NSW to offer EV incentives too

New South Wales has joined Victoria in announcing subsidies for electric vehicle buyers – and a new tax for drivers of electric and plug-in hybrid vehicles.

Revealed yesterday ahead of the 2021-2022 NSW budget announcement tomorrow (June 22), the new distance-based road-usage fee for EVs and PHEVs in Australia’s most populous state doesn’t come into effect until 2027 or when EVs account for 30 per cent of new-vehicle sales (whichever comes first).

However, from September 1 this year, EVs priced below $78,000 will be exempt from stamp duty, as they are in the ACT, and buyers of the first 25,000 EVs priced below $68,750 will receive a $3000 discount.

The NSW EV subsidy is virtually identical to the one already being offered in Victoria, as is the state’s eventual per-kilometre usage fee for EVs and PHEVs, which comes into effect in Victoria on July 1.

In both cases, the new road tax – 2.5 cents per kilometre for EV and 2c/km for PHEVs – is designed to offset the lack of fuel excise, a major proportion of which has traditionally been allocated to road funding, for EV buyers.

That means PHEV customers in NSW will eventually pay both a new road-user tax and fuel excise at the bowser, despite the fact they can travel up to about 50km on zero tailpipe emissions electric power alone – even if many of them don’t.

Similarly, the NSW government’s plan to incentivise the uptake of EVs, which account for just 0.75 per cent of new-vehicle sales in Australia, also mirrors the Victorian EV subsidy.

In NSW, in addition to the $3000 subsidy, the stamp duty saving on EVs amounts to three per cent of every dollar up to $45,000 ($1350) and five per cent of every dollar between $45,000 and $78,000 ($1650).

The NSW EV rebate and stamp duty exemption are estimated to reduce the price of the Hyundai IONIQ Electric, for example, by around $4500 to $44,500.

They will also reduce the price of Australia’s most affordable EV, the MG ZS EV small SUV, to as little as $39,670 for eligible NSW residents from September.

In the ACT, as well as a stamp duty exemption, EV buyers receive two years’ free registration and can access $15,000 in interest-free loans.

NSW energy and environment minister Matt Kean forecast the incentives will see EVs account for 52 per cent of all new cars sold in NSW by 2030-31.

“We know that with new cars staying on the road 15 years on average, the vast majority of new cars sold in NSW need to be EVs by 2035 to achieve net-zero emissions by 2050,” he said.

“Our aim is to increase EV sales to more than 50 per cent of new cars sold in NSW by 2030 and for EVs to be the vast majority of new cars sold in the state by 2035.”

The NSW government’s $490 million EV plan also includes a $171 million investment in new charging infrastructure as well as a $33 million plan to transition the NSW government fleet to EVs by 2030.

The NSW government said it wants to install EV chargers at 100km intervals on major highways and at 5km intervals on major roads in Sydney, to incentive households with limited access to off-street parking and therefore charging.

NSW transport and roads minister Andrew Constance said the average NSW driver will save around $1000 a year in running costs by switching to an EV, and up to $7500 a year for businesses.

“Electric vehicles are not only cheaper to run and quieter on our roads, but they also reduce both carbon emissions and air pollution, which results in dramatically improved health outcomes for our communities,” he said.

“As the world’s right-hand drive market moves to manufacturing electric vehicles, we have to make sure we have the policies in place to give industry the green light to increase model availability and cut entry price points.”

The Australian automotive industry including several car-makers have welcomed the NSW EV announcement, which the Federal Chamber of Automotive Industries (FCAI) described as a blueprint for other states to follow.

“The direction being set by the NSW government has the capacity to kickstart serious EV penetration into Australia,” said FCAI chief executive Tony Weber.

“This change in the taxation for EVs and PHEVs, significant investment in charging infrastructure, initiatives supporting fleets and consumer incentives balanced with a user charge represent the most significant steps we have seen in decades.

“The incentives package for electric vehicles is consistent with actions being taken by forward-thinking governments across the world.”

However, the FCAI chief called on the federal government to replace other existing taxes for new-vehicle buyers with a consistent national road-user tax.

“As the future of mobility continues to rapidly transform, now is the time for governments to relieve motorists of a myriad of outdated, confusing and inefficient charges and replace them with a simplified road user charging approach,” said Weber. 

“The FCAI released a discussion paper last month advocating for the introduction of a road user charging approach aimed at eliminating charges such as registration, sales taxes and luxury car taxes and replacing them with one charge.

“Ideally, road user charging decisions should not be based around specific technologies and particularly those that are in their relative infancy in the Australian market. An efficient road user charging scheme can address all vehicle users regardless of the type of vehicle they drive, how often it is driven and the purpose of the travel.

