OEM of DC fast chargers for electric vehicles. You will have seen their charging stations everywhere, and they’ve recently listed on the NASDAQ. Also joined by Benjamin Ward, who’s the managing director of Supercheap Auto. I’m sure all of you are familiar with Supercheap Auto. Tony Fairweather, who’s the president and founder of SEA Electric, which is an Australian automotive technology company specializing in electrifying commercial and heavy transport. And we’re also joined by Kylea Tink, who’s the member for North Sydney.
All right, so today’s panel session is going to be centered around industry. We’ve heard a lot about our policy direction in relation to sustainability and consumer choice, but I think one of the things that’s been alluded to a lot, but it’s great to have a panel session on it, is what kind of industry are we going to create as part of the transition. So maybe, Tony, if I start with you? As someone who’s founded a business in the EV space in Australia, how have you found the journey so far? Can you compare those experiences to your recent experience in the US?
Yeah, thanks, Tim. Great to be here, also to be back in Australia, and it’s fantastic to see this sort of activity in the EV space. Much like Tim in JET Charge 10 years ago, we’re kind of 10 years overnight successes, and the first seven or eight years of that have been fairly challenging for all to the point where… Bit of background, we developed some electric commercial vehicle power system technology in Melbourne as it started that, around 10 years ago, focused specifically on the delivery and distribution vehicle segment of the automotive space, a segment that really hasn’t been spoken about much today but it’s a segment that is really well suited to electrification for a range of reasons, duty cycle works, there’s plenty of dwell time at night for onboard AC charging, very minimal and fixed routes and the likes, and the economics kind of make sense.
Started that journey in Australia the first seven years, and I was talking to Jane about it just before. We really struggled to get support, both government, state and federal, but we just couldn’t fund the business. We raised about 15 million, I think, in that first seven years, and there came point. It was actually a catalyst, defining moment when one of the big four banks that we had a very small trade finance facility, with $500,000 for funding components, and it was the same week that Michaelia Cash told everyone in Australia that tradies wouldn’t buy electric vehicles and they came, knocked on our door and said, “Hey, we don’t believe in electric commercial vehicles,” and pulled that trade finance facility.
So it wasn’t just about chasing the opportunities that were in the US. It was, quite frankly, about saving the business and surviving, and it’s been fantastic. I would’ve loved to be able to do it from here, but for the last three years, we’ve raised more than a $100 million, we’re just closing on another 150 million now, we’ve still got our Australian business, our team down the back’s doing an exceptional job there, and huge opportunities in that delivery and distribution vehicle space, so hoping to see opportunities that the ministers spoke about before with zero tariffs for imported electric vehicles. It’d be great to have that for the batteries, the motors, and the SKDs that we’ve got coming in, and Glen and Bill down the back, they’re producing literally hundreds of those at the moment for distribution around Australia. Forecast to build about three and a half thousand trucks next year. That is very well suited to the electrification industry. So I’ll stop there, 30,000-foot view, but it’s great to be here. Really excited.
That’s great. And Kylea, I mean, the story of Australian businesses who’ve had to go overseas to find success is a familiar one. What goes through your head when you hear stuff like that?
Oh, it just reiterates for me why I’m here, to tell you the truth. So I don’t come from a political background. I’ve spent 35 years building businesses, running teams, working in the not-for-profit space, and I confess, it was very much a combination for me of frustration but also eternal hope. That kind of led me to say yes when a community asked me if I would run for federal politics. Because I think fundamentally, what’s been missing in the political system here in Australia for the last decade, at least, has been any sort of common sense and any sort of commitment to progress. Sorry. But I mean, your story is heartbreaking and, I mean, you do hear it so frequently here in Australia. We are a nation of innovators, of thinkers and doers. But if the legislative environment isn’t set to support you in realizing that, of course you have nowhere else to go.
I think for me, the reason I’m so intrigued by this panel today and so keen to hear from you all is that I also get the sense, though, that it’s fine for the minister to come in this morning and make the announcements that he did, and I am very pleased to have heard those announcements. I can tell you that positioning’s changed in the space of eight weeks, but it’s great to see that it’s moving. What I would say is that we don’t have, though, another three to five years to kick this around. It is time for us to move now because the market opportunities that exist now are closing rapidly around us, and if we don’t do it, Indonesia will, Thailand will, Vietnam will. There’s a thousand other locations that want this. It’s time, I think, as a nation we stepped into our own potential and decided that we do want to be world leaders in this space, and I don’t think we need a lot of consultation around that to say, “Yes, let’s do it.” It’s a bit of a GSD kind of philosophy, get shit done.
