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The latest incentives for EV drivers in NSW and the ACT

Electric vehicle charging
Electric vehicle charging

The NRMA strongly supports the NSW Government’s sweeping tax reforms and initiatives aimed at making it cheaper and easier to purchase and own an electric vehicle (EV) in NSW. We also support ACT Government's leadership role in driving reform.

From September 2021, the NSW Government has waived stamp duty on EVs valued at less than $78,000, and the first 25,000 people to buy an EV or hydrogen fuel cell car valued at less than $68,750 will receive a $3000 rebate. Under the road and tax reforms, part of a $490 million commitment in the 2021-22 NSW budget, electric vehicles will ultimately be subject to a per-kilometre road user charge instead of stamp duty and fuel excise.

The program is the first step in the NSW Government’s goal to have EVs represent 53 per cent of new vehicles sold in NSW by 2030. 

NSW reforms at a glance

  • $490 million in funding and tax cuts
  • Aim to cut EV range anxiety, upfront costs and model availability
  • Stamp duty waived on EV and hydrogen fuel cell cars valued at less than $78,000
  • $3000 rebate on the first 25,000 privately purchased vehicles valued at less than $68,750
  • Road user charge to be implemented in July 2027 or when 30 per cent of new vehicle sales are EVs
  • $131 million on fast chargers and $40 million on EV chargers at tourist destinations, carparks and hotels
  • $33 million to start the transition of government passenger fleet to EVs where possible
  • Will make cheapest EV on the market around $40,000 drive away
  • Households with limited off-street parking to be no more than 5km from a fast charger
  • In the coming months, the NSW Government will update policies and legislation to allow EV drivers to use T2 and T3 transit lanes for a limited time to encourage EV uptake. 

NSW Government, EV Council and NRMA representatives

Pictured: Andrew Constance - Minister for Transport and Roads in NSW, Matt Kean - NSW Minister for Energy and Environment, Dom Perrottet - NSW Treasurer, Rob Sharp - TNSW Secretary,Rohan Lund - NRMA Group CEO, Behyad Jafari - EV Council CEO

Working towards price parity

“This is not about trading off performance, comfort, convenience or cost to take action on climate change,” says NSW Minister for Energy and Environment, Matt Kean.

“This is about embracing new, better technology that is coming down the cost curve and giving Australian customers choice when they go to buy their new car.”

With the rebate and stamp duty deducted, the cheapest EV currently available in the Australian market, the MG ZS EV small SUV, would cost just over $40,000 drive away. Removing stamp duty and offering rebates are important steps towards achieving purchase price parity with petrol and diesel vehicles.

 “Our comprehensive strategy is about making sure we have the right mix in place to incentivise the take-up of electric vehicles, while ensuring everyone who drives on our roads contributes to funding and maintaining them,” says NSW Treasurer, Dominic Perrottet.

NRMA Group CEO, Rohan Lund, says the organisation supports a policy that makes buying and driving an electric vehicle easier and more affordable. 

“The biggest impediments to the take-up of electric vehicles that we hear from our membership are price and range anxiety – and the NSW Government’s policy goes straight to those concerns,” Mr Lund says.

“The commitment by the NSW Government to ensure all households with limited off-street parking will be no more than 5km from a fast charger is important because our research shows anxiety about charging continues to be a concern for many drivers.”

Regional areas to benefit 

Country areas will also benefit from the program, with $20 million in grants allocated for fast charger installation in regional tourism destinations.

“The government’s announcement of a push towards EV tourism confirms much of what we’re already seeing in our own electric vehicle network – frequent use of our charging stations across regional destinations as a result of increased domestic drive tourism,” Mr Lund says.

“We also welcome the important decision to reform road pricing and defer the start of road user charges until 2027 or when 30 per cent of new vehicle sales are EVs, as it’s clearly too early in the rollout of this new technology to have any financial impediments.”

Tackling vehicle emissions and lowering running costs

Behind all the reforms is a government plan to tackle vehicle emissions. According to Minister for Transport and Roads, Andrew Constance, transport accounts for 20 per cent of greenhouse gas emissions – and almost 50 per cent of those come from passenger vehicles.

