Australia’s New South Wales puts neighboring Victoria to shame with huge new EV incentive package

Industry

New South Wales, Australia’s most populous state and home to Sydney, has announced a massive new EV policy package with $500 million worth of tax exemptions, rebates, and new spending on chargers, along with traffic-avoidance perks.

In contrast, earlier this year, neighboring Victoria, the second most populous Australian state, implemented the “worst EV policy in the world,” by punishing EVs with a high road usage tax while collecting no similar road usage or gas tax from gasoline-powered vehicles.

New South Wales’ new incentive package, in contrast to their neighbors, takes a lot of the best EV incentive ideas from around the world and collects them all into one package. It’s expected to be fully implemented by September 1.

First, “stamp duty” will be relieved on any EV costing less than $78,000 AUD. Stamp duty is a tax collected on a new or used vehicle at purchase, in the amount of 3-5% (depending on purchase price).

The first 25,000 new EVs sold in the state will also receive a rebate of $3,000. This rebate only applies to cars under $68,000 AUD.

For comparison, a base model Tesla Model 3 is currently listed as costing just under $68k in NSW. We suspect that the base model will be eligible for the rebate and the stamp duty reduction, but as more options get added, those incentives might rapidly disappear. Other EVs at a lower price level than the Model 3 should comfortably qualify, though car prices can be a little out of whack in Australia due to their geographical isolation.

Finally, EV drivers will get a “carpool lane”-style incentive, where electric cars are allowed to use 2- and 3- passenger carpool lanes during heavy traffic hours.

Beyond these consumer incentives, the NSW government will spend $171 million on charging infrastructure, primarily on DC fast charge stations, but also destination charging and public chargers on land owned by the NSW public transit agency. It will also spend more than $30 million on upgrading state government vehicles to electric.

Another big piece of news relates to a *non*-action the NSW will take regarding road taxes for EVs. The NSW government had planned a road usage fee in the same amount as neighboring Victoria, at a rate of 2.5 cents per kilometer (~$330/yr for the average Australian vehicle, among the highest EV taxes in the world). But NSW thankfully has decided not to implement that fee yet, delaying its implementation until either 2027 or when EVs make up 30% of new vehicle sales, whichever comes first. Currently, the rate is less than 1% in NSW.

The low rate of EV adoption in Australia has a lot of factors, but government support (or lack thereof) has had a lot to do with it. The federal Australian government is heavily influenced by the fossil fuel lobby, and coal and petroleum products make up a huge chunk of Australia’s exports. This tends to lead to some rather regressive thinking on energy and climate issues (with predictably disastrous results). The Morrison government, in particular, has failed completely at coming up with any way to incentivize EVs or lower emissions.

For a quick rundown, a satirical Australian youtube channel didn’t pull any punches in lampooning Australia and Victoria’s terrible electric vehicle policy results in a viral youtube video which took their governments to task:

But it looks like NSW, at least, isn’t falling into the same pitfalls (which is interesting, considering NSW is led by the same party as Morrison – the center-right Liberal party, whereas Victoria is led by center-left Labor). NSW’s incentive package may not be completely perfect, but it’s a serious effort that takes a lot of good ideas and puts them all together into one package.

The EV road usage fee is still suboptimal (It would be better if all cars paid both road usage and pollution fees, and in Australia fuel taxes are federal, not state), but one of the big downsides of these fees is that they add a roadblock to early EV adoption. Once adoption is already at 30% of new cars, the ball will be rolling well enough that a fee shouldn’t hold things back too much. And there’s plenty of time to reconsider or adjust policy between now and then.

The plan targets 50% of new car sales to be electric by 2031, which is a bit weak. Several governments in Europe are coalescing around 2030 for the abolishment of new gas car sales, and several American states have announced a 2035 end date (though we’re hoping that date gets pushed forward to meet or beat the European consensus).

To be fair, Australia does have the aforementioned difficulty of geographical isolation, which means their car market lags behind regions that have an auto manufacturing industry of their own, but surely they can aim for better than 50% by 2031, particularly given the ravages of climate change which they are already experiencing.

The NSW government does recognize the urgency of this shift, as Environment Minister Matt Kean was quoted by the Sydney Morning Herald saying “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’s right – the sooner we get off gas the better, since cars sold today don’t just pollute today, but will continue polluting for more than a decade in the future. That’s time we don’t have to fix these problems, which are only going to get worse and more expensive to fix the longer we take to address them.

Kean also said he wanted to make NSW the “Norway of Australia when it comes to electric vehicles” – a bold claim, but this incentive package is a serious start towards getting there. That said, Norway plans to end new gas car sales by 2025 (and might even get there sooner), not 2035, so you’ve still got ground to cover if you want to match them, Matt.

So, all told, this is a great and quite large step on the part of NSW government in addressing this global emergency, and in helping encourage EV adoption in their state. We’d like to see them continue to develop and improve on this plan, and certainly hope they can serve as a model for the rest of Australia, who have heretofore been lagging on electric car and climate change measures.

What do you think about NSW’s new EV plan? Let us know in the comments below.


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