South Australia offers $3,000 rebate to limited number of new electric cars

South Australia has become the latest state to offer a rebate for electric car purchases, with a $3,000 rebate for the first 6,000 vehicles. But it has immediately been criticised as not enough to power a rapid transition to zero emissions cars.

The $18 million plan proposed by the South Australian Liberal government would be in addition to the state’s $18.3m Electric Vehicle Action Plan that it announced in its State Budget 2020-21. It joins NSW and Victoria with similar rebates.

“We are committed to investing to help drive the take-up of environmentally friendly zero and low emission vehicles while ensuring there is a long-term sustainable model for critical road funding,” said state treasurer Rob Lucas in a statement.

“Our proposed new $3,000 State Government-funded subsidies for new full electric vehicles are expected to provide a further incentive for those motorists who may be considering a purchase of this type.”

The about-turn by the South Australian government has been welcomed, but The Australia Institute says it is a small, temporary measure that will not do enough to facilitate the transition.

It says South Australia should be spending as much as $107 million to encourage an EV transition, an amount that would match that of NSW, which was awarded the top scorecard on EV policy in the recent Electric Vehicle Council report, per capita.

NSW’s EV plan will see the first 20,000 EV purchases from September 1 receive a $3,000 rebate and a waiver of stamp duty.

“A small, temporary incentive slapped on top of a permanent tax on an essential weapon in the fight against climate change just doesn’t cut it,” said Noah Schultz-Byard, SA director at The Australia Institute, in a statement.

Federal Chamber of Automotive Industries chief Tony Weber said the new incentive would send consumers the right message. “The proposed customer subsidy of $3,000 for electric vehicles provides a positive signal to customers and car companies that this emerging technology is a key part of our transportation future,” he said in a statement.

Schultz-Byard argues that with the latest IPCC report message that crucial climate action and decarbonisation must be achieved within the next few years if the planet is to avoid exceeding 2°C of warming, more action needs to be taken by the South Australian government on transport, which in Australia accounts for around 20% of carbon emissions.

“We are in the midst of a climate emergency and South Australia is already lagging badly behind the rest of the world when it comes to reducing carbon emissions from our transport sector. More needs to be done to support a rapid switch to EVs,” he says.

While Schultz-Byard argues South Australia needs to step up on incentives, the proposal to offer an incentive is a turn-around from rumblings in early 2021 when the Lucas said his government may copy the “crippling” Victorian Labor stance of introducing a road use levy on electric vehicle drivers because they do not pay fuel excise.

Eventually a road user tax will likely be needed to address falling fuel excise, said Lucas. And while falling fuel excise is largely due to increasing fuel efficiency of combustion engine cars it will also decline as electric cars become more prevalent, simply because overseas governments are legislating the decarbonisation of the transport sector and Australia does not make cars.

The early introduction of road user taxes has been decried by several quarters because it would put a roadblock in the way of the transition to clean transport, targetting the nascent electric car industry in a move that has been likened to a “tax on non-smokers“.

That didn’t stop the Victorian government introducing an EV tax in July, however NSW is delaying an EV tax until certain milestones are reached.

South Australia will now fall in line with NSW, delaying the proposed road user tax until 2027, or when the state’s motor vehicle sales reach 30%, whichever comes first.

Weber says that state road user taxes would be useful if applied across all vehicle types, particularly in the absence of any federal initiative on the simplification of vehicle taxation.

“The FCAI is a strong advocate for the reform of outdated, inefficient and burdensome taxes and charges to be replaced with one efficient road user charge that can apply to any type of vehicle,” he said.

“The proposed user charge for electric vehicles is consistent with the charge proposed in other States which provides a platform for national consistency in the absence of a Federally-led approach.

“The timing of the introduction of the charge in 2027, or when EVs represent 30% of sales, will allow some time for the market to adjust. This will result in low emission vehicles taking a greater share of the overall automotive market,” Mr Weber said.

With 60,000 cars sold in South Australia in 2020, the new incentive would only account for around 10% of purchases if all were claimed within the first year. Reaching the 30% sales target would equal around 1,500 new EV sales per month.

Poll results published in August by the Australia Institute showed that South Australians are keen to buy electric cars, but with the higher purchase price of EVs already a barrier to uptake 69% said they wouldn’t make the switch if a road user tax were introduced.