NSW Labor might unplug EV incentives, despite Australia already being decades behind

This week NSW Labor premier Chris Minns announced he was considering removing EV incentives in the next state budget. Just when Australia starts creeping forward, it takes a sharp u-turn.

According to AAP, Minns made this statement as a response to treasury estimates that stated that there was no concrete evidence that growing EV sales in Australia had anything to do with rebates.

Minns said that he had received advice that EV uptake incentives could actually raise the price of these vehicles.

“We’ve got a subsidy in place that we think is pushing up the costs of EVs and we’re seeing EVs take up from about two percent to eight percent in the marketplace,” he said on Monday.

NSW EV subsidies are already threadbare

Let’s take a look at these subsidies allegedly driving up the prices. In NSW we only have two — a $3,000 rebate for EVs that cost under $68,750 (up to 25,000 EVs only) and a stamp duty exemption for EVs that cost up to $78,000.

Really, we’re going with that excuse?

A $3,000 rebate is barely anything when you consider that most EVs in Australia are expensive, particularly compared to their petrol counterparts. And that’s before you even take maintenance costs into account.

In fact, it was only a few weeks ago that Australia received one of its first sub-$40,000 EVs, the MG 4. Meanwhile, most EVs in Australia are between $60,000 and $100,000 – meaning many aren’t eligible for the meagre incentives that are currently in place.

What’s worse is that NSW is looking to actively disincentive EV uptake by introducing the same ZLEV road-user charge that Victoria has. As a side note, Victoria upped the cost of this on July 1 this year despite the fact that the state’s EV market share is only sitting at around 4%.

Under the new pricing, EVs and hydrogen vehicles (HEVs) are charged 2.8 cents per km driven, with plug-in hybrids charged 2.3 cents. The road user charge is currently being challenged in Victoria’s High Court.

NSW has threatened to introduce a similar scheme in 2027, pending the outcome of the case.

Premature rollbacks that could hurt future uptake

An obvious argument for rolling back incentives is the “exponential” uptake of EVs in Australia. In 2022 the number nearly doubled to over 80,000, and in the first seven months of 2023 alone an additional 50,000 had hit our roads.

While it’s incredible to see this level of growth, it’s still very early days. Going back to the stats, in 2022 over 20 million cars were registered in Australia. It’s going to be a while before a significant number of these are EVs.

Considering the current cost of petrol, it’s ludicrous to be considering not only removing incentives but penalising EV drivers with road taxes. Being a car-loving nation, it’s already challenging to get some people to accept an EV future. It didn’t help that just four years ago former PM Scott Morrison mocked Bill Shorten’s EV policy saying it would “end the weekend” for four-wheel-driving loving Aussies.

Just two years earlier, as Treasurer, this same man brought a lump of coal into Question Time, sarcastically telling people to “not be afraid”.

Promoting such backward perceptions of the future of cars and renewable energy has been damaging. Now that we’re finally seeing some semblance of recovery, NSW Labor is potentially looking to take incentives away rather (rather than adding to them) at this early stage of the Australian EV journey.

And the funniest part is that we’re already decades behind other countries. The October 2022 budget was the first time in Australia’s history that EVs were given a proper federal incentive: the removal of the Fringe Benefits Tax on EVs. Prior to this, the closest we had was a high luxury car tax (LCT) threshold for low-emissions vehicles at $84,916.

Comparatively, many countries have had EV incentives in place for decades. In the case of Norway, it first began rolling them out in the 1990s. And it went well beyond a couple of thousand dollars in rebates.

For 15-20 years Norway offered EV drivers: no annual road tax, no charge on toll roads, no charge on ferries, free municipal parking. And for 32 years the country didn’t charge any kind of purchase or import taxes on EVs.

It’s only been in the last couple of years that Norway began rolling some of these back. Even they they weren’t removed entirely.

So to have the largest state economy in Australia consider revoking EV incentives in just a few years, with no assurances that others may be introduced, seems like an incredibly premature step.