Electric Vehicles
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@nta I don't know much about Australia's car market. But New Zealand's is the equivalent of the Mozambique clothing market where rich people buy new and the rest buy the shit that richer countries don't want any more. The majority of New Zealanders are driving the equivalent of a sweat-stained Fruit of the Loom.
The fact that it is now so accepted that the government is counting on it to be the source of our green revolution is as depressing as it is laughable.
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@antipodean said in Electric Vehicles:
@nta said in Electric Vehicles:
In NSW they've announced a $3K subsidy for vehicles under the Luxury Car Tax threshold (up to the first 25,000 vehicles), no stamp duty, and the gradual introduction of road user tax to offset that in the longer term. Details TBC but that makes an EV more attractive to me, and it is only the lack of options that puts a halt to it.
Case in point ^. The government shouldn't subsidise the middle class.
Probably not, but when no EVs currently exist in the market under ~$50k, what else is it going to be but a middle class subsidy?
People aren't going to take up a $45k vehicle ($50k minus value of subsidy/stamp duty) when they've got a shitload at or below half that price, no matter their social conscience. That's why we have a Kia Cerato instead of a Nissan Leaf at this point as our second car.
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@jc said in Electric Vehicles:
@nta I don't know much about Australia's car market. But New Zealand's is the equivalent of the Mozambique clothing market where rich people buy new and the rest buy the shit that richer countries don't want any more. The majority of New Zealanders are driving the equivalent of a sweat-stained Fruit of the Loom.
The fact that it is now so accepted that the government is counting on it to be the source of our green revolution is as depressing as it is laughable.
I think (but don't know 100%) the primary difference is your grey car market is a larger percentage - for ALL vehicle types, not just EV.
Australia at the moment could do a couple of simple things to help EV adoption, and the first is drop Luxury Cary Tax (LCT) on EVs, which admittedly is subsidy by another name. LCT was originally designed to protect our car manufacturing from reasonable-value overseas cars entering the market, by putting the BMWs and Mercedes etc above a certain cutoff in favour of your Commodores and Falcons.
Now that we don't have manufacturing (speaking of massive subsidies...) it is a pretty easy move to scrap it and get some EVs down into a price where they don't need any more subsidies. Oh wait - except it is yet another free hit for the government tax base. (Note: LCT for "fuel-efficient" vehicles is a slightly different threshold, but regardless isn't fulfilling the stated purpose).
EDIT: and LCT is effectively new cars only, but that is where a significant chunk of second hand cars come from I reckon
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@nta said in Electric Vehicles:
@antipodean said in Electric Vehicles:
@nta said in Electric Vehicles:
In NSW they've announced a $3K subsidy for vehicles under the Luxury Car Tax threshold (up to the first 25,000 vehicles), no stamp duty, and the gradual introduction of road user tax to offset that in the longer term. Details TBC but that makes an EV more attractive to me, and it is only the lack of options that puts a halt to it.
Case in point ^. The government shouldn't subsidise the middle class.
Probably not, but when no EVs currently exist in the market under ~$50k, what else is it going to be but a middle class subsidy?
People aren't going to take up a $45k vehicle ($50k - value of subsidy/stamp duty) when they've got a shitload at or below half that price, no matter their social conscience. That's why we have a Kia Cerato instead of a Nissan Leaf at this point as our second car.
But then what is the longer term plan to get the poorer people with the most polluting cars into a greener vehicle? Are we counting on them to buy old Leafs with end-of-life batteries? Because I reckon if you tell them they are up for a $5k-plus refurb bill within the next 2 or 3 years otherwise their car is unsellable they might just keep on driving that old XE Falcon.
Wouldn't it make more sense to subsidise trade-ins of towards the modern rule efficient, lower polluting ICE equivalents as an interim step?
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@nta said in Electric Vehicles:
@antipodean said in Electric Vehicles:
@nta said in Electric Vehicles:
In NSW they've announced a $3K subsidy for vehicles under the Luxury Car Tax threshold (up to the first 25,000 vehicles), no stamp duty, and the gradual introduction of road user tax to offset that in the longer term. Details TBC but that makes an EV more attractive to me, and it is only the lack of options that puts a halt to it.
Case in point ^. The government shouldn't subsidise the middle class.
Probably not, but when no EVs currently exist in the market under ~$50k, what else is it going to be but a middle class subsidy?
There shouldn't be one. Manufacturers will fill that market opportunity as wealthy people and early adopters make the design and manufacture of cheaper vehicles cheaper per unit. Of course there are cars in that space, but people don't like them.
If a government wants a policy of encouraging EV uptake, it should spend the money improving supporting infrastructure.
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@antipodean There is apparently a EV charging station at least every 50km's across NZ state highway network.
