EV targets

8 July 2022

Reality check

The Federal Government has a very ambitious zero and low-emission vehicles (ZLEVs) policy agenda. Labor’s EV strategy, as outlined in its Powering Australia plan, claims 89 per cent of new car sales will be electric by 2030.

Based on the results of modelling commissioned by Labor, the details of which are mostly unavailable, from what we do know, the EV target will be achieved thanks to:

• the removal of the five per cent import tariff on EVs that fall below the Luxury Car Tax threshold
• the exemption of EVs from Fringe Benefits Tax for the personal use of business vehicles
• a government fleet target of 75 per cent electric cars by 2025
• the rollout of 1,800 public charging stations, and 
• reviewing building codes to allow more charging options.

While these measures will stimulate EV buying, are they sufficient to raise electric vehicle sales in Australia from just under two per cent to 89 per cent of new vehicle purchases in the space of eight years? 

While having a big EV vision is commendable, it must also be realistic.

According to VACC modelling, if the Federal Government offered an EV subsidy of $10,000 for each new EV sold, and if it were applied at a $60,000 EV price threshold, then 320,000 new EVs would sell in a 12 to 24-month period, which represents a 32 per cent share of the new vehicle market. The cost of this initiative would be just over $3 billion.

While such a subsidy comes at a high cost, it’s unlikely we’ll achieve an almost 90 per cent EV sales target without a kick-start. 

If it weren’t for Australia’s $1 trillion debt, then doing more to reduce the upfront cost of EVs for the mass market would be an easier sell for the government.

Words: VACC CEO, Geoff Gwilym.

Share your thoughts! E: ceo@vacc.com.au. As featured in the Herald Sun Friday 8 July 2022.