“The FCAI has consistently advocated for a national approach to these issues that ideally would be federally-led to avoid the prospect of individual state governments introducing their own standards and incentive programs in support of ZLEVs [Zero and Low Emissions Vehicles].

“Consistency is the critical element for Australian customers. If other states introduce their own programs, they must align. Otherwise, the result will be another disjointed and chaotic system like the introduction of different rail gauges across the country.

“In the long term, the aim is to reduce CO2 emissions from vehicles. Governments should focus on targets, not technologies. If governments set the targets, the car-makers will deliver the range of vehicles into the market that achieve the environmental outcomes and meet the needs of Australian motorists.”

Several automotive brands have also welcomed the NSW government announcement, including Volkswagen Group Australia, which is yet to confirm when it will introduce any electrified models but described the NSW plan as the “model to drive Australia out of the automotive third world”.

Michael Bartsch, the managing director of VGA – which includes the Volkswagen, Skoda, Audi and, soon, the Cupra brands – said the announcement will make NSW the “easiest place to buy and drive an EV in Australia”.  

“The Berejiklian government has shown its federal colleagues and its counterpart in Victoria the way to bring about mass ownership of affordable electric vehicles,” he said.

“In terms of his targets for private ownership and fleet take up of EVs, there is no faulting Mr Kean’s ambition.”

Bartsch said that while the Volkswagen Group was becoming the world’s biggest seller of affordable EVs and PHEVs, barriers including free trade agreements and the lack of a federal CO2 target prevent Australia from emulating European countries in which demand for ZLEVs exceeds supply.

“While the Victorian government’s vision of progress is to tax EVs while they are less than one per cent of new-vehicles sales, it is the lack of national commitment to a CO2 target that has most impeded the case for EV prioritisation,” he said.

“Europe’s mandatory carbon targets, enforced by severe penalties, will ensure that those markets continue to the first in line for zero-emission vehicles.

“Volkswagen is further disadvantaged by being the only top-10-selling brand in Australia that remains subject to a tariff designed to protect local manufacturing that ceased in 2017. The other mass-market brands benefit from free trade agreements.

“While the federal government has resolved to address Australia’s third-world fuel quality, until it and the other state governments emulate the vision of NSW, our country will remain a dumping ground for technology that cannot be sold in advanced countries.”

Nissan, which has the largest EV dealer network in Australia with 92 outlets including 22 in NSW, and whose LEAF hatch was one of the county’s pioneering EVs, welcomed the NSW EV plan.

“It is extremely encouraging to see the NSW government’s strong leadership in the EV space,” said Nissan Australia managing director Stephen Lester.

“These decisive actions are good for consumers, good for the market and ultimately good for the state’s own legislated net-zero targets. These types of policies not only accelerate the EV transition right now, but also put Australia in a stronger place for priority adoption of new vehicle technologies, sooner.

“Additionally, with the announced transition targets for its own fleet, the NSW market will see greater EV uptake because of government purchases, but also will ultimately benefit customers by providing a vibrant second-hand EV market in the years to come.

“The announcement of upcoming EV-related taxation reform provides consumers the right balance between EV adoption today, and surety about the future regulatory environment.”

Separately, Hyundai Motor Company Australia chief operating officer John Kett said: “The New South Wales government’s stated ambition is to make NSW the easiest state in Australia to buy and drive an electric vehicle.

“This strategy goes a long way to making that a reality. We congratulate the state government and recognise New South Wales as now setting the pace for the rest of Australia.

“Significant investment in the charging network, in both urban and regional areas, is a welcome initiative. Highly developed infrastructure provides confidence to customers and removes uncertainty around being able to charge EVs away from home.

“Providing stimulus for improving low EV adoption rates in Australia, by offering tax relief and purchase incentives for customers, is another encouraging step. We’ve seen government incentives stimulate adoption rates in advanced markets overseas and the NSW EV strategy is at world best-practice levels in that regard.

“We also acknowledge the New South Wales government’s own commitment to convert its fleet to fully electric by 2030, with an interim target of 50 per cent by 2026. We look forward to being a key partner in that transition as we continue to expand the range of Hyundai EVs available to all Australians in the future.”

Hyundai already sells electric versions of the IONIQ hatch and Kona small SUV in Australia, and its parent company plans to produce 44 electrified vehicles by 2025, including 23 EVs – all of which have been earmarked for Australia.

MG Motor Australia also welcomed the NSW government’s EV strategy, with CEO Peter Ciao saying: “This is a vital and welcome initiative from the NSW government to support the continued rollout of electric vehicles.

“At MG, we believe in ‘Electric For Everyone’, and this government subsidy program will give many more people the chance to experience the benefits of electric motoring for themselves.”