Updated ,first published
Sales of electric vehicles have surged past a quarter of all car sales in the wake of the war-induced petrol price shock, as Energy Minister Chris Bowen declares progressives are winning the climate wars.
After Bowen claimed a win in a cabinet debate over whether to cling onto an expensive tax incentive for EV owners, new data showed that Australians were rapidly shifting to EVs after years of low sales.
In April, 27.5 per cent of light vehicle sales were electric, plug-in hybrids or hybrids. This was up from 23 per cent in March, and 14 per cent a year ago.
EVs, including plug-in hybrids, were 16.4 per cent of sales in April, also a record. The other 11.1 per cent in Bowen’s figures were hybrids that do not require charging, but are not considered pivotal to emissions reductions. The government is subsiding car firms, including Chinese makers, to the tune of hundreds of millions to sell low emissions cars in Australia.
Bowen will use a speech at the Smart Energy Council on Wednesday to declare that the Coalition was failing to sway Australians against green energy, which he said was the “cheapest form of energy that is also more sovereign”.
“They are losing the argument in outer suburbs and regions, with suburban and regional Australians taking up renewable energy with more speed than anyone else. And they are losing the argument around the world as well,” he said, according to speech notes.
Labor is gearing up to boost Australia’s fuel stocks and change road regulations to allow more EV trucks. Government figures are not predicting any major new green energy investments in next week’s tight budget, however, as the Prime Minister Anthony Albanese prioritises fuel security.
As voters confront high electricity prices, Bowen pointed out that conservatives’ predictions of rolling blackouts had not proved true.
“We have moved from 33 per cent renewable energy in 2022 to 50 per cent in 2025,” he will say, as the government scrambles to reach its difficult climate targets. “I believe we can make 82 per cent by 2030.”
“But only if we keep our collective feet on the accelerator. Only if we move even faster.”
Opposition Leader Angus Taylor told this masthead on Tuesday that his budget-in-reply speech would focus on his pledge to boost fuel stocks to 60 days.
“An energy system that’s affordable and abundant, rather than obsessed with Chris Bowen’s favourite technologies,” Taylor said. “Labor has so completely failed.”
Before the war in the Middle East, this masthead reported that Chalmers’ razor gang was pushing to significantly pare back EV the tax concession, the cost of which had blown out by 15 times its original forecast size.
However, the war changed the government’s thinking. Bowen pushed to retain the measure for a while, to keep powering EV uptake, even as the oil shock drove up sales.
The government landed on a slower phase-out than it originally planned, as announced on Tuesday.
The electric vehicle fringe benefits tax waiver – currently in place for all EVs purchased for under $91,387 through a novated lease – will be phased out over three years and replaced with a 25 per cent discount on the tax for cars under that threshold.
In the first phase, the full 100 per cent exemption will be available until March next year. Then, from April 2027, vehicles priced between $75,000 and the luxury car threshold of $91,387 will get a 25 per cent discount on their fringe benefit tax.
Finally, from April 2029, all EVs below the luxury car tax threshold will get only the 25 per cent discount.
Existing leases will not be affected, and eligible vehicles will remain exempt from import tariffs.
The move is expected to save the government $1.7 billion over five years, while electric vehicle buyers will pay thousands more on their novated leases for the most expensive models.
The government said the swift uptake of the incentive and the proliferation of more affordable models in recent years meant the discount should be more targeted.
Accelerating EV adoption is essential to the Albanese government’s target to cut national greenhouse gas emissions by 62 to 70 per cent on 2005 levels by 2035.
Last September, the Climate Change Authority said even the lower end of the target could only be achieved if half the light vehicles sold in the next decade were electric, including plug-in hybrids but not including traditional hybrids that can’t be charged.
Francis Vierboom, chief executive of electrification advocacy group Rewiring Australia, said the decision showed the government recognised that EV incentives still had an important role to play.
“Even in a record-setting month, during a national fuel crisis, when filling up an EV costs a small fraction of the petrol equivalent, six in seven new car buyers still chose a petrol car,” Vierboom said.
“Every new petrol car sold locks in another two decades of oil dependency, higher running costs and emissions.”
National Automotive Leasing and Salary Packaging Association chief executive Rohan Martin said the government had balanced fiscal responsibility with retaining the “single most effective demand-side lever for EV uptake”.
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