Never seen more than 3 chargers at a single station. Last thing anyone needs is rapid uptake.
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@jc said in Electric Vehicles:
But then what is the longer term plan to get the poorer people with the most polluting cars into a greener vehicle? Are we counting on them to buy old Leafs with end-of-life batteries? Because I reckon if you tell them they are up for a $5k-plus refurb bill within the next 2 or 3 years otherwise their car is unsellable they might just keep on driving that old XE Falcon.
Agreed - there isn't a quick fix to replace an entire fleet of millions of vehicles. This will take a decade or more in order to get the new vehicles in to become second hand and replace the grey import market entirely.
Fleet replacement will be a key area: if the government over there chucks all the mid-size cars it has for EVs, then gets them onto the market, it starts the process.
Wouldn't it make more sense to subsidise trade-ins of towards the modern rule efficient, lower polluting ICE equivalents as an interim step?
I think more of those vehicles with the stop-start enginges (like ?Mazda SkyActiv? etc) are the natural starting point. Cheaper to run in petrol terms, and once they're second hand you start phasing in your carbon taxes etc.
Don't you guys have some sort of scheme for diesel where you submit km per annum?
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@antipodean said in Electric Vehicles:
@nta said in Electric Vehicles:
@antipodean said in Electric Vehicles:
@nta said in Electric Vehicles:
In NSW they've announced a $3K subsidy for vehicles under the Luxury Car Tax threshold (up to the first 25,000 vehicles), no stamp duty, and the gradual introduction of road user tax to offset that in the longer term. Details TBC but that makes an EV more attractive to me, and it is only the lack of options that puts a halt to it.
Case in point ^. The government shouldn't subsidise the middle class.
Probably not, but when no EVs currently exist in the market under ~$50k, what else is it going to be but a middle class subsidy?
If a government wants a policy of encouraging EV uptake, it should spend the money improving supporting infrastructure.
Yeah that's what I believe. I would buy a full electric in a heartbeat if it could get me everywhere I want, whenever I want. It's disappointing that governments want to leave the provision of infrastructure to the market but are happy to subsidise consumption, which is always a bad idea.
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@antipodean said in Electric Vehicles:
If a government wants a policy of encouraging EV uptake, it should spend the money improving supporting infrastructure.
@jc said in Electric Vehicles:
Yeah that's what I believe. I would buy a full electric in a heartbeat if it could get me everywhere I want, whenever I want. It's disappointing that governments want to leave the provision of infrastructure to the market but are happy to subsidise consumption, which is always a bad idea.
In Australia I'd actually be talking the underlying network infrastructure, not direct charging infrastructure. Upgrades to transmission lines are a must given we'll be distributing energy generation resources more widely than before.
As petrol/diesel use decreases, the market will be filled with enough EV charging installers to make it work. And a shitload of petrol stations who don't ship fuel any more.
If you leave the Big Boy infrastructure to any form of private enterprise, it'll cost more in the long run as every link in the chain becomes more expensive.
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Had an unpleasant realisation about EV in NZ yesterday
We're the typical candidates for buying an EV (probably a secondhand leaf - the gateway car). The savings in petrol and maintenance offset the initial purchase price quickly, and range limitations in the city environment aren't super scary at all.
But then I found out yesterday that the Road User Charges exemption for EV was due to end at the end of 2021. For light vehicles, that runs around 7.6c/km.
Our small city car costs around 12c/km to run (petrol costs only, ignoring maintenance). With RUC included and the charging costs, it's basically breakeven unless the cost of fuel skyrockets (currently estimating around $2.35/L). So, it makes no financial sense to buy an EV unless RUC are excluded, or petrol costs go silly.
Then, in a perfect sense of timing, the Govt announced that the EV RUC exemption would run to 2024... so there's a 3 year payback.
What really annoys me is that we should be encouraging people in EV, but someone with a basic calculator can figure out that it makes marginal financial sense in operating costs in NZ. We need some way of funding roads that shifts away from fuel. I want to buy an EV, but I want it to make rational financial sense.
@nta what's the situation in Aus?
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@nzzp Because Australia has three levels of government, road funding comes from the following:
- council rates
- State vehicle registration
- Federal fuel excise
- General revenue
The adoption of EVs in Australia is also dependent on which jurisdiction you're in. In the ACT for example you're exempt from registration costs and obviously don't pay fuel excise. In Victoria they've announced a distance based levy to partly account for the extra damage EVs do to the road over their comparable ICE counterparts.
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@antipodean cheers
what is the additional damage? I thought damage was linked to the fourth power of the weight - so doubling the weight means 16 times the damage.
Light vehicles just don't do much meaningful pavement damage compared to heavily loaded trucks.