“Electric vehicles are not only cheaper to run and quieter on the road, but they also reduce both carbon emissions and air pollution, which results in dramatically improved health outcomes for our communities,” he says.

“The average NSW driver will save around $1000 in running costs by switching to an EV, and those savings can be up to $7500 a year for businesses, taxis and freight.”

The NSW Government is also looking to transition its own passenger fleet to electric, with $33 million devoted to creating charging infrastructure for public transport and on Transport for NSW land. Since government vehicles are typically sold after three to five years, this should increase the number of low-cost second-hand electric cars available to the general public.

Frequently asked questions

Ultra Low Emissions Vehicles or ‘ULEVs’ include Battery Electric Vehicles (BEVs), Plug-in Hybrid Electric Vehicles (PHEVs) and Fuel Cell Electric Vehicles (FCEVs).

ULEVs provide a range of benefits, including lower vehicle emissions and better air quality; ULEVs also reduce our reliance on importing liquid fuel from overseas markets.

Given their current high purchase prices, ULEVs contribute significantly to government revenue through a combination of GST, LCT, stamp duty and registration; transitioning to ULEVs also shifts consumer fuel spending towards Australian-made energy, supporting Australian industry.

While ULEVs pay very little or zero fuel excise, they contribute significantly to government revenue through GST, luxury car tax, stamp duty and registration; given higher initial purchase prices, ULEVs often contribute more to government revenue than equivalent petrol or diesel vehicles. 

The luxury car tax (LCT) in Australia applies a tax of 33 cents on every dollar paid over a certain amount on new-car purchases. For fuel-efficient vehicles, this threshold – for the 2020–2021 financial year – is set at $77,565 (versus $68,740 for ‘other vehicles’).

The Australian Taxation Office defines a fuel-efficient vehicle as having a “fuel consumption that does not exceed seven litres per 100 kilometres as a combined rating under the vehicle standards in force under section 7 of the Motor Vehicle Standards Act 1989.”

This definition is ripe for review as it casts the same net over electric, plug-in hybrid and hybrid vehicles as it does fuel-efficient, yet still conventional internal combustion engine, models.

While Australia’s cheapest electric car, the MG ZS EV, is priced from $43,990, the electric vehicle segment quickly exceeds the fuel-efficient luxury car tax threshold.

Uptake of ultra-low emission vehicles (ULEVs) in Australia continues to lag behind global standards, and the NRMA believes a large reason for this includes prohibitive costs attached to electric cars. The NRMA discourages any additional impost on buying and using ULEVs in the short-term and implores policy makers to consider the broad economic and societal benefits of ULEVs before creating additional barriers for their adoption.

Electric vehicles are currently more expensive than their combustion-engine-equipped counterparts due to battery prices and economies of scale, and while the NRMA supports reforming how we fund, finance and price road use, additional taxes on ULEVs will further delay adoption in Australia.

Governments across Australia have implemented a number of NRMA policies in recent times designed to support the transition to ULEVs, however more needs to be done in the immediate term to ensure we are not left behind in this imminent shift to newer and more beneficial technologies.

Putting downward pressure on initial purchase prices while investing in supporting infrastructure will encourage more motorists to consider ULEVs. Addressing high purchase prices compared with overseas markets and tackling range anxiety continue to be priorities for the NRMA.

 

Road User Charging is a more progressive and dynamic way of charging drivers for the use of roads, and places a greater emphasis on the pricing concept of ‘User Pays’.

A Road User Charge (RUC) would initially see ULEVs taxed on a per-kilometer-driven basis. The basis for this new charge is due to the fact ULEVs pay very little or zero fuel excise (a tax on petrol and diesel collected by the federal government). A RUC aims to provide a revenue source to ideally fund road and transport projects and maintenance.

The ‘User Pays’ pricing concept currently underpins how charges are applied for water, gas, electricity and telecommunications usage.

Once recognised, a distance-based RUC system could be evolved to consider further use factors to improve equity and road network efficiency, including location, time of day and vehicle type; price adjustments could also be considered over time and as required to ensure sustainable funding for roads and transport infrastructure and maintenance.

