New South Wales announces $490 million EV incentive and support package in 2021 budget
The slow cascade of reform and incentives to adapt to a future of e-mobility has hit New South Wales, as the government announces a $490 million package to boost battery electric vehicle (BEV) uptake in the state.
Electric vehicle reform is often a battle of ideologies and ministerial power; state treasurers see potential sources of revenue whilst environment and transport ministers see community, environmental, and social benefits.
With Victoria’s rush to implement a user charge on electric vehicle owners receiving wide condemnation, NSW has taken a considered approach to state reform in this area. While not as generous as incentives implemented by the government of the Australian Capital Territory, NSW is heading in the right direction, and this announcement has received wide acclaim from industry groups like Federal Chamber of Automotive Industries (FCAI), manufacturers such as Nissan Australia and Hyundai Motor Company Australia, and community groups like Solar Citizens.
The $490 million package aims to cut the upfront costs of electric vehicles for early adopters from September 1 this year, with a $3,000 rebate available for just the first 25,000 purchases below $68,750. The following vehicles currently on the market in Australia would be eligible for this rebate:
L to R: NSW treasurer Dominic Perrottet, EV Council CEO Behyad Jafari, NRMA CEO Rohan Lund, NSW Environment minister Matt Kean and NSW transport minister Andrew Constance. Image: Andrew Constance via Twitter
BMW i3
Hyundai Ioniq range
Hyundai Kona Electric range
Kia Niro range
Maxda MX-30 E35 Astina
Mini Electric
MG ZS EV
Nissan Leaf Range
Tesla Model 3 Standard Range Plus
Stamp duty on BEVs and hydrogen vehicles will be waived from September 1 this year, provided the vehicle retails for less than $78,000. Duty in the state is calculated at a rate of 3 per cent on the vehicle’s value (excluding registration and compulsory third party insurance, but including Goods and Services Tax (GST) and Luxury Car Tax (LCT)) and an additional 5 per cent on every dollar about $45,000.
These incentives will be offset by a 2.5c/kilometre charge set to be introduced in 2027, or when EV sales in the state make up 30% of total sales, whichever comes first.
As an example, if you were looking to buy a Kia Niro EV that had a retail price of $66,000 inclusive of options and federal taxes, the state stamp duty cost would be $2,400. Instead, the government is reducing the price to $63,000 for those first 25,000 takers.
If you purchase a $66,000 BEV once the c/km charge comes in in 2027 —assuming stamp duty rates remain the same— you would be saving $2,400 in duty payable to the state.
Unfortunately, this unfairly targets consumers in regional areas or those who are pushed to the urban fringe of Sydney, who are forced to drive long distances due to limited transport options. A 2.5c/km charge wouldn’t concern an inner-city driver who might cover ten-to-twenty kilometres a day and certainly wouldn’t push that driver into public transport options.
It would disadvantage many of the state’s residents who have no option but to drive hundreds of kilometres a week; a commuter who travels 30,000 kilometres a year would eradicate any stamp duty saving on that $66,000 vehicle above in just three and a quarter years, paying $750 in EV tax annually.
The NSW government also announced that its own vehicle fleet would be fully electrified by 2030, and is putting $33 million toward that goal.
NSW transport minister Andrew Constance is hopeful that an increase in electrification of vehicles in NSW will reduce the state’s emissions, saying “Our transport sector currently makes up 20 per cent of the state’s emissions, with almost 50 per cent of those coming from passenger vehicles,” Constance said. “Electric vehicles are not only cheaper to run and quieter on our roads, but they also reduce both carbon emissions and air pollution which results in dramatically improved health outcomes for our communities.”
There’s also $171 million to establish a network of ultra-rapid vehicle chargers across the state’s major highways, that aims to replicate Queensland’s Electric Super Highway, $20 million in grants to assist key tourist sites rolling out destination charging facilities, and $20 million for charging infrastructure at public transport hubs and depots.
The government has an ambitious target to ensure Sydney residents are no more than 5km from a rapid charging site, and that regional residents are within 100km of rapid charging facilities. Buried deep in the press release were these maps, and it looks like the government intends to provide pretty broad coverage across all areas of NSW.
The NSW government has announced that most of the state will be covered by DC rapid charging sites, with communities to be no more than 100km from a charger.
Sydney residents are promised a rapid charging network that will likely roll out at key sites around the city’s orbital motorway system, with charge points to be located within 5 minutes drive of all residents.
NSW is set to roll out a network of rapid EV charging sites across the state’s highways and freeways.
According to The Driven, NSW energy minister Matt Kean said the new policies should put the state on track to see an electrification rate of 50 per cent of new car sales.
“Countries and carmakers around the world are moving to EVs and NSW consumers deserve access to the latest vehicle models when they go to buy a car,” Kean said. “We also know that, with new cars staying on the road 15 years on average, the vast majority of new cars sold in NSW need to be EVs by 2035 to achieve net zero emissions by 2050.”
“Our aim is to increase EV sales to more than 50 per cent of new cars sold in NSW by 2030 and for EVs to be the vast majority of new cars sold in the State by 2035.”
“This nation-leading plan will help us achieve these objectives by tackling the three biggest barriers to purchasing an EV – range anxiety, upfront cost, and model availability – and is forecast to see EV new car sales hit 52 per cent by 2030-31. We want new and cheaper models of EVs to be available here in NSW and this strategy is designed to drive that outcome,” Kean added.
The above initiatives are certainly welcome, and with around 400,000 new car sales a year, NSW holds the crown for the largest passenger car market. Any uptake in electrification will certainly assist in emissions reduction.
Kia’s Niro EV will benefit from zero stamp duty under the NSW government’s new EV scheme.
There are a number of policy changes that we would have liked to see alongside the EV incentives:
Interest-free loans for EVs and household batteries and solar (as per the ACT)
A charge on internal combustion engine vehicles, either at the point of sale or on a cents-per-kilometre basis factoring in weight and emissions
Low Emissions Zones (LEZs) established in congested areas such as Sydney’s central business district (CBD), the Parramatta CBD, and in the soon-to-be-built third Sydney basin city of Bradfield;
Concessions for those outside dense metro areas
We believe that along with the carrot approach, a little bit of stick is needed to accelerate the change to EVs. As New Zealand recently demonstrated, EV subsidies should work hand in hand with appropriate levies on polluting internal combustion vehicles. a Ford Ranger or Toyota Hilux will incur an additional $NZ2,900 fee under the country’s new scheme.
NSW’s scheme also penalises those who have no choice but to drive more; a 2.5c/km charge won’t impact an inner-city Sydney resident who might drive 5-6km per day (and certainly won’t be a push factor into public transport), whereas it would have a large impact on regional residents or those on to the city’s fringe who are forced to commute 50, 80 or 100+ kilometres per day by car, and don’t have alternative transport options.
The scheme should take this into account, and we believe emissions zones would be another great addition. By designating certain dense city areas a LEZ, The state can generate additional revenue, dissuade polluting trucks and ICE cars from entering central city areas at peak times, and improve public health outcomes for commuters and residents.
The state’s Premier, Gladys Berejiklian has stated that the new city of Bradfield — currently in the early stages of master planning — will be Australia’s first 22nd Century City; if this is truly the case, the government should recognise any city from the future must be emissions-free. When a government has the rare opportunity to plan a dense metropolitan area from scratch, it must think big, and it must think zero-emissions.
All in all, this is a welcome announcement from the NSW government, and with rebates and stamp duty waivers set to commence from September 2021, we may see a sharp increase in EV sales in the latter part of this year.