Yep, absolutely. You’re welcome to say the second word here as well. I mean, I guess talking about world leaders, Jane, Tritium has become a world leader in DC charging manufacturing, being an Australian business. You’ve joined the EV industry from another world leader, being Boeing, and you’ve had experience internationally. What do you think, coming into the EV sector, some of the things that we can learn from more mature industries? Similarly, I’d love to hear your experiences about the international stage compared to what it’s like in Australia as well.
Yeah, and it’s a very different journey for Tritium than Tony’s journey, and Tritium is probably something of a textbook case of a startup where we had some seed funding from the government, the Queensland’s Business Development Fund, which was matched public-private funding, which is exactly how you want to do it. The private investment, you are later able to buy the state out. And then we had other Australian high-net-worth individual investors, Varley, who I think is in the room somewhere. Kara, raise your hand if you’re here. They’re an Australian engineering company, 100 years old, they were an investor, and then, eventually, an institutional investor from the United States. And from there, when I came into the company, they were already in place. At that stage, they were looking to mature the company to raise capital, to keep the market share that we gained.
So at that point, Tritium had number two global market share in DC fast charging. So we had the tiger by the tail. We need to keep it as the industry as you know it hit the tipping point, Tim, at the end of 2019, start of 2020, and so we needed capital to scale, and what we managed to do was list on the NASDAQ but keep it as an Australian company. So we’re an Australian company listed on the NASDAQ, with majority Australian directors and majority Australian shareholders, which is a lovely story but a very unusual story.
And we’re an exporter. So we export over 90% of our product. Last year, we made an even amount of revenue from North America and from Europe. We made 14% from the Asia-Pacific region. So these are the stories that you want to create in Australia, which is homegrown industry with homegrown IP, but not selling it to move the whole business offshore, because we actually bring in Euro and USD into Australia, which is just a great story.
Absolutely. I agree. And maybe, Benjamin, I’ll move to you. As a retailer specializing in auto parts and accessories, where do you see Supercheap Auto as playing the EV space? Do you view it as another major business opportunity or is it something more than that for you?
I think it’s absolutely more, Tim. We see it not an opportunity but as a responsibility and a responsibility to our customers. As they are looking to choose EVs, we want to support them on that journey of EVs. And we’ve talked today about probably three main issues facing EV uptake within Australia, the affordability, the supply issues, the range anxiety, and there’s probably a fourth one for us, which is the availability of products and services to suit the customer over the lifespan of the product.
And we’ve probably got a… Well, we find it a little bit hard to help with the affordability and the supply issues, being Supercheap Auto, but the range anxiety, we actually see an opportunity and a role for us to play in. We’ve got 329 stores all states and territories in Australia, North Island, South Island of New Zealand, rural and regional areas, and so we are looking for opportunities to partner on assisting the EV highway and facilitate charging networks through our car parks. So we’re looking for that opportunity. We’ve had Tesla charging station in our Penrith source since 2017. We’ve got work to do to look at rolling that out much further.
But probably the biggest area that Supercheap Auto can support is the products and services we sell. So the average age of the car park in Australia is now 10.7 years and growing, and as a customer purchases an EV, they want assurance that, well, they can come and get products when they purchase it, whether it’s a car seat cover or a mom’s taxi sticker, but as they go through the ownership of that vehicle, they want a surety that they can get windscreen wipers replacement within that warranty period as it comes out of the dealer network, which is usually about three years. We’ve got a good another seven years then where they’ll be looking for replacement parts, and so we’ve already started ranging EV charging cables all the way through to brake pads for EV vehicles to make sure that the customer can actually have a surety they’ll have parts available and service opportunities for the lifespan of the vehicle and keep that maintained fully.
It is really interesting, isn’t it, that as we move towards electric transport and you can charge up anywhere there’s electricity, where they buy their windscreen wipers and their L-plate, they can also charge up their car and fuel up their car? It’s just a crazy world we’re living, but it’s really interesting.
So Tony, if I move back to you, you started in Australia, you still manufacture in Australia, you also got operations in the US. I mean, if you look forward, say 5 to 10 years, what are some of the opportunities, I guess, for industry? I guess, in particular, manufacturing, do you see in Australia, if we accelerate our policy development, do you see an industry building here?
