Electric car company Tesla would consider manufacturing vehicles in Australia, "if the opportunity arose", a Senate inquiry has been told.
Telsa senior manager Sam McLean said there were advantages to Australian production, including the availability of a skilled workforce and easy access to lithium and nickel, important to the manufacture of vehicle batteries.
But Mr McLean said there were also disadvantages including the size of the domestic market for electric cars, currently well under one per cent of total sales.
"In Australia, given the size of the market and how much it lags the rest of the world, a relatively small proportion of manufacturing would be absorbed by the domestic market," he said.
"If Australia wants to be more attractive to electric vehicle manufacturing it will need a more mature and faster growing electric vehicle market."
The Senate inquiry, which held its first hearing in Adelaide on Friday, is examining the scope for the greater uptake of electric cars and other vehicles including buses and shuttles and for greater local involvement in manufacturing and the component supply chain.
Chair and independent Senator Tim Storer has called for Australia to join the shift towards electric vehicles or face getting left behind in the global rush to embrace the new technology.
Mr McLean said the small size of the local electric vehicle market reflected the lack of leadership to drive demand.
"Countries that have stronger uptake of electric vehicles generally have plans to achieve that," he said.
He pointed to a bi-partisan plan developed in New Zealand in 2016 to double the number of electric vehicles on the road every year.
While in the UK targets of 50 to 70 per cent market penetration by 2030 and 100 per cent by 2040 had recently been set.
"These countries have recognised the benefits that electric vehicles bring, not to manufacturers, but to their citizens and they've laid out a clear plan to achieve it," Mr McLean said.
He said a plan in Australia should set a clear sales targets for electric vehicles and include investment in electric vehicle infrastructure.
He said government fleet purchases were also important to fuel the second hand market and greater public education would help people understand the benefits of shifting to electric cars.