Australia’s New South Wales Scraps Taxes on Electric Vehicles

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(Bloomberg) — Australia’s largest state economy will waive levies on electric vehicles and will offer other incentives, which add up to as much as A$490 million ($366.5 million), in an effort to increase the size of the EV market to half of all new sales within a decade.

The package includes a A$3,000 rebate for the first 25,000 new electric vehicles sold, with a A$68,000 ceiling, and scrapped stamp duty for those cost less than A$78,000. The state will invest A$171 million in infrastructure for charging EVs, the government said on Sunday. To compensate for the loss of fuel excise revenue, electric car owners will face a road-user charge of 2.5 Australian cents a kilometer (1.55 Australian cents per mile) by 2027, or once EVs make up 30% of new sales, according to the framework released ahead of the state budget this week.

The state’s plan is the most aggressive yet in a country renowned for its isolated highways and culture of car-loving, and where even tractors outsell EVs two to one. Battery-powered models made up just 0.7% of Australia’s total vehicle sales last year, ranking the nation among the worst in the Group of 20 for progress in de-carbonizing its roads, according to BloombergNEF.

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“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,” state Minister for Transport and Roads Andrew Constance was quoted as saying in the announcement.

Energy and Environment Minister Matthew Kean said with new cars averaging 15 years on the road, the majority of them sold in the state will need to be electric or hydrogen powered by 2035 to meet net zero emissions targets by 2050.

Industry participants and interest groups embraced the plan.

“Many Australian governments have announced EV ‘plans,’ sometimes even ‘plans to have a plan’, but New South Wales is the first state to step up and deliver real action.” Behyad Jafari, chief executive officer of the Electric Vehicle Council, said in a statement.

The Sydney-based council has pushed for government subsidies akin to those in the U.K. and Europe to support EV automakers.

The model will “drive Australia out of the automotive third world,” Volkswagen Group Australia managing director Michael Bartsch said in a separate statement. Under Australian import duties, buyers of many European car models face a luxury vehicles tax, and Bartsch claimed the group has been “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.”

©2021 Bloomberg L.P.

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