Yeah, 100%. So I think as much as Australia’s been very late to move, I think, from what I’m hearing today, the opportunity to move very quickly and catch up with the rest of the world is absolutely there. One of the reasons we were able to raise capital so easily in the US was not just because we had really good technology, and we do, we’ve got really unique proprietary technology, it’s been developed in Australia, it’s Australian software, IP sits here, and it’s been really well received in the US, but it’s because the industry that we targeted, the delivery distribution vehicle industry, has fantastic regulations, incentives, and structures to scale. The US has recognized the absolute benefit from electrifying delivery and distribution vehicles, and what we’re talking about there is FedEx, Amazon, UPS, and, in the case here, Woolworths, Toll, and Australia Post, those sort of vehicles.
There’s generally somewhere between 5 and 20 times the emissions for a diesel delivery vehicle in comparison to a passenger car vehicle in terms of savings. So the opportunity, because it works, if the incentives and the regulatory structure is in place, the opportunity to electrify the 30-odd thousand units a year that are in that space, and there’s another 200,000 in the light commercial vehicle space per annum, all of which are generally diesel, the opportunity to do that, transition here, and have very substantial manufacturing and assembly operations here is large. And it really is assembly. We don’t make our own trucks or vans. We work with the OEMs, the manufacturers, and the manufacturers want to work well with us because they quite simply don’t have the technology and they’ve still got a long way to go with ramping down their engine manufacturing, changing their full dealership models. Most of their profits come from servicing and supporting diesel engines, so to make that transition for them internally is difficult. We’re really lucky. We’ve got something that makes that happen.
And there’s been one particular rule in the US called the Advanced Clean Truck rule, which has underpinned everything that’s been done in this space and effectively mandates a certain percentage of this segment, commercial vehicles, being electrified and sold as new vehicles. And it’s been done on a state basis. It was led by California, of course, but picked up by 14 other states. It mandates, starting in 2024, that 7% of trucks need to be zero-emission to be allowed to be sold in California and those 14 other states, which are all blue states and makes up about 50% of the market over there, and then it goes to 9% the next year and up to 75% by 2035. It’s a bit of a big stick approach, but it’s actually worked with the OEMs. It’s driven their activity, it’s made them come and find technology companies like us, and then there’s been incentives and the likes that have been built around that and other regulatory framework to make that happen.
Now, that starts in 2024. I’d highly recommend that that gets looked at as a similar structure from here. We could just emulate that from the US. And it’s had a huge effect. The uptake of zero-emission delivery vehicles is substantial. So something like that comes into play here, with some incentives to help the end customers uptake. The opportunity to employ thousands of people in this industry alone, in this industry alone. Glen and the team in Melbourne have 75 or 100 people at the moment, but if we start producing thousands of vehicles rather than hundreds, that could go through the roof very, very quickly.
Sure. And Jane, do you feel the same way? You’ve got a manufacturing facility in Brisbane at the moment. If we saw the kind of policy outcomes that Tony was talking about, do you think that we could potentially expand the manufacturing facility opportunities in Australia?
Look, I absolutely do. Australia can do value-add manufacturing. I think Robin might have mentioned that before, which is we can’t make basic commodities. We can make things that you add IP and complex technology to, and they need to be things that add enough profit margin that we can then export them and make the business case on that basis, and that means we can do EVs, as Robin said, because they’re becoming software on wheels as well, and we do software very well, that’s an intangible that we can export. We can do batteries. As was mentioned before, we’ve got the rare earths and the minerals. We can also do some of the complex components, not the simple components. So I do worry a little when I hear some of the discussions about us onshoring component manufacturer. The components that we can do are the components like liquid-cooled cables, which are still coming up the technology readiness path, AC to DC modules, DC to DC modules, where you’re adding significant IP, not bare board PCBs that come out of a foundry, and those things, we have a huge amount to play in.
And the other thing that I’ve seen which it translates from the aerospace industry, because as you mentioned, I came from Boeing, building drones and building unmanned underwater vehicles and the mission systems that drive them, and that sense of technology is that there’s a very excellent base here of STEM graduates, both software engineers, systems engineers, electronics engineers, and they’re world class and they can build world-class products. We have world-class universities, so we need to take advantage of that, build the IP and the technology, and then make that jump, which, again, I think Robin touched on, which is keep it onshore, because we keep sending the raw commodities overseas for somebody else to get all of the benefits of the skills and jobs that come with manufacture.
But Tritium, again, and I don’t mean to skite, but it’s a good example of how you can manufacture successfully here because of the fact that the way that we run is labor is less than 10% of our components, so the cost of goods is mainly your parts, which get brought in, and they’ll have to be brought in wherever you are. And then there’s a very small amount of labor and there’s also almost no energy costs because we have a region energy system, so the energy we pull in, we recycle and we just have almost no energy costs.
