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Australia’s electric vehicle policy needs improving

28/01/2021 by Mark Schneider in Technology

The move away from petrol and diesel-powered vehicles has just picked up pace with Japan’s recent announcement that it’s considering a ban on sales of new ones by 2035. That follows the news that Britain and India will do the same from 2030.

The nation leading the trend, however, is Norway. It’s banning the sale of petrol and diesel models as early as 2025. With strong government incentives in place, electric car sales were over 79% of Norway’s new car market by October 2020.

It’s becoming increasingly obvious that the internal combustion engine’s days are numbered, with a growing number of countries, cities and territories announcing bans on their sales.

Right-hand drive

The move by Japan, Britain and India is particularly significant for Australia. They form the bulk of the market for right-hand drive vehicles, so it’s inevitable that the production and supply of right-hand drive petrol and diesel vehicles is going to be increasingly curtailed.

In contrast to other countries, Australian government policy has been lukewarm at best to electric vehicles, and openly hostile at worst. Australia does not offer the sort of tax incentives and subsidies that encourage electric vehicle ownership.

The move by the South Australian and Victorian governments to impose an additional tax on electric vehicles is curious to say the least. Right now the purchase price of electric vehicles is a big enough disincentive to ownership without imposing an additional tax of 2.5c a kilometre. No other country is doing that.

A leaked government paper written by the Victorian Treasury obtained by the Australia Institute has warned that taxing EVs would probably discourage people from buying them and “impede government process on transport sector pledges” to reduce emissions and “face strong opposition from industry and environmental stakeholders”.

“This document shows there are real risks associated with the introduction of a new tax on electric vehicles,” said Richie Merzian, director of The Australia Institute’s climate and energy program.

Danger for Australia

The danger for Australia is that without an effective transition policy to smooth the way to the inevitability of electric vehicles we could be left high and dry when the supply of new petrol and diesel vehicles disappears.

It’s extremely unlikely that major vehicle makers will keep producing such vehicles exclusively for a market as small as Australia’s. We risk becoming a dumping ground for increasingly outdated petrol and diesel vehicles for a few years after the rest of the world’s moved on to vehicles that are cheaper to run and much less polluting.

Electric vehicles become an opportunity for political point scoring at the last election, when what we required was a rational policy that recognised the advantages of electric vehicles and their inevitability, while addressing the loss of fuel tax revenue.

The Australian Government may have been slow to act on electric vehicle policy, but its hand will eventually be forced by the decisions of other governments and the plans of vehicle makers around the globe. Germany’s giant Volkswagen group is planning to spend $A118 Billion in future technologies over the next five years, with more than half of that earmarked for electric cars and batteries. And Volkswagen’s not alone. Daimler is investing $US85 Billion on electric cars from 2021 to 2025.

Increasingly for carmakers, going electric is no longer an option, it’s a necessity. Even Saudi Arabia is investing in electric cars. Now there’s a sign of the times.

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