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@nzzp said in Electric Vehicles:
@antipodean cheers
what is the additional damage? I thought damage was linked to the fourth power of the weight - so doubling the weight means 16 times the damage.
Light vehicles just don't do much meaningful pavement damage compared to heavily loaded trucks.
Yes, fourth power, with the added complication of number of axles. But a Tesla Model 3 for example weighs about an eighth more than a Mazda 6.
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Worth noting that the fuel excise and other vehicle owner taxes aren't directly tied to road spending - like pretty much any tax, it all goes into the pool and then funds are spent as needed.
The heavier EVs' effect on roads will be interesting, but really at less than 1% of vehicles it is a drop in the well as far as road damage goes at this point.
Fuel excise is also dropping steadily as more efficient vehicles enter the market. Anything with one of those stop-start engines is causing just as much wear and tear on the road system by weight as a similarly sized ICEV, but will pay far less in excise for the same distance.
Depending who you ask, a road tax to replace fuel excise for EVs is just a stop-gap, with a few bodies urging a whole-of-market approach at a national level:
Electric vehicle taxes not needed to offset falling fuel excise revenue: report
The report argues the federal government should instead upgrade the nation’s energy grid and push the mining sector to convert from diesel to electric-powered off-road vehicles.
**Electric vehicle taxes not needed to offset falling fuel excise revenue: report** Declining fuel excise revenue doesn’t need to be replaced with new taxes on electric vehicles, a report has found, arguing the federal government should instead upgrade the nation’s energy grid and push the mining sector to convert from diesel to electric-powered off-road vehicles. The Institute for Energy Economics and Financial Analysis (IEEFA) report argues obstacles are being put in the way of large-scale take-up of electric vehicles because of concerns about the potential loss of revenue from fuel excise, without recognition it has been dropping for years with little impact. Instead of state-based taxes, it urges the federal government to accelerate the mining industry’s shift towards electric vehicles by winding back the fuel rebate for off-road vehicle use, and consider a 10-year, 0.1¢/kWh tax on retail electricity to create a $7 billion fund to upgrade Australia’s energy infrastructure. The federal government collects 42.3¢ in tax on every litre of petrol and diesel sold at the pump in Australia and paid by drivers using public roads. In 2021, gross revenue from the fuel excise tax was $19.2 billion and net revenue was $11.6 billion. But despite the growing population, vehicle fleet and total vehicle kilometres driven, revenue from fuel excise continues to decline in real terms as newer, safer vehicles with reduced fuel consumption hit the roads. It has fallen 68 per cent as a share of federal government revenue over 20 years and now contributes only about 2 per cent. The fuel rebate for off-road vehicle use, mainly in the mining sector, is 40 per cent of the total excise raised. IEEFA researcher Owen Evan said proportionally reducing the rebate to zero over 15 years while capping an individual group’s rebate to a maximum of $5 million annually – ensuring no small or medium-sized businesses were impacted – would bring incremental tax revenues from net excise of some $1 billion annually. “Even in the mining industry, this would be a material incentive to implement change, consistent with their own net-zero emissions pledges,” he said. “And our mining industry is a globally significant consumer of trucks and earthmoving equipment. We can have a real impact on this part of the world market.” Australia’s take-up of battery-electric and plug-in hybrid cars has lagged behind many European and Asian nations, accounting for just 0.7 per cent of total car sales in Australia last year. Three states – Victoria, South Australia and NSW – have flagged new taxes on electric cars based on distance travelled. The Andrews government passed laws last month that will charge electric and other low-emission vehicles 2.5¢ per kilometre driven and 2¢ for plug-in hybrids. But IEEFA, a think tank largely funded by environmentally focused private foundations, said states considering their own tax and subsidy structures should concern “all thinking citizens” because “when states drive economic policy, multi-gauge rail networks get developed”. The Australian Automotive Association, the peak organisation for Australia’s motoring clubs, including the RACV and NRMA, has argued that irrespective of technological shifts, the fuel excise is an inequitable tax. It has called for urgent national leadership and co-ordination to move to a single road-user charge. The Federal Chamber of Automotive Industries last month urged the federal government to lead a national overhaul of vehicle registration, stamp duty, licence fees and fuel excise and replace them with a single road-user charge based on kilometres driven. But Mr Evan said the most pressing issue was upgrading transmission infrastructure. Australia would struggle with a scenario of a 20 per cent electrified fleet within five years because there was not yet adequate production, transmission and distribution capacity to charge vehicles, he said. He argued a tax on retail electricity, which would probably cost $60 per household a year, would enable Australia to be ready for conversion when manufacturers suddenly cut off sales of petrol-powered vehicles. “It would maximise the value of Australia’s world-leading rooftop solar and behind-the-meter battery investments, driving decarbonisation while delivering household savings on energy bills at many multiples of the proposed 0.1¢/kWh tax,” he said. -
A road user tax ignores the fact that EVs generally enter the market at a higher price and therefore already pay more in tax.