So we’re low in labor, low in energy, which means Australia’s quite a good place to manufacture. Why have we opened our world’s largest factory in Tennessee, which opens next week and is going to be able to do 30,000 fast charges? The Brisbane one does 5,000 fast charges, so it’s exponentially larger. It’s because the President Biden’s legislation. So the NEVI legislation, the Inflation Reduction Act, the combination of that with Made in America and Buy America is incredibly attractive to business to build onshore and it will be for EV car manufacturers, battery manufacturers, EV charger manufacturers. So Australia has got to take some big steps in legislation to do things which will pull onshore manufacturers and keep manufacturers here to build here.
Yeah, absolutely. And Benjamin, you don’t sell trucks yet or DC fast chargers yet, but do you see a role for Australian products in, I guess, your product suite?
Yeah, absolutely. Well, we’re an Australian business ourselves that’s celebrating 50 years this year, and it’s unfortunate that a lot of Australian manufacturing has gone offshore, and we do source a lot of product from the global factory of Asia and, more specifically, China, but we’ve always worked with and will continue to work with Australian suppliers and manufacturers wherever we can.
Some examples of that, Century Batteries, whilst not Australian-owned anymore, still maintain a manufacturing facility in Carroll Park, outside of Brisbane, and they’re a key partner of ours, and EVs in the future will still require and do today 12-volt batteries as a supplemental power source, low voltage, so there’ll be an opportunity to expand there.
I’m probably going to be the only panelist today to mention a lubricant company, but Penrite Oil is a family-owned business out of Melbourne. And again, EVs will require coolants, they’ll require lubricants to maintain drivetrains and so on, and we’ll work with those kind of Australian companies where we possibly can to maintain that manufacturing in Australia and supplement our range as we move towards an EV future.
That’s great. And Kylea, we’ve heard from, I guess, the three panelists who are involved in industry. You’ve been on the policy side, on the politics side. What are some of the things that you want to see done quickly to assist, I guess, the industry that we’ve heard so far?
Well, I want to thank everyone for coming together today, first and foremost. I mean, I was fortunate enough to attend a breakfast this morning and have been here for most of the day listening to all of the information that’s being shared, and it is incredibly heartening and inspiring to hear that there are businesses in Australia and around Australia that have succeeded against the odds, in many cases, I would say. There’s no doubt that the national framework has not been there. I can’t sit here and pretend that it has. I think it’s really clear to me that fundamentally, the Australian federal government needs to do three things. First is provide real leadership across our country, so send the very clear signals that this is the business that Australia is in and this is the business that we want to stay in, because I think that’s the risk. If we lose it all offshore, it’s very hard to entice people back.
The second piece, then, is to actually coordinate across the states and territories, and I think we’ve heard that today from a number of people that have been here to represent states, territories, and local councils. They are working really hard at the levels of government that they can, but ultimately, the only organization that sees the country from the top-down is the federal government. Sees every bit of it, every armpit, every centimeter. So that’s the position that the federal government can bring to the table in terms of seeing it for its overall capacity, and then appropriate stimulus, and whether that is economic stimulus, so whether it is incentives to move in a certain direction, right through to human capital, I think, is actually a piece that I’m looking forward to us exploring further.
Because at the heart of this, I think one of the real challenges we have is ensuring an equitable transition moving forward. And there are Australian communities that currently do rely on what I call our old mentality, which is dig and ship. What we do in Australia very well is dig and ship. If we’re talking about transitioning, that we are actually going to go to a dig and value-add and a dig and create, then I think the communities we should be targeting for those opportunities are those ones that actually stand to lose the most as we transition out of them.
So I had a very interesting conversation recently as it related to the Kurri Kurri gas plant, with the question around why are we doing that in that community when we could effectively… Imagine if we established a TAFE, a national TAFE center in the Hunter, where the training was about how do you take homes and electrify them by connecting them to a vehicle faster. There is just so much opportunity here and I’m really will be working very hard from the crossbench, as I know everyone else. Sophie’s here, Zoe’s here, Mon’s here. Allegra is not here, couldn’t be here, Zali couldn’t be here. But what I can tell you is consistent across the crossbench is our very firm commitment to getting this done. And I thought Zoe was very kind when she was talking about, “We did ask the minister this morning. Great announcement, but what’s the timeline?” Like, “We’re ready to go, the whole country’s ready to go. Let’s do this.” And it would’ve been nicer to actually hear him announce this morning that fuel emission standards were being introduced rather than just a white paper.
Great. Do we have time for questions? I’m looking for guidance from anyone.
No, we do not have time for questions. Well, I’d really like to thank the panel. It was great to hear your perspectives. Cheers.