Bowen says Labor’s FBT exemption will make electric cars very affordable

Labor climate and energy spokesman Chris Bowen says his party’s proposed fringe benefit tax exemption for EVs will make electric cars “very affordable” for business, and says there are more EV policies to come.

Labor went into the last election armed with a target of a 50 per cent share of new car sales to be EVs by 2030. It was seized upon by the federal Coalition as some sort of mandate, and led to an absurd but sadly effective campaign that included the “weekend will be ruined” by electric and Labor will “steal your utes” memes.

“I don’t think we need an EV target,” Bowen said in an interview in the latest episode of RenewEconomy’s Energy Insiders podcast.

“The 50 cent target enabled the Liberals to point to it as a mandate, to point to it as some sort of compulsory government edict that 50% of cars would be EVs. Now, of course, that was complete nonsense. It was never never the case and couldn’t be the case, completely unrealistic.

“But they got away with it. Morrison was able to say that 50% EVs will mean the end of the weekend. It’s complete garbage, as we all understand, but it was pretty effective.

“So I prefer the levers, the powerful levers, are bringing the cost of EV’s down and I paint it as a choice. You know, I want to I want Australians to have more effective choice.

“At the moment, there are a lot of people who would love an EV, but they can’t afford one because the cost is high, we don’t get enough affordable EVs into Australia compared to other countries … manufacturers (are) just not bringing the affordable ones here because the policy settings aren’t right. ”

Bowen has already announced some, but not all, elements of Labor’s EV policy.

First is the exemption for EVs from of the 5 per cent import tax that applies to cars below the luxury car tax threshold. “It’s material, it’ll take $2,000 off a $50,000 Nissan Leaf,” Bowen says, noting that states such as NSW, Victoria, Tasmania and the ACT are also offering a mix of rebates, stamp duty exemptions and interest free loans.

The biggest impact could be on the FBT exemption for the fleet or business market, meaning that EVs will benefit from the same exemptions afforded to utes.

“If you’re an employer who gives an employee a car, you don’t pay fringe benefits tax if you give them a ute, which you do if you give them any other sort of a car.

“We will provide the same FBT concession for an electric vehicle as is currently available for a ute. That’ll bring $9,000 off the cost of an EV at an affordable price. So that is real. That is really significant I think because 50% of purchases in Australia are a fleet so that’s a real driver.

“If an employer can get a car $9,000 cheaper that will really drive behavior in my view. And that’s important not only because of the numbers, but also just the demonstration effect, getting more EVs out there.

“If a neighbor sees their neighbor pull up with an electric vehicle, which is a company car,  they might take it for a spin and see actually, it does go all right, and it can travel a good distance, just in terms of breaking down those misconceptions, I think will be very important.

“So that’s just the cost offering on electric vehicles. We’ve got to still look at some of the other elements of our electric vehicle policy. I’ve said we’ll take an electric vehicle strategy to the election. So I’m still working on other elements.”

You can listen to the Energy Insiders podcast interview in full here.

You can read more about state-based incentives in this Explainer article here.