Make electric cars cheaper: Labor promises tax breaks for EVs, battery storage

Federal Labor has promised to slash taxes on electric cars and remove key barriers to uptake as part of a new suite of climate policies aimed at lowering cost-of-living pressures on Australian households.

The opposition will on Wednesday reveal it would remove government charges on non-luxury electric vehicles, including import taxes and fringe benefits tax, to drive down the sticker price for Australians who want to drive electric cars.

Labor plans to make electric cars cheaper in Australia if it wins the next federal election.Credit: AP Photo/Jens Meyer

Putting the party on an election footing, Labor leader Anthony Albanese will also announce a $200 million package to install 400 community batteries across the country should it form government, which would support 100,000 households by storing energy from popular residential rooftop solar during the day.

Labor was pummeled by the Morrison government during the 2019 election campaign for wanting to “end the weekend” by setting a 2030 target of 50 per cent of all new car sales being electric. Subsequently, Australia’s take-up of battery-electric and plug-in hybrid cars has lagged behind many European and Asian nations and North America.

While it has walked away from imposing a national target on commercial sales or mandating EVs for government fleets, Labor says in government it would work with industry, unions, states and consumers to develop Australia’s first National Electric Vehicle Strategy. That would include boosting domestic manufacturing of electric car components — especially batteries — and the consideration of moving to road-user charging to address declining fuel excise.

There are no electric cars currently available in Australia for less than $40,000 and just five for under $60,000. In Britain there are more than two dozen electric cars available for under $60,000 — including eight that are cheaper than the cheapest electric car in Australia.

The Electric Vehicle Council estimates removing the 5 per cent import tax on a $50,000 model, such as the Nissan Leaf, would save consumers more than $2000. If the same model was provided through employment arrangements, a fringe benefits tax exemption would save employers up to $9000 a year.

Exemptions will only be available to cars below the luxury car tax threshold for fuel-efficient vehicles, which is currently at $77,565.

“A majority of Australians say they would consider buying an electric model as their next car, but because of scaremongering and the policy vacuum under the Morrison government, electric vehicles remain unaffordable for most Australians,” Mr Albanese said.

“By reducing upfront costs, this policy will encourage uptake, cutting fuel and transport costs for households and reducing emissions at the same time.”

Australia will need to drastically reduce pollution levels from passenger cars, which make up almost 10 per cent of Australia’s annual greenhouse gas emissions, if it is to achieve both its Paris climate targets of 26 to 28 per cent below 2005 levels by 2030. Labor estimates the incentives would cost around $200 million over three years.

Labor’s community battery policy is designed to cut power bills, emissions and reduce pressure on the electricity grid.

A community battery is typically the size of a 4WD vehicle and provides around 500kWH of storage that can support up to 250 local households.

Climate spokesman Chris Bowen said it would allow households that can’t install solar — like apartment owners and renters — to draw from excess electricity stored. While models will be tailored to local needs, community batteries will be funded by the Commonwealth, installed by licensed electricians, and operated by network operators.

Once a battery is installed in a community, providers would invite local households to participate, just like they offer solar and battery schemes now.

“Only 1 in 60 households have battery storage, because the upfront costs are still just too high,” Mr Bowen said. “The technology of the future to cut household bills and emissions is already here, we just need the policy settings to unleash it.”