Labor has returned electric vehicles to the policy fray, unveiling a new strategy to drive uptake by cutting taxes and sending thousands of electric powered cars to the second-hand market.
Experts and industry have welcomed the Opposition’s plan, describing it as a clever way to advance the nation’s EV fleet beyond talk, and going some way to catch up to the rapidly transitioning global market.
But they also warned that the policy barely qualifies as groundwork by global standards, and that much more would need to come from both the Opposition and the government if either are serious about driving uptake.
The Opposition is now committed to cutting taxes and tariffs on non-luxury electric vehicles. The tax cuts, branded as Labor’s Electric Car Discount, would reduce the import tariff on electric vehicles worth less than $77,565 and exempt them from fringe benefits taxes.
“It’s a really great step forward,” Australian Electric Vehicle Council chief executive Behyad Jafari told InnovationAus.
“This is something that every other developed country has had for the better part of the last decade. One of the benefits of being laggard is we know what works.”
The tax exemption would bring the price of electric vehicles down significantly for salary sacrificers and large-scale fleet buyers, the group Labor’s policy is really aimed at.
“The biggest way that you can change behaviour is by changing the fleet make-up,” Opposition leader Anthony Albanese said.
“And that’s why the changes to fringe benefits tax here are so important.”
Fleet buyers are especially receptive to low maintenance and running costs – two standout qualities of electric vehicles – but because of the way Australia’s fringe benefits tax is set up they have tended to favour the lower upfront costs of non-electric vehicles, according to University of Queensland research fellow Dr Jake Whitehead.
“The way the system set up is it leads to a bit of a perverse outcome where it effectively incentivises you to have a car that costs more to operate,” he told InnovationAus. “So that means it’s less efficient and uses more fuel and is generally bigger.
“Electric vehicles struggle because they have a higher capital cost but a really low operating cost. This proposal levels the playing field and that’s why I think it will have a significant impact in fleet [sales].”
Dr Whitehead has advocated for a policy like Labor’s for years because it has the added advantage of pumping up the second-hand market for electric vehicles as fleets are replaced every few years.
And because the current government has also identified fleet buyers as a potential way to drive adoption there is a genuine chance at a unity ticket, according to Dr Whitehead.
“It’s completely in the government’s court as to whether they want to take that opportunity or not,” he says, “I can only say that I would encourage them to do so because it directly aligns with what they’re trying to achieve.”
The policy is Labor’s first electric vehicle pledge since its failed 2019 election campaign, when it committed to an electric vehicle target of 50 per cent of new car sales by 2030 and heavier emissions regulation for car retailers.
The Coalition lampooned Bill Shorten’s 2019 Labor policy as a “war on the weekend” before being returned to government and eventually releasing plans for its own less ambitious electric vehicle strategy.
“If you look back at that conversation there was no one from the automotive industry or the transport world that was backing up any of that scaremongering [by the coalition],” said Jafari, whose association represents the Australian EV industry.
“All of them said, ‘yes, of course this [target] is achievable. This is where all of our investments are going.’”
This time Labor is putting the actions before the targets, according to Jafari, and effectively daring the current government to criticise them at a time when its own backbenchers are pushing for a similar approach.
“If anything, I think there’s an opportunity for the government to come and eat Labor’s lunch by saying ‘we’ll do this tomorrow.’ But we’re not holding our breath.”
While it may not be as ambitious as the 2019 policy, Labor’s early plan can still drive effective change, Jafari says, because Australia is coming from such a low base.
Currently, less than one per cent of new cars sold in Australia are electric. In world leading countries like Norway it is around 75 per cent but in most comparable countries it is around 10 per cent. Even the global average, which includes non-developed countries, is more than four times Australia’s rate.
Jafari said Labor’s plan is enough to catch Australia up to the 10 per cent mark and give the private sector some of the certainty it needs before make large scale investments in infrastructure.
“This is a type of policy that will get us there [to 10 per cent].
“In Australia last year we sold 6,900 electric vehicles. If 10 per cent [of all sales] were electric that would have been 100,000 electric vehicles. It’s a sizable jump but it’s a very achievable one today.”
Labor’s new policy is expected to be a tentative first step rather than a final call on electric vehicles. Should it win government, the party will also develop Australia’s first ever National Electric Vehicle Strategy.
The policy is a “very positive first step” towards inclusion in a global electric vehicle revolution, according to Everty founder and chief executive Carola Jonas.
She agrees targeting fleet buyers will eventually see more electric vehicles enter Australia’s second hand car market, eventually bringing down the cost of ownership.
“I think it’s a good idea,” she told InnovationAus. “It would be an even better idea if it was a broader policy.”
According to Ms Jonas, whose company develops the software to manage electric vehicle charging stations, much more government action will be needed. Because the longer Australia stalls electric vehicle policy the more expensive it will be to join the global transition.
Almost all auto manufacturers are transitioning to electric vehicles, Ms Jonas said, but the supply is still limited. And without an effective electric vehicle strategy Australia is missing out.
“These cars go to Norway, they go to Germany, to all the other markets. And we don’t allow Australia to have the same great technology. It’s almost like you would tell Australians they could go back to a Nokia phone.”
Ms Jonas said it will be interesting to see the coalition government’s response in the run up to the next election. She hopes for more progressive policies from both sides, pointing to countries like Germany where much bigger subsidies are given to consumers and more investment is made in public infrastructure for electric vehicles.
The University of Queensland’s Dr Whitehead says there is no silver bullet for electric vehicles in Australia but the need to do something is now paramount.
“No one’s advocating for 100 per cent electric vehicles tomorrow. What we’re saying is that this transition will take time. We need to get there in less than 20 years if we’re serious about net zero.
“And that’s why we have to start that transition now because it is a slow process, and it needs to be done in a gradual manner so that we don’t have a major economic shock.
“But if we don’t have policy, that’s what governments are setting us up for in the future: a major shock. When all of a sudden the world has moved on and Australia hasn’t prepared for that transition.”