Impact of Electric Vehicle on Petrol Car Demand in Australia

Passenger Car
Demand
Petrol
Prices
Question 1
(a)
Australia’s dependent on Middle East for oil is very much evident to all. Middle East is the
main source of oil for Australia. Any outbreak of hostilities in Middle East can cause major
disturbances in Australian oil supply which can lead to spike in oil prices and its cascading
effect on other sector of economy, like automobile industry’s heavy passenger car which is
run on Petrol. Any hostilities in Middle East can cause severe dent in sale of passenger car
demand which is run on petrol. Petrol is the complimentary good for Passenger car and any
rise in price of petrol will have negative impact of sale of Petrol passenger car. Australian
petrol car demand is already on decline due to prospect of Electrical Vehicle in
Australia(Lescaroux, 2010).
As you can see increase in price of petroleum product P to P1, decreases the demand of
passenger car from OQ1 to OQ. So it is evident that any increase in petrol prices decreases
the demand for passenger car.

(b)
Environment concern forced the scientific community to invent more environmental friendly
modes of transport, after years of hard work and innovation, electric vehicle come into
operational mode, for last few years and now gradually started picking up pace and becoming
more spread across various parts of the world. Electric vehicle production and uses started to
get momentum and Australia cannot remain isolated from this phenomenon(Taylor,
2009).With the news coming of release of electric car in Australia, it would certainly make
serious dent in the sale of petrol fuelled car, not only because newly launched electric car
will be cheaper but also it will be environment friendly with zero or very low emissions, and
will purely run on electric charge(Albrecht, 2009a). It will also save Australian people from
increasing fuel prices. Electric vehicle is certainly very good news for countries’ whose
dependence on imported oil is very high, even upto 80-90%(Hellenicshippingnews.com.
2019).
Demand for car run on petrol will slump, because neither it will be affordable to use nor it
will environment friendly, so people will shift to electric vehicle, demand of electric vehicle
will rise. In fact it impact is already started to show, as per the data released by the Federal
Chamber of Automotive Industries, that car sales to the end of July 2019 are 7.7% down from
the previous year(Ketchell, M. 2018).

Demand for petrol car
Demand for
Electric Vehicle
Quantity Electric vehicle impact on Petrol Car
Quantity
It can be seen in above diagram that with every rise in demand of electric vehicle demand for
petrol car is going down. Reasons are both electric cars are environmental friendly and no use
of fossil fuels in it, which reduces impact of rising petrol prise.
Question 2
a)
Australian government initiative to promote young people to go for higher study is an
encouraging sign for Australian economy. It will not only enhance their skill but also enhance
their knowledge base to be employed in more skilled and demanding job. This initiative of
government will produce lots of skilled workforce for Australian economy in future and their
dependence on foreign workforce will go down in coming years, henceforth, it will be
compensated bylocal skilled workforce, because of this step, taken by its government. Once,