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EV discount bill set to pass with anti-PHEV amendments

The Albanese Labor Government has secured the support of the Australian Greens for its electric vehicle (EV) incentives bill, though not without a couple of amendments.

The Greens and the Government have agreed to the following amendments to the Treasury Laws Amendment (Electric Car Discount) Bill:

  • Sunsetting support for plug-in hybrids on April 1, 2025
  • Prioritising electric vehicles in the Australian Government’s fleet procurement policy by removing plug-in hybrids except in “exceptional circumstances”

With the amendments sought by the Greens secured, its senators will support the EV bill being passed in the Upper House this week.

The Greens also say the ATO will issue guidance on when household charging technology can be included within fringe benefits tax-exempt vehicle packages.

“The Greens have fast-tracked electric vehicles,” said Greens leader Adam Bandt.

“The government fleet will go electric, and when these cars are sold second hand, it will help bring the cost down of EVs for everyday people.

“By limiting handouts to petrol cars and accelerating support for electric vehicles, the Greens in balance of power have pushed the government to go further and faster on climate.

“This shows the power of the Greens in pushing Labor to go further and faster on fossil fuels.”

Rather than focusing on direct rebates like many of Australia’s States do, the bill centres around tax breaks to cut prices and drive take-up.

The legislation exempts low-emissions cars from fringe benefits tax (FBT), potentially saving employers and private vehicle operators thousands.

This proposed ongoing FBT exemption was originally set to apply to battery-electric vehicles (BEV), hydrogen fuel-cell electric vehicles (FCEV), and plug‑in hybrid electric (PHEV) vehicles, and be reviewed after three years.

To qualify, the low-emissions vehicle must have a first retail price below the current relevant luxury car tax threshold of $84,916 (for 2022‑23), and have been first made available for use on or after July 1 of this year – meaning the legislation will be backdated.

MORE: Luxury Car Tax thresholds increased, FCAI slams ‘poor tax’

The Labor Government claims an employer offering a circa $50,000 EV to an employee as a fringe benefit could save up to $9000 a year.

It also claims that individuals using a salary sacrifice arrangement to pay for the same model could save up to $4700 a year.

Beyond this bill, the incumbent Labor Government also intends to remove the current 5.0 per cent import tariff for eligible EVs that aren’t already subject to a free-trade agreement – meaning vehicles supplied from Europe.

“The transport sector is one of the fastest‑growing sources of emissions in Australia and the stronger uptake of electric vehicles can make a substantial impact in our efforts to tackle climate change,” the government said.

“Importantly – as families struggle with the rising cost of fuel – encouraging more affordable EVs into the market is an important step in addressing transport costs over the medium term and building resilience to global oil prices.

“Yet, right now Australia lags far behind our international peers when it comes to electric vehicle use. This legislation will encourage greater take up of electric cars and contribute to reducing transport emissions.”

For all this, the Australian Government hasn’t announced any plan for a federal emissions standard despite calls from the industry to do just that, to liberate supply. That’s left the Federal Chamber of Automotive Industries to establish its voluntary scheme in lieu.

The Electric Vehicle Council has praised the new incentives, though it wants more to be done.

“We’re seeing especially the FBT exemption is a quite valuable incentive to encourage particularly more fleets and novated leases to go electric,” said Electric Vehicle Council of Australia CEO Behyad Jafari.

“I think it does quite a lot for the sector, of course it still leaves us with that ongoing challenge of getting more supply of vehicles and I think that’s the next big challenge that we’re discussing with the government now.

“What’s natural and falls in line with the promises they’ve already made is to put in place a very strong fuel efficiency standard in line with the zero by 2050. That means having one that is in line with the type of standards we see in the United States and in the EU.”

That echoes comments from companies like Volkswagen which have said they struggle to get supply of electric vehicles for Australia as the lack of a federal emissions standard, which could penalise companies for not selling enough low- or zero-emissions vehicles, pushes us down the priority list for vehicles.

The (then) Labor opposition announced last year a National Electric Vehicle Strategy, which included the tariff and tax exemptions plus investments in charging infrastructure, and a goal to “create an environment for 3.8 million EVs on the road by 2030”.

The recently elected Albanese Labor Government intends to follow through not only on the election promises of tariff and tax exemptions, but also other promises around electric vehicles.

That includes implementing the $500 million Driving the Nation plan, with an EV fast charger every 150km on Australia’s highway network.

A Hydrogen Highways refuelling network is also planned to deliver hydrogen refuelling stations along Australia’s busiest freight routes to support hydrogen fuel-cell trucks.

The Government also intends to gradually convert the Commonwealth fleet to zero-emissions vehicles with a target of 75 per cent of new passenger vehicle leases and purchases by 2025.

Last year, the Labor opposition also announced plans to roll out charging infrastructure in over 100,000 businesses and 3.8 million households, with 1800 new public access fast charging stations by an unspecified date.

Sales of BEVs currently amount to a measly 2.0 per cent of the Australian new car market, miles behind most developed regions. PHEV uptake is even lower.

MORE: Australia’s best-selling EVs in the first half of 2022
MORE: Why the car lobby wants more CO2 regulation from new government
MORE: What electric car buyer incentives are offered across Australia?

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