The electric vehicle (EV) road taxes announced by the South Australia Liberal and Victorian Labor state governments will likely bring planned transitions of private car fleets to a halt, and will also impact jobs and the secondhand car market, industry experts say.
Likened to a “tax on millionaires” by lobbyists, an “EV tax” that in Victoria would in fact mean a secondhand EV driver pays more in road user fees than the owner of a luxury hybrid, has been met with stunned reactions from those working to clean up Australia’s transport emissions this week.
Some, such as the Australian Electric Vehicle Association (AEVA), have gone so far as to compare it to taxing non-smokers, while the Electric Vehicle Council (EVC), which represents nearly 70 companies and organisations, has named it the “Clean Air Tax” and dedicated a petition to it.
Industry stakeholders agree that electric cars should contribute to roads, but that the introduction of the tax is premature and puts Australia singularly at odds with EV policy to accelerate uptake overseas.
Central to the transition to clean, electric transport is fleet uptake, because it gives more people exposure to EVs, and it will also feed into a secondhand EV market to make it easier for more drivers wanting to do the right thing to afford a zero emissions vehicle.
Tim Washington, chair of the EVC and founder of charging solution provider JET Charge, says that an EV tax of 2.5c/km will mean it is harder for fleet managers to make the business case for a transition to clean transport.
“It’s obvious that a tax on EVs will hurt uptake, and it will be felt most of all in the fleet space,” Washington said in a note by email to The Driven.
Data from Melbourne-based research house ClimateWorks shows that electric vehicles can already be cheaper to run for fleets compared to petrol and diesel cars because of the lower cost of maintenance and power.
It’s data such as this from Climateworks and this ARENA-backed EV fleet platform from transition consultancy firm Evenergi that help fleet managers navigate the commercial decisions necessary to get electric vehicles approved for fleet transition.
“When a typical organisation wants to transition a fleet, they want to build a 10 year plan,” founder and CEO of Evenergi, Daniel Hilson, tells The Driven.
Fleet vehicles are typically turned over every three or four years, and Hilson notes that adding on a $500 EV tax for a vehicle that travels 20,000km a year means an additional $1,500 over three years, plus an equal loss on resale value because the next owner must factor the extra cost in.
For a typical 150-strong fleet this equates to a $450,000 impact over three years. Over ten years, the impact is $1.5 million.
It is reasons like this that will stop an industry still its infancy in Australia in its tracks, says Washington.
“Just as fleet managers start to plan their transition to EVs, this new tax will stop them in their tracks, because it will drive up total cost of ownership, and create an administrative burden that otherwise would not exist for non-EVs,” he says.
“These two factors will mean a further delay of fleet EV take-up, which then robs Victorians of cheaper, well-maintained, secondhand EVs that come onto the market as fleets cycle onto new vehicles. It puts us behind by years.”
It won’t only be fleets that are affected by new EV taxes, which the NSW Liberal state government has also said it would consider.
While all Australian states – with the exception of Western Australia – have committed considerable investment towards public EV charging infrastructure, Washington says privately installed infrastructure, which allows fleets and private owners to charge up when parked for a few hours, is also an important part of the transition.
“Any government should be commended for setting aside funding for EV charging infrastructure, and I’m happy to see that this is being foreshadowed by the Victorian government too,” he says.
“However, EV charging is about both public and private infrastructure. With less EV take-up, the private infrastructure in buildings, carparks and homes won’t be built up like it should, and there will be less usage of public charging infrastructure if there are less EVs.”
He notes that the growth of businesses tied into the EV industry will also be impacted if the new EV taxes stifle uptake and therefore further growth.
Ultimately this means less job creation, in an industry that could, if supported adequately, contribute to a potential one million jobs over the next five years.
There are many businesses in Australia that are contributing to the development of clean transport industries both locally and on the worldwide stage.
As Washington notes, stifling local companies makes it harder for Australian-grown technology to compete on the global market.
“Jet Charge’s growth is tied heavily into EV uptake. Our market for now is local, but the technology we develop competes globally,” he says.
“The problem is that our overseas competitors are in environments that are going all in on EVs (eg UK). That means greater access to investment, people and government support. If we don’t have a similar environment, we’ll end up just being technology takers, rather than creating an industry off this once-in-several-generation shift in transport fuel.”
Tony Fairweather, president of electric truck maker SEA Electric which has been making in-roads in both Australia and overseas markets and has more plans for expansion including a factory in Victoria’s La Trobe Valley partly funded by the state Labor government to help the valley transition from a coal economy, agrees that the introduction of electric vehicle taxes could impact local job creation.
“Australia is well behind the rest of the world in the support of vehicle electrification and the addition of taxes for electrification simply conveys the lack of understanding of this important sector,” he told The Driven in a note by email.
He questions the logic of taxing electric vehicles locally, pointing to an extensive pipeline of orders for electric trucks in the US , “the majority of which have a unit incentive in excess of USD80,000 for the end customer.”
“Considering the global expansion and EV sector valuation obtained during the 2020 pandemic, a clean run at 2021 will deliver an irreversible catalyst for EV/fuel cell transition across all segments of the EV/fuel cell space and the ultimate demise of the internal combustion engine.
“Australia needs to find a position on zero emission vehicles that reduces further embarrassment on the global stage,” he says.
Bridie Schmidt is lead reporter for The Driven, sister site of Renew Economy. She has been writing about electric vehicles since 2018, and has a keen interest in the role that zero-emissions transport has to play in sustainability. She has participated in podcasts such as Download This Show with Marc Fennell and Shirtloads of Science with Karl Kruszelnicki and is co-organiser of the Northern Rivers Electric Vehicle Forum. Bridie also owns a Tesla Model 3 and has it available for hire on evee.com.au.