Should your next car be electric?
We’ve all seen the stats. Electric vehicles promise less than half the greenhouse emissions of the comparable petrol car. With transport contributing to almost 20% of our greenhouse gas emissions, 60% of which come from cars, electric vehicle integration could be the key to a greener Australia. Electric vehicles also bring other benefits, such as reduced fuel costs, lower maintenance costs and increased efficiency.
Major barriers are causing Australia’s electric vehicle integration to lag behind the rest of the world. These include a lack of charging infrastructure, range anxiety, consumer uncertainty and high upfront costs. In 2019, electric cars contributed to only 0.6% of total car sales in Australia, compared to 54% in Norway.
With accelerated change expected to occur in the next few years, should your next car be electric? If you invest in a petrol car, what will it be worth in five years? Today, we breakdown Australia’s current and proposed electric vehicle policies to help you decide.
Here are a few things to consider:
Stamp Duty
Stamp duties vary greatly depending on the state you live in. In Queensland, electric and hybrid vehicles pay reduced stamp duty of $2 per $100 for vehicles up to $100,000 and $4 per $100 value thereafter. NSW is offering a stamp duty exemption for new and used electric vehicles under $78,000. The ACT and Tasmania are providing a stamp duty waiver for all new and used electric vehicles. In Victoria, electric vehicles are exempt from the luxury vehicle rate of stamp duty and pay a flat rate of $8.40 per $200 of market value, compared to up to $18 for polluting vehicles.
Luxury Car Tax
Currently, electric vehicles over $79,659 attract a 33% Luxury Car Tax and this threshold is expected to increase over time. Luxury Car Tax is also currently applied to non-fuel-efficient vehicles above $69,152.
10% GST also applies to all vehicle purchases and 5% customs duty to any vehicles imported into Australia.
Charging Infrastructure
Charging stations will soon be everywhere. Jolt Charge will create 5000 electric vehicle chargers across Australia, which will be free for the first 7kWh. Under a funding agreement with the Australian Renewable Energy Agency, Evie Networks, Ampol, Chargefox, Engie and Electric Highway Tasmania will deliver over 400 new fast charging stations. Evie Networks will supply more than 150 fast chargers across eight regions and Ampol will install chargers at 121 of its petrol stations across Sydney, Melbourne, Brisbane, and Perth.
NSW plans to be the easiest state to use an electric car. The NSW government has released its own NSW Electric Vehicle Strategy which will invest $171 million over the next four years. The investment will build charging infrastructure at regional tourist locations, commuter carparks, and install a charger at every 5km along Sydney’s metropolitan commuter corridors.
Canberra is bringing charging technology home. Currently, they are holding a $6.6m vehicle-to-grid (V2G) trial, testing charging infrastructure that links car and home battery usage. With the implementation of this charging technology, your car will be able to charge your home, providing security for the electricity grid during blackouts.
Future Fuels and Vehicles Liberal Strategy
The Government’s new Future Fuels and Vehicles Strategy has attracted a lot of controversy. Unlike almost every other national strategy, this initiative features no fuel emission regulations, tax incentives or subsidies to make electric vehicles more affordable and competitive.
Instead, the fund plans to install charging infrastructure at 400 private companies and 50,000 households. The program has also been increased from $71.9m to $250m and is focused on improving information via the Green Vehicle Guide and supporting innovation and manufacturing. However, we do expect some announcements at this year’s budget.
National Electric Vehicle Labour Strategy
Labour’s proposed approach more closely mirrors the electric vehicle integration strategies observed around the world. Under a $251 million investment, they will fund discounts for electric vehicles, including making non-luxury electric vehicles exempt from the 5% import tax and 47% fringe benefits tax.
They will also invest in more than 1800 publicly accessible chargers nationwide, 100,000 facilities for businesses, and 3.8 million for households. By 2030, they promise that their strategy will reduce emissions by 43% and will aim to have 3.8 million electric vehicles on the road by 2030.
Other Initiatives
Some states are planning to offer attractive incentives to make the case for electric cars. In NSW, the government will offer a $3,000 rebate on the first 25,000 new battery electric vehicles with a dutiable value of less than $68,750 and eligible electric vehicles will be able to use transit T2 and T3 lanes. In ACT, new or used electric vehicles are eligible for two years of free registration. In Victoria, a subsidy of $3,000 is available for new zero emissions vehicles with a dutiable value under $68,740 and all electric vehicles will receive a $100 discount on annual vehicle registration.
Case Study: Norway
Norway is leading the way in electric vehicle adoption, a testament to its strong financial and non-financial incentives, investment in charging infrastructure, and public awareness campaigns.
Some of their current electric vehicle incentives include full import tax exemption, exemption from 25% VAT on purchase, access to bus lanes and company car tax of just 20%.
These policies have driven the integration of electric vehicles in Norway, which is expected to offer only fully electric cars for sale by early 2022. Due to these incentives, the country has also been able to make real strides in environmental change, lowering total emissions by 3.5% in 2020.
Macro Recommends
Electric vehicle integration strategies in Australia are underway. Strong investment in charging infrastructure will help to ease consumer uncertainty and encourage more electric vehicles on the road. However, there are few financial incentives in place, which, given the high upfront cost of an electric vehicle, are preventing Australians from committing to the change. The outcome of the election will influence the financial incentives available, whilst different states are offering different levels of support to electric vehicle users. If you are starting to think about a new car purchase, consider electric, as any future investment in combustion engines may be short-lived.
27 January 2022
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