Labor launches Electric Car Discount in Australia
Australia’s new Labor government plans to implement its “electric car discount” policy from July 1, then grant exemptions to certain import tariffs and social benefits taxes. This will effectively make some EV models cheaper, depending on the country of origin.
In particular, electric cars arriving in Australia from most of Europe, Japan and South Korea will benefit from thousands of price cuts, once the 5% import duty is finally reduced. . As The Driven > has learned, the government has confirmed that it will honor a promise to grant exemptions from certain federal taxes starting in early July.
The import duty exemption will not benefit all electric vehicle models, as Australia already exempts some car imports from several countries under free trade agreements.
However, popular models that will benefit from the import duty waiver are the Nissan Leaf, Mercedes EQA, Hyundai Kona EV and Mini Cooper SE. To be concrete, the Electric Vehicle Council estimates that a $50,000 model like the Nissan Leaf will cost more than $2,000 less due to the removal of import duties.
In addition, there is the so-called social benefit tax. It applies to company cars provided by employers for the personal use of their staff and attracts a tax rate of 47% on the financial benefit of the arrangement, explains The conduit.
The Labor government has estimated that excluding EVs from benefits tax could reduce the effective cost of EVs by up to $9,000 for models costing around $50,000 – and is expected to trickle down to the market used electric vehicles.
Any exemptions will only apply to electric vehicles priced below $77,565 in 2020-21, the luxury car threshold for fuel-efficient vehicles in Australia.
The continent has lagged in the adoption of electric vehicles due to past unfavorable policies. Currently, just 1.5% of cars sold here are electric and plug-in hybrids, compared to 17% in the UK and 85% in Norway, writes the new government. This represents around 24,000 electric cars registered on Australian roads, out of a total of around 15 million cars.
The Labor government further cites a tariff barrier as there are no electric cars available in Australia for less than $40,000 and only five for less than $60,000. By comparison, more than two dozen electric cars are available in the UK for less than AU$60,000, eight of which are cheaper than Australia’s cheapest electric car.
“That’s because the UK government and governments around the world have introduced incentives and policies to help electric cars compete with older technologies with lower upfront costs,” Labor writes.
Their new nationwide “Electric Car Discount” will begin July 1, 2022 and will be reviewed after three years, in light of the adoption of electric cars at that time.
The government has not yet clarified whether the exemptions will only apply to zero-emission vehicles, including FCEVs.
Previously, there had only been regional efforts to increase the adoption of electric vehicles, such as in New South Wales or Western Australia, as noted. However, this has often come at the expense of road taxes for electric vehicles.