EV tax discount removed two days' worth of carbon emissions

The EV tax discount abated two days' worth of emissions, a Treasury review has concluded. (ABC News: Keana Naughton) The EV tax discount removed two days' worth of emissions, at a cost of $2 billion. About 64,000 more electric vehicles are on Australia's roads thanks to the scheme, which the government says helped jump-start the industry. Changes to the EV tax discount coming in the federal budget will add as much as $18,800 in tax to the cost of a typical $50,000 EV novated lease. Link copiedShareShare articleThe $2 billion tax discount for electric cars abated two days' worth of Australia's annual carbon emissions since it began in late 2022, a government review has found. But its supporters say — while expensive — the scheme successfully jump-started an EV market that was struggling to get off the ground. The popular scheme is estimated to have resulted in an additional 64,000 battery electric vehicle sales since its beginning to the end of last year, or about a quarter of all EV sales in that time. That has avoided about 2.2 million tonnes worth of emissions from cars, the Treasury review found. That equates to two days' worth of the roughly 440 million tonnes of emissions Australia pumps out each year, or about eight days' worth of transport emissions. The EV tax discount helped to add about 64,000 more electric cars to Australia's roads. (Reuters: Yves Herman) The scheme has been adopted at a rate far beyond the government's expectations and is now expected to cost $1.35 billion this year alone, well above the initial forecast of $90 million. As the federal government searches for savings, it has announced a wind-back on the tax discount for EVs bought under a novated lease, saying electric cars worth more than $75,000 will have to pay some fringe benefits tax from April next year, and all EVs will have to pay from 2029 — though at a discounted rate. Climate Change Minister Chris Bowen said the government was reforming the scheme to make its value more focused towards cheaper EVs. But he maintained the scheme had been a success, comparing it to early investments in rooftop solar. "15 years ago support for household solar was looked at in isolation and seen to be too expensive, but it created an industry and the market conditions which has led to one in three homes taking up solar, slashing costs for consumers and cutting bills for good," Mr Bowen said. "The same is true of EV uptake in Australia — our EV tax break has supercharged our take up of cheaper to run cars and the knock on effect is harder to measure, from cleaner air, avoided fuel costs, unlocking more public charging infrastructure and quieter streets." Rooftop solar has had a greater adoption in Australia than anywhere else in the world. (ABC News: Daniel Mercer) The review noted the scheme's indirect benefits, such as supporting Australia's EV charging network, stimulating the wider EV market and reducing health impacts from air pollution. Since the EV tax discount's introduction, sales of battery electric and plug-in hybrid cars have surged from 3.8 per cent of all sales to 19 per cent of car sales as of February. Rohan Martin, chief executive of the national car leasing peak body, said the scheme helped to normalise EVs. "There's always going to be some apprehension with a new product, but the more of these vehicles we see on the road, the more we see parked in our neighbours' driveways, the more that they will become accepted by the mainstream," Mr Martin said. The Productivity Commission estimated the tax discount was costing somewhere between $987 and $20,084 per tonne of emissions reduced, depending on how many EV sales could be attributed to the scheme. The commission sets the lowest-cost abatement price of about $67 per tonne. Treasury acknowledged the Productivity Commission's remarks the electric car discount "is unlikely to be the most cost-effective way" of reducing emissions. The head of the National Automotive Leasing and Salary Packaging Association, Rohan Martin, said the scheme was still "absolutely value for money". "There may be cheaper ways that are less effective … [but] we are well behind the eight-ball in terms of where Australia needs to be in terms of EV uptake, in terms of hitting our climate targets," Mr Martin said. Mr Martin said without the push from the tax perk, Australia would be even further behind in its EV adoption. He pointed to EV sales rates in Norway of 92 per cent of new cars, 58 per cent in Sweden, 24 per cent in France and 28 per cent in the United Kingdom. Australia is lagging behind at about 19 per cent of new car sales being electric vehicles, though that number has surged from before the tax discount's introduction, as well as other reforms, including a penalty scheme for heavy-polluting vehicles. "We're a long way behind them," Mr Martin said. The report found the tax discount was saving drivers about $3,200 to $4,700 a year for a $50,000 electric vehicle, depen

EV tax discount removed two days' worth of carbon emissions

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