A new report from the RACE for 2030 Cooperative Research Centre sheds light on Australia’s poor uptake of electric vehicles and recommends tax incentives to encourage greater adoption of EVs.
Researchers from Griffith University and Monash University reveal that of just under one million new cars sold in Australia in 2020, just 7000 were EVs. This represents 0.7 per cent of the new car market, which significantly lags behind many European countries, including Norway which boasts 74 per cent new electric vehicles on the road.
The report says buying and running EVs for business fleets is too costly under Australian tax rules, and it proposes practical tax changes to support home charging and allow fleet managers to readily adopt battery electric vehicles.
“Some of our recommendations could be implemented right now,” says Griffith University tax law expert and lead researcher Dr Anna Mortimore.
“Because of the turnover of business fleets, these vehicles would start flowing into used car markets within three to four years so more Australians could afford to go electric.”
The researchers say Australian fleet managers believe the cost of owning and running EVs is currently too expensive.
“Fleet managers told us the total cost of owning an EV can be twice that of an equivalent petrol car,” says report co-author Dr Diane Kraal, a tax law expert with the Monash Energy Institute.
“There is a lack of business site charging infrastructure for EVs. But statistics show that most employees park at home every night so home charging is a solution to increasing fleet EVs.
“There are challenging barriers to home charging fleet EVs, such as tax imposts on driving a car home to charge, home charger costs and the use of home energy to charge.”
Dr Kraal says tax incentives would kickstart Australia’s EV market.
“Changes to Australia’s current fringe benefits tax and income tax would provide solutions, as seen in European countries with high numbers of EVs, such as Norway, Netherlands and Germany,” she says.
The report proposes short-term tax changes, including EVs being fully exempt from fringe benefits tax if they are provided by an employer; concessions made depreciation of EVs; eligibility for 100 per cent instant asset write off of EVs, but not petrol cars; and tax-deductible home chargers for fleet employees.
Long term recommendations include vehicle fringe benefit taxes being based on CO2 emissions, and government subsidises for cost and installation of EV chargers at fleet employees’ homes.
“Battery electric cars will be the best option for fleet managers once effective tax changes are made in Australia,” says Dr Mortimore.
“Our report outlines 17 short-term and long-term tax changes that will transform Australia’s car fleet.
“These are policies used successfully by countries in Europe with high EV uptakes, and our research indicates they will work in Australia as well.”
The Reliable Affordable Clean Energy for 2030 Cooperative Research Centre (RACE for 2030) is a 10-year, $350 million Australian research collaboration involving industry, research, government and other stakeholders with a mission to drive innovation for a secure and affordable clean energy future.