EVs ‘will siphon $10bn in fuel excise’

Bill Shorten’s plan for electric ­vehicles to make up 50% of new car sales would strip more than $10bn in lost fuel excise.

A Tesla S75D electric car. Picture: AP

Bill Shorten’s plan for electric ­vehicles to make up 50 per cent of new car sales would strip more than $10 billion from the federal budget in lost fuel excise by the time the target was reached, putting pressure on an incoming Lab­or government to charge EV own­ers for the kilometres they drive.

Modelling by Bloomberg New Energy Finance suggests the 50 per cent target will be reached in 2033 — three years later than predicted by Labor — by which time EVs would make up 15 per cent of the nation’s fleet, costing the budget $2.3bn a year in lost revenue. But the fuel tax losses would ramp up over time, with a cumulative loss to 2033 of $10.5bn.

Bloomberg NEF analyst Ali ­Asghar told The Australian that the forecasts were modelled on technology uptake trends and falling battery costs under a neutral government policy setting.

“This is organic growth, and is mainly based on the technology trend we see in lithium ion batteries,” Mr Asghar said.

“We believe the cost of batteries will decline at an accelerated pace in line with the economies of scale of lithium ion battery production. For every doubling of production capacity, the cost goes down by about 18 per cent.”

 

Mr Asghar said by 2030, it was estimated EV sales would make up 28 per cent of total sales, and comprise 7 per cent of the fleet, costing the budget $1.2bn a year.

By 2040, Bloomberg NEF expects EVs to make up about 60 per cent of new cars, for an annual $5.5bn budget loss.

Mr Asghar said even greater losses to excise revenue would be caused by fuel efficiency improvements for internal combustion cars, adding to the case for a kilometre-based road user charge.

The Australian Automobile Association has urged both sides of politics to consider such a charge, starting with EVs, to ­ensure they pay their fair share of road funding.

But the government and Labor have baulked at the suggestion, fearing the political implications of introducing a new tax. Opposition frontbencher Anthony Albanese has declared Labor would only consider a road user charge with bipartisan agreement.

Last week’s budget revealed a net fuel excise take of $12.2bn, with petrol car owners paying an average $650 a year for 15,000km travelled. Mr Shorten offered further details of his EV policy yesterday, confirming Labor was putting the finishing touches on a plan to create a new EV industry in Australia through its $1bn Advanced Manufacturing Future Fund.

The Opposition Leader said the Coalition had given up on making cars in Australia, but Labor would work to create a new hi-tech car industry, supplying cheap finance to EV-related businesses.

“I would like to see electric cars made in Australia, because Australians are top-class manufacturers when you’ve got a government that gets behind them,” he said.

Talks have been held with major overseas carmakers, with the plan potentially involving the repurposing of disused car factories in Victoria and South Australia.

Scott Morrison yesterday pressed his attack on Mr Shorten’s EV policy.

“Bill, what will it mean for the price of a car, your vehicles emissions standards? What does it mean for the Australians who work in our refineries?” the Prime Minister said.

But Josh Frydenberg said he would “encourage people to take up electric vehicles”. “I believe that this technology will come along very strongly in the years ahead,” the Treasurer said.