The NSW government is to scrap electric vehicle rebates and stamp duty exemptions, arguing that it is “pushing up the cost of electric vehicles”, and has also confirmed it will also impose a road tax on EVs.
The Minns Government on Saturday said the $3,000 rebate for vehicles under $68,7500 and the stamp duty exemption for EVs under $78,000, will end on January 1, 2024. The road tax – yet to be defined but likely to be around 2.5c/km – will come into force – as previously flagged – in 2027.
NSW is the second Labor state to scrap its EV rebates following a similar shock decision by Victoria in June. Victoria already has a controversial EV road tax. Queensland, on the other hand, has doubled the size of its rebates to $6,000.
The NSW decision will effecting add up to $5,500 to the upfront, on-road cost of an EV. The rebates and stamp duty exemptions were introduced by the previous Coalition government in order to reduce the high up front cost of EVs.
However, the new Labor government says the rebates are actually driving up the cost of EVs, and it says that manufacturers are pocketing bigger profits.
This is despite the recent introduction, for the first time, of three new models priced below $40,000, and multiple price cuts by Tesla, for its Model 3 and Model Y EVs which account for more than half the EV market.
The NSW Budget to be announced on Tuesday will instead include $260 million for fast chargers on commuter routes, more kerbside chargers near apartment blocks, and upgraded grid capacity and charging hubs to support fleets.
“It’s important the scarce taxpayer dollars we have to transition to electric vehicles are being well spent,” Treasurer Daniel Mookhey said in a statement.
“The benefits of government spending shouldn’t be concentrated in the hands of the few, we must ensure it’s spread across the whole state.
“Savings gained from cutting these costly exemptions and rebates will be reinvested, where it is needed, to deliver a more equitable and efficient EV roll out.”
The government said that those people who have purchased or placed a deposit on an eligible EV, and are awaiting delivery of the vehicle, will still be eligible for the $3,000 rebate, even if the vehicle has not been delivered by January 1. It is not clear when the cut off date for orders is. (We have asked the government for clarification).
The road user charge, which would come into effect earlier than July 1, 2027, if EVs make up 30 per cent of new light vehicle registrations, will apply to all zero and low emissions vehicles, including plug-in hybrids, registered for the first time or transferred from January 1, 2024.
The move was slammed as a “backflip” and a “betrayal” by the Electric Vehicle Council that will slow down the rollout of Evs, deteriorate air quality, and significantly increase the state’s carbon emissions.
EVC chief executive Behyad Jafari said sales data shows the NSW’s incentives were working – encouraging EV purchases to spread from wealthier areas to the west and to NSW regions. Since the NSW rebates have been in place, sales have gone up by 450 per cent and the most popular EV models have fallen in price by $8,000.
“I doubt the people who voted for this government thought they were voting to cut electric vehicle incentives to fund handouts to coal-fired power stations,” Jafari said in a statement.
“Labor backed these EV incentives when the former government introduced them, and did not give any indication they were planning to cut them before the election.
“The NSW incentives, combined with more affordable EV imports, were just starting to drive significant uptake in Sydney’s west and the state’s regions. Now the government wants to kill that momentum.
“Wealthy people on the north shore will be fine under this change – they’ll continue to buy EVs, because they know they’re a superior option. But less well-off families in the west will be forced to stick to costly gas guzzlers and a time when petrol prices are going through the roof.
“What’s particularly galling is the reintroduction of stamp duty that was due to be replaced by road user charges in 2027. This important tax reform was in the best interest of motorists by replacing an upfront tax that often stopped people from getting into a newer, cleaner car.
“By reintroducing stamp duty for EVs the NSW Government has broken faith with voters. It’s foolish, short-sighted policy from a government that people would have expected more from.”
Jafari urged the NSW Parliament to reject Labor’s changes in order to preserve the benefits of the existing policy settings. “The Opposition, the Greens and the others in the NSW Upper House should defend the state’s interests and oppose the government’s short-sighted backflip.”