What will Labor’s promised electric vehicle policy deliver for drivers?

The incoming Labor government has promised to do what was unthinkable under the outgoing Coalition government: deliver an actual electric vehicle policy.

Its Powering Australia Plan includes a range of different actions to help deliver its target of 3.8 million EVs on the road by 2030. It includes removing import and fringe benefits taxes, setting targets for government fleets, rolling out charging infrastructure, and reviewing building codes to allow more charging options.

The strategy will be helped by having an energy and climate minister, Chris Bowen, who actually drives an EV, one of a handful of Labor MPs in a Model 3. He does not subscribe to the Coalition theory that EVs will ruin the weekend.

Labor says its electric vehicle strategy modelling will mean 89% of new cars sales will be electric by 2030, and 15% of all vehicles on the road will be electric. It has also pledged a government fleet target of 75% new electric cars by 2025, and 1,800 public charging stations.

The biggest problem for Labor to meet those targets is the availability of EVs in Australia. Labor’s policies will support demand, but that’s not the problem right now.

It’s almost impossible get hold of an EV right now, and many insist that the best way to increase the supply of vehicles would be to move to vehicle emissions standards in line with overseas markets .

Even the Federal Chamber of Automotive Industries, historically known for its conservative “technology-agnostic” approach, has now called for the Australian government to implement vehicle emissions standards.

“Give us the target; we will give you the technology,” said FCAI chief Tony Weber via a release on Monday.

FCAI voluntary emissions reductions too weak

However, the devil is in the detail, and the FCAI is fudging the issue because it wants the federal government to implement only voluntary emissions standards which are weaker than those in place overseas.

Currently, the FCAI’s standard aims sets a low bar: it wants makers of passenger cars and light SUVs to emit less than 100 grams of CO2 per kilometre (gCO2/km) by 2030, and 145gCO2/km for heavy SUVs and light commercial vehicles (MC+NA).

Europe’s emissions regulations for passenger cars are already lower than this: fleet averages must sit below 95gCO2/km until 2024. The limit for vans is already 147gCO2/km , and even stricter measures are will come into action as the decade rolls on.

Legislating vehicle emissions standards and putting consequences in place should carmakers not meet them is the only way to ensure they are met.

In April, brand emissions data released by the FCAI showed that most carmakers did not even meet their stipulated brand emissions limits. Six out of the top 10 car brands missed their limits, including Mazda, Hyundai, Kia, MG, Mitsubishi and Nissan.

EV imports grind to standstill

The point is that for as long as Australia’s vehicle emissions standards are weaker than overseas, carmakers will prioritise overseas markets.

Imports of electric vehicles in Australia have all but ground to a standstill in recent months.

The reasons behind this are varied, not least the global chip shortage exacerbated by the Covid-19 lockdowns in China and the war in Ukraine.

But central to the issue is the fact that Australia’s complete lack of vehicle emissions standards means the small numbers that car importers have been able to secure are whittled away all too quickly when global EV manufacture is throttled.

Tesla Model 3 wait times are now stretching out to 12 months, and the Model Y has not yet even been launched locally. Kia and Hyundai have only secured 500 or so of their hugely popular Ioniq 5 and EV6, and when they go on sale they sell out within minutes.

Volvo and Polestar have been forced to delay deliveries of orders and even cancel them as Australian HQs struggle to slot orders into production schedules.

Lowering the price of EVs

For consumers and businesses, the focus will also be on the price of buying an EV.

Part and parcel of Labor’s EV strategy is its promise to cut import taxes and fringe benefits tax for EVs that fall below the luxury car tax threshold of $79,659.

All new cars would also be exempt from 5% import tariffs. That said, not all EVs will be subject to this cut as several free trade agreements means they are already exempt (see chart below). In the sub-$50,000 EV range, savings could add up to more than $2,000.

Country FTA / Import tariff (%) EVs available now/soon EVs confirmed for future Notes
China 0% (ChAFTA), 4% (RCEP, 2022-2023), 3% (RCEP, 2024-2025), 2% (RCEP, 2026-2027), 1% (RCEP, 2028-2030), 0% from 2031 Tesla Model 3, BYD Atto 3, MG ZS EV, Volvo XC40 Recharge, Polestar, Ora Good Cat, BMW iX3
USA Australian duties on passenger motor vehicles were phased out to zero in 2010. No EVs made in the USA are currently imported to Australia Tesla Model S, Tesla Model X All Tesla used to come from Fremont
UK 5%; 0% from Dec 2022 Nissan Leaf, Mini Cooper SE
France No FTA, 5% Renault Megane E-Tech, Renault Kangoo ZE
Germany No FTA, 5% Mercedes-Benz EQ series, Cupra Born, Porsche Taycan, BMW i4, BMW iX
Belgium, Austria No FTA, 5% Audi e-Tron, Jaguar I-Pace Volvo C40
Czech No FTA, 5% Skoda Enyaq
South Korea 4% (RCEP, 2022-2023), 3% (RCEP, 2024-2025), 2% (RCEP, 2026-2027), 1% (RCEP, 2028-2030), 0% from 2031 Hyundai Ioniq 5, Hyundai Kona, Kia EV6, Kia e-Niro
Japan 4% (RCEP, 2022-2023), 3% (RCEP, 2024-2025), 2% (RCEP, 2026-2027), 1% (RCEP, 2028-2030), 0% from 2031 Lexus ux300e, Mazda MX-30

Toyota bZ4X, Subaru Solterra

Thailand, Malaysia 0% tariff from 2020
Indonesia 0% tariff from 2015 Hyundai to open factory in future, will make Ioniq 5 there

For businesses, this means greater ability to integrate EVs into fleets, avoiding the 47% FBT and capitalising on lower servicing and maintenance costs as well as being released from soaring petrol prices.

Labor says modelling shows FBT savings could be:

  • $8,700 on a $50,000 model (such as a Nissan Leaf)
  • $10,600 on a $60,000 model (such as a Hyundai Kona) and
  • $12,000 on a $70,000 model (such as a Tesla Model 3

This in itself will ensure a greater number of secondhand EVs on the market as fleets tend to turn over cars every three to four years.

The success of cutting the FBT for vehicles has been seen in the case of dual cab utes, which (not ironically) has contributed to Australia’s increasing transport emissions and carmakers’ failures to meet the abovesaid voluntary standards.

This article has been updated to add the BMW i series place of manufacture.