Policy modifications for electric vehicles may impede attainment of zero emissions objectives
The shift towards electric vehicles (EVs) is a global trend, with many countries making significant strides in adopting EVs. However, Australia is lagging behind, with electric vehicle sales accounting for just under 10% of all new car sales from April to June 30.
The Road Ahead for Electric Vehicles in Australia
The Australian government is considering a road user charge for electric vehicles, starting with a trial on heavy vehicles and potentially extending to all cars. This move follows the Productivity Commission's recommendation to phase out the exemption of electric vehicles from the fringe benefits tax.
However, the problem with Australia's approach to EVs is the variable, ad hoc, fragmented, and overlapping policies across Federal and state and territory policies. This lack of consistency is a barrier to the growth of the EV market in Australia.
Lessons from Norway and Other Advanced Economies
Norway, a world leader in EV adoption, has achieved success through a mix of regulations, fiscal incentives, subsidies, and on-road subsidies in cities like Bergen and Oslo. For instance, Norway exempts EVs from most road usage taxes, reduces toll road fees by 30%, and penalizes gasoline and diesel car purchases with high registration taxes.
Similarly, the UK offers an electric car grant and subjects manufacturers to the Zero Emission Vehicle Mandate. In China, electric car sales are projected to reach 60% of total car sales in 2025, thanks to strong support for domestic manufacturers and substantial subsidies and incentives for both manufacturers and consumers.
Overcoming Range Anxiety and Incentivizing EV Adoption
Drivers in Australia still hold range anxiety about charging facilities, a concern that must be addressed for EV adoption to grow. For charge-point operators to invest in Australia, they need certainty about the future growth of electric cars.
In addition to infrastructure, fiscal incentives play a crucial role in encouraging EV adoption. For example, in Norway, drivers have benefited from reduced toll, parking, and bus lane privileges for electric vehicles in addition to initial incentives for upfront vehicle purchases.
The Role of Government Policies in Encouraging EV Adoption
Countries like the United Kingdom, France, Germany, the Netherlands, and China have higher percentages of electric vehicle sales due to clear and consistent government policies to incentivize the transition from petrol and diesel to electric cars. These policies include regulations, fiscal incentives, subsidies, and carbon reduction mandates.
The Way Forward for Australia
Decarbonisation to meet net zero targets is already an uphill battle, and the government needs a better electric vehicles plan, coordinated with states and local councils. By learning from the success of countries like Norway and adopting consistent policies, Australia can encourage the transition to electric vehicles and contribute to the global effort to combat climate change.
References:
- BBC News
- Norway's Electric Vehicle Success
- IEA
- IEA
- IEA
Despite Australia's lackluster adoption of electric vehicles, with electric vehicle sales accounting for only around 10% of new car sales, the government is considering sports-betting-style incentives to encourage more Australians to switch to EVs. For instance, following the Productivity Commission's recommendation, the government may phase out exemptions for electric vehicles from the fringe benefits tax, creating a sports-betting-like competition for companies to invest in EVs.
On the other hand, countries like Norway have successfully adopted electric vehicles through policies that include regulatory measures, fiscal incentives, and subsidies. If Australia wants to catch up, it might need to consider adopting similar strategies, turning the EV market into a more competitive sports-betting-style arena.
