Why now is the right time for an electric-bike subsidy

In May the Victorian government, in response to heavy criticism of their electric vehicle road user charge, announced a $3,000 subsidy for the purchase of an electric vehicle priced under $68,740. This week, NSW has followed up with its own $3,000 rebate and a stamp duty exemption.

The ACT government leads the way in electric vehicle support, with the highest take up of electric vehicles as a proportion of all sales, in part due to financial incentives, such as stamp duty waivers and now free registration and zero interest loans.

As has been widely published elsewhere, Australia is at the back of the pack when it comes to the take up of EVs, at less than 1% of new cars sold, compared to over 50% in Norway. The strong take up in European countries is as a direct result of established incentive programs, including measures to lower the cost of purchase.

It’s therefore reasonable for Australian governments to begin to subsidise EVs, given that transport is the fastest growing source of national emissions, and that high purchase cost is the biggest barrier to the uptake of EVs.

One simple and fiscally modest addition to the government’s electric vehicle subsidy program would be the inclusion of 2 wheeled electric vehicles. Unlike Sweden, Germany, the UK and France, Australian support for EVs is restricted to those with four wheels. The reason these other OECD countries provide a subsidy for e-bikes and e-cargo bikes is because:

• Upfront purchase price is one of the main barriers to the uptake of e-bikes/e-cargo bikes in Australia
• E-bikes are shown to be more likely to act as a replacement for motor vehicle trips than conventional bikes, helping to reduce congestion, carbon emissions and parking frustration.
• E-bikes provide enough physical activity to help people live healthier lives, but don’t require the physical exhaustion that can act as a barrier to conventional bike riding.
• E-bikes are used twice as often as conventional bikes, for trips twice as long
• E-bikes use 1/40^th the energy of electric vehicles, and only cost 15c to charge, using a regular power point.
• Subsiding e-bikes is much cheaper than subsidising e-cars, and a much greater proportion of the population could afford a subsided e-bike, compared to an e-car.

What would an e-bike subsidy program look like? Thankfully, since there are so many e-bike/e-cargo bike incentive programs in other countries, we can look to their programs to point us in the right direction. Whilst there are small differences across the various countries operating such schemes, they all share some common features:

• Provide the subsidy at the point of purchase. Just like the Victorian government’s e-car subsidy, the rebate is done through dealerships/shops.
• Provide ~25% subsidy, up to the value of $4000. This means that if an e-bike costs $4000, the buyer is provided a $1,000 subsidy, and this essentially acts as a cap on the government’s contribution.

The benefit to government from subsidising e-bikes and e-cargo bikes include:

• Reduction in emissions. About 50% of car trips in Australian cities are under 5km, so there is huge potential to reduce short car trips by making e-bikes more attractive.
• Reduces congestion and parking pressure in our cities.
• Boost in cycling, which increases people’s health and wellbeing.
• Provides a greater diversity of transport choice and lowers transport costs.

In essence, the winners from this program are anyone who takes up the offer, and anyone that doesn’t and continues driving (as they will not need to compete as much for road and parking space, not to mention the reduction in emissions).

With bike riding surging during the pandemic, people’s hesitancy to use public transport, and state governments setting ambitious climate targets, now is a perfect time to start subsiding e-bikes.

Author: Dr Elliot Fishman, Institute for Sensible Transport, a consultancy to government on sustainable mobility.. Find them at www.sensibletransport.org.au