While the electric vehicle (EV) market has been getting stronger year-on-year in Australia, that trend could soon start to slow down as government subsidies fade away. Queensland has become the latest state to end an initiative to get Aussies on the EV bandwagon.
The Sunshine State used to have the biggest rebate for motorists wanting to buy an electric car, with up to $6,000 available to eligible residents and businesses. Car expert Paul Maric told Yahoo Finance the EV boom could start to slow down in Australia and across the world if this continues.
“I think that once the governments start pulling back on incentives, we’re going to start seeing the demand drop and these vehicles will reduce because they’re not the same cost as an internal combustion car,” he said.
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Having an EV can cost considerably less than a regular combustion engine. A Compare the Market analysis found electric car owners in Sydney and Brisbane spent between $897 and $1,536 less a year on car running costs compared to petrol car owners.
This is one of the major selling points for the EV market and it encouraged many to sell their petrol or diesel cars in exchange for an electric car.
According to the Australian Automobile Association, battery-powered electric vehicles accounted for 8.7 per cent of the car market at the start of the year, but that fell to 8.1 per cent in 2024’s second quarter.
In 2023, a record 87,000 EVs were sold and the Electric Vehicle Council believes Australia is on track to pass the 100,000 mark this year. But the Council is concerned this trend could slow down if governments pull out of the market.
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“These figures demonstrate that Australians want more electric cars and governments need to listen to this demand by continuing to provide support for electric vehicles,” Electric Vehicle Council chief executive Samantha Johnson said last month.
“We have seen several states prematurely withdraw incentives – it is critical that governments implement targeted programs that enable more Australian households and businesses to make the switch to electric vehicles.”
What state government subsidies have ended?
Queensland’s Zero Emission Vehicle Rebate Scheme ended on September 2 and has been around since May 2022.
The state government committed $45 million to the rebate program, which was aimed at making the purchase of an entry-level EV more affordable for more households and businesses.
Under the scheme, households with a taxable income larger than $180,000 per year would be eligible for a $3,000 rebate if they bought an EV. The rebate would jump to $6,000 if you earned under that salary threshold.
New South Wales had a similar rebate policy to encourage residents to buy an EV, but that ended on January 1 this year.
Eligible NSW drivers were exempt from stamp duty charges if they bought an EV for less than $78,000, and $3,000 rebates were available for the first 25,000 EVs purchased for less than $68,750.
The cut-off date for applying for a stamp duty refund in NSW was June 30 this year.
The move was aimed at saving NSW EV drivers up to $5,540, but one month before the scheme was due to end only 10,229 rebates had been paid and there were nearly 14,000 spaces still available. The state government has now pivoted to plunging money into boosting EV charging infrastructure.
South Australia similarly ended its rebate scheme for EV purchasers at the end of 2023, which gave people up to $3,000 for a new battery electric and hydrogen fuel cell vehicles valued below $68,750.
Our nation’s capital was offering free registration and an exemption from stamp duty for vehicles classed as zero emissions up until June 30 this year.
Infrastructure needs to keep up with demand
While there is a significant push to get Aussies into EVs en masse, Maric is worried the charging infrastructure isn’t keeping pace.
Across Australia, there are more than 2,500 charging stations, compared to approximately 6,500 petrol stations. For an even bigger comparison, EV drivers in Canada can choose from 7,000 charging locations.
He also pointed to Ampol, one of the country’s largest petrol retailers, recently winding back plans to triple the number of EV chargers because of grid limitations.
Ampol orignally wanted to increase charging bays from 92 to 300 by the end of this year but chief executive Matt Halliday said the grid is already struggling to cope with the increased demand coming from EVs.
“I think it just shows you that it isn’t quite as simple as just throwing money at it,” Maric said.
“Our grid itself is unable to cope with the level of charges we need at the moment to facilitate all of the electric vehicles that will be hitting the road.”
China’s influence might cause a ‘tipping point’
There’s also the impact that China could have on the Australian EV market.
Chinese-made electric vehicles are set to flood into Australia over the coming months and Maric predicts this could cause a major “tipping point”
“We’ve got another 10 or so Chinese car brands coming to Australia… we are going to have so many brands here, most of which that no one has ever heard of,” he told Yahoo Finance.
“So I think during the next sort of year or so, we’re going to see this big rush of cars coming in.
“But like any business, I think a lot of the Chinese brands that are coming to Australia are going to see that it’s not quite as simple as just flooding the market with cars and we will see some of them drop off.
“It’s at that point that I think we’ll see some normalisation to not only prices but the vehicles that are available for people to buy.”
State-by-state breakdown of EV rebates and bonuses
Federal: Eligible EVs are exempt from the fringe benefits tax (FBT) if they fall under the luxury car tax threshold of $91,387. Plug-in hybrids can also benefit from this initiative, but that will end on April 1 next year.
NSW: Nothing
Queensland: Nothing
Victoria: EV and low-emission vehicle owners can receive a $100 discount every year of their registration.
Owners of an EV above $76,960 will also get access to a flat rate of vehicle motor duty, meaning they will pay less than a driver buying a standard passenger car of the same value.
ACT: While EV drivers can’t access free rego, they will pay much less than combustion-engine vehicles. ACT residents can also apply for a zero-interest loan of up to $15,000 to purchase an EV as well as help with the costs associated with energy-efficient upgrades and household battery storage systems.
Tasmania: The Electric Vehicle Rebate provides funding of $2,000 for new battery electric vehicles or second-hand but new to Tasmania electric vehicles. Rebates will be re-released to new applications until funding runs out.
Eligible residents can also apply for an interest-free loan of up to $10,000 to install an EV home charging facility that needs to be paid off over a maximum term of three years.
South Australia: A three-year registration fee exemption exists for new battery electric and hydrogen fuel cell vehicles valued up to $68,750 (inclusive of GST). The exemption is available for new battery electric and hydrogen fuel cell vehicles first registered from 28 October 2021 and up to 30 June 2025.
Northern Territory: EV drivers in the Top End can receive a stamp duty concession on cars valued up to $50,000 until 30 June 2027. They can also access free rego for new and existing EVs, as well as a grant of $1,000 for residents and $2,500 for businesses who buy and install EV chargers.
Western Australia: Residents can access the state’s Zero Emission Vehicle (ZEV) Rebate Scheme, which will give them upwards of $3,500 back if they purchase an EV.
That is only available for 10,000 eligible vehicles and the scheme will run out by May 10.
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