Australia Urged to Boost EV Adoption, Cut GST, Save $40 Billion Annually

Australia is facing an urgent call to enhance its electric vehicle (EV) adoption strategies. With an opportunity to save approximately $40 billion annually by cutting oil imports, stakeholders urge the government to take decisive action.

The Case for Boosting EV Adoption

Transitioning to EVs is not just an environmental issue; it presents a significant economic opportunity. By drastically reducing oil imports, Australia could effectively boost its trade surplus, akin to launching a new export industry. This shift would not only contribute to decarbonisation but also enhance public health and increase the wealth of average Australians.

This year, three major policy reviews are underway: the EV FBT concession, the Safeguard Mechanism, and the National EV Strategy. Among these, the National EV Strategy offers the most substantial potential for improvement.

Key Recommendations for EV Policy

To optimize EV adoption, Australia needs to focus on several essential strategies:

• Expand charging infrastructure to support growing consumer demand.
• Introduce financial incentives, such as an exemption from GST for EV purchases.
• Implement a supply mandate to ensure manufacturers meet demand as consumer interest escalates.

Countries like China and Vietnam have successfully bolstered their domestic EV industries through substantial government support and incentives. China, for example, invested between $200 billion and $300 billion in subsidies to accelerate EV adoption. Australia must leverage this favorable environment and adapt its policies to take advantage of these global dynamics.

The Economic Rationale Behind EV Adoption

Reducing oil imports, which currently cost Australia around $40 billion per year, could enhance the nation’s economic landscape. This reduction would not only simplify trade balances but would also decrease strategic vulnerabilities during times of global conflict. Moreover, as electric vehicles become increasingly popular globally, Australia must keep pace with emerging markets that are rapidly advancing in EV adoption.

Comparative Global EV Market Trends

As of now, Australia holds a 12.6% share in the global EV market, lagging behind countries like Norway (92%) and Denmark (67%). A closer examination reveals Australia is missing out on vital lessons from these high-adoption markets:

• Norway’s impact stems from a long-standing tax exemption policy for EVs.
• Denmark benefits from advantageous registration tax systems for electric vehicles.
• China’s success is a result of its Dual Credit System, promoting both demand and supply-side incentives.

Conclusions and Future Directions

For Australia to make significant progress in EV adoption, a shift in policy is essential. Adopting a GST exemption for EV purchases could substantially lower costs for consumers and stimulate the market. The infrastructure investment must focus on future-proof solutions that encourage widespread adoption.

The potential benefits of an enhanced EV strategy extend far beyond emissions reduction. By actively promoting electric vehicles, Australia can ensure a healthier environment and a robust economy for future generations.