Even those under the Luxury Car Tax threshold will spend more in tax at point of purchase - if I buy a Nissan Leaf brand new in Victoria, I'm spending $50K compared to a similarly sized ICEV (Mazda 3, Corolla, etc) for around half that price. That is $625 in stamp duty before I've even driven out of the dealer, or enough to cover 25,000 kilometres under Victoria's EV tax (2.5c / km).
And, amusingly, even if I cover those kilometres outside Victoria, I still pay them the tax
https://www.caradvice.com.au/887635/electric-cars-increase-government-revenue-report-claims/
**Electric cars 'increase government revenue', report claims** Critics of electric cars say they get a free ride by avoiding fuel excise. A new report argues the opposite. As debate continues to rage over whether electric cars should be subsidised or taxed in Australia, a new report has suggested their uptake could help, not hinder, government revenue – once economic and societal benefits are taken into account. The report, conducted by consultancy firm EY and commissioned by Australia's Electric Vehicle Council (EVC), seeks to examine the suggestion electric cars unfairly benefit from avoiding the government's fuel excise – a tax on fuel and petroleum products that is put towards the maintenance and expansion of Australia's road infrastructure and goes into consolidated revenue. Critics of electric vehicles (EVs) argue they should be subject to the excise, or an equivalent charge, because they use the same road systems as their petrol- and diesel-powered cars. The report acknowledges the average electric car imposes costs on the government estimated at $5879 in lost fuel excise revenue over 10 years, as well as $8585 of lost GST revenue (that would have been spent on liquid fuels) over 10 years. However, the report claimed despite a combined $14,464 in lost revenue over 10 years, an electric car that replaces a petrol car delivers a net government revenue benefit of $1370, or an overall net societal and economical benefit of $8763, over the same 10-year period. To obtain these estimates, EY calculated both the direct and indirect benefits and downsides of electric cars and petrol and diesel vehicles on on a cost-per-kilometre basis – taking into account factors such as fuel excise payments, sales taxes, operational GST, greenhouse gas emissions, noise pollution and implications for the electricity market and public health. The report claims benefits from electric cars – such as an increase in discretionary household spending because of the lower running costs associated with electric cars, or a reduction in direct health impacts from particulates – can counteract the revenue lost from the fuel excise exemption. Matt Bell, EY Climate Change and Sustainability Leader, said it's a complicated issue, adding that EY's report wasn't seeking to refute previous studies examining the cost of electric cars, but rather to provide a summary of their positive effects – and ascribe a monetary value to these benefits. "On the societal side, (electric cars) have benefits when it comes to minimising greenhouse gas pollution and climate change and reducing direct health impacts from particulates," said Mr Bell. "Some of the positive impacts of (electric cars) we didn't even include in the report, because the data is changing too quickly – for example, one of the benefits is they connect into the grid and lower electricity pricing, but the technology is not at scale yet," said Mr Bell. While electric cars don't pay a fuel excise, Mr Bell said the report accounted for the fact they "tend to cost more" than their petrol or diesel counterparts, thus bumping up the cost of registration or luxury car tax paid (even though the LCT exemption threshold is higher for fuel-efficient vehicles). EVC CEO Behyad Jafari claims the report "puts to bed" the notion that electric cars should be taxed in order to compensate for the fuel excise loss. “You often hear this idea that when someone replaces their petrol engine vehicle with an electric car they reduce their tax, because they don’t pay the fuel excise anymore. This analysis blows that argument out of the water,” said Mr Jafari. "The fuel excise is just one tax among many, you have look at the entire plate – EVs have to pay GST on things like electricity that ICE cars don't." Mr Jafari said it was important to put a dollar figure on the societal impact of electric cars and the additional value they provide over their life cycle. "Clean air might not cost you at the pump, but at some point along the chain the government has to pay for these things ... they get the cleaner air, they don't have to pay for the hospital down the line." Geoff Gwilym, CEO of the Victorian Automobile Chamber of Commerce, says any modelling on electric vehicles needed to take into account how they obtain their power by acknowledging that Australia's grid is majority coal-powered. "If you use electricity from a coal-powered power station to charge your (electric car), any benefits would have to be reconsidered – you can't assume they all run on green energy," said Mr Gwilym. In response, Mr Jafari said the report does factor this in – assuming EV owners will be using the coal-powered grid to charge their cars, and looking at the effects of a combination of both coal power and renewable energy being utilised over the 10-year period. Mr Gwilym said electric cars should technically be paying for some sort of fