The state of Victoria is set to increase the cost of electric cars for its residents by scrapping a $3,000 subsidy for zero-emission vehicles.
This decision comes almost a year earlier than initially planned and will leave Victoria behind other Australian states such as Queensland, New South Wales, South Australia, and Western Australia in terms of electric vehicle incentives.
The Victorian government made this cost-cutting move as part of its May budget, announcing that the $3,000 rebate on new electric vehicles priced under $68,740 would come to an end on June 30. The subsidy program was introduced in 2021 with the goal of subsidizing 20,000 electric vehicles, originally scheduled to continue until May 2024.
Dr. Syed Ali, a Research Fellow in the School of Engineering, expressed concern about the decision to cut EV subsidies, highlighting potential negative consequences for Australia’s emissions targets by 2030. He emphasized that while two new electric vehicle models were being introduced to the Australian market at a lower price, ending subsidies in Victoria could strongly discourage potential EV buyers. Furthermore, current EV owners are already subject to a road user charge, a unique cost not seen in other regions.
Australia still lags behind countries like the United States, Europe, and China in terms of electric vehicle sales. Dr. Ali argues that government incentives should not be reduced until Australia achieves an EV uptake rate of 40-50%, which is currently less than 10%. Electric vehicles, particularly their batteries, represent a vital technology for significantly reducing greenhouse gas emissions.
Purchase incentives and favorable government policies play a crucial role in encouraging the swift adoption of EVs. Dr. Ali stresses that these factors are essential to enhance EV uptake. Removing subsidies may dissuade conventional car owners, who are not early adopters of new technology, from transitioning to electric vehicles or delaying their adoption.
Dr. Ali suggests that the government should continue to provide substantial subsidies until Australia’s EV uptake aligns with that of other developed countries. Additionally, there should be disincentives for high-emission vehicles, such as increased penalties and prices.
The government could also introduce special incentives for first-time EV buyers, similar to the incentives offered for first-time homebuyers. These measures would contribute to a significant expansion of the second-hand EV market, making electric cars more affordable for the general public.
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