A RUC could apply to Battery Electric Vehicles (BEVs), Plug-in Hybrid Electric Vehicles (PHEVs), Hybrid Electric Vehicles (HEVs) and Fuel Cell Electric Vehicles (FCEVs), as well as some of the most fuel efficient combustion-engine-equipped vehicles.

In addition to existing road-related fees, charges and taxes, a proposed Road User Charge (RUC) targeted at ULEVs is being examined by several state governments. 

On 26 May 2021, Victoria's RUC tax passed through legislation to come into effect from 1 July 2021. Victoria’s RUC model will see plug-in hybrid (PHEV) owners charged two cents per kilometre, with battery electric vehicles (BEV) racking up 2.5 cents per kilometre. These equate to additional yearly costs of $400 and $500 respectively for PHEVs and BEVs that travel 20,000km per annum.

In March 2021, the South Australia State Government announced it would defer introduction of RUC until July 2022.

In NSW an RUC of 2.5 cents per kilometre ($325 per annum for the average motorist) is planned to be introduced on 1 July 2027 or 30 per cent of new vehicle sales, whichever occurs first.

The NRMA is supportive of bringing forward the evolution to cleaner and more efficient vehicles and transitioning to a Road User Charging system to improve consumer equity and road network efficiency.

As all vehicles progressively become more efficient, the opportunity to consider how we better fund, finance and pay for roads and transport infrastructure will become increasingly important.

In the short-term, the NRMA discourages any additional impost on buying and using ULEVs and implores policy makers to consider the broad economic and societal benefits of ULEVs before creating additional barriers for their adoption.

Electric vehicles are currently more expensive than their combustion-engine-equipped counterparts due to battery prices and economies of scale, and while the NRMA supports reforming how we fund, finance and price road use, additional taxes on ULEVs will further delay adoption in Australia.

 

Acknowledging the benefits of ULEVs, as well as the fact that road-related revenue is increasingly becoming an own-source revenue stream for state and territory governments, transitioning ULEVs to a Road User Charging system based on distance travelled in the first instance could underpin a broader and longer term reform agenda, supporting a move away from suboptimal fuel excise, registration and stamp duty charges.

Transitioning ULEVs to a Road User Charging system should initially incentivise uptake, particularly in the mass market; this first phase of a longer term reform agenda could be enabled by replacing government registration and stamp duty charges at the state and territory level – effectively administering a ‘tax switch’.

This approach places no additional impost on ULEVs in the short term while purchase prices remain high, and does not preclude a cross-jurisdictional commitment to ensure national consistency and simplicity; a nationally consistent approach to this type of reform is preferred and encouraged.

A trial or pilot of this type of model on a voluntary, opt-in basis would be supported by the NRMA.

The current federal excise on petrol and diesel (42.3 cents per litre) is a suboptimal tax, with the large majority of collections directed to general government revenue; state and territory registration and stamp duty charges are similarly suboptimal given their fixed structure, and are inconsistent across jurisdictions.

Provided that consumer equity is improved and no additional impost is placed on ULEVs, the NRMA is supportive in principle of reforming how we fund, finance and pay for roads and transport infrastructure with a greater emphasis on the pricing concept of ‘User Pays’.

Supporting a transition to a Road User Charging system and ULEVs concurrently is achievable if governments work together and acknowledge the economic and societal benefits of ULEVs as part of any reform agenda. An approach to Road User Charging that encourages the purchase of cleaner and more efficient vehicles will will lead to economic, environmental and consumer benefits.

Road-related income and expenditure is currently disparate, inequitable and unsustainable, with the fixed structure of several systems placing constraints on network optimisation.

A comprehensive Road User Charging system will ultimately offer the opportunity to better consider how we fund, finance and charge for roads and transport infrastructure, improving equity and sustainability.

Any potential new or additional impost on ULEVs in the short term would be counterproductive to existing government policies, and would act to discourage the purchase of cleaner and more efficient vehicles.

Given current market conditions, government projections, independent modelling and Member feedback, the NRMA supports the development of beneficial technology over the application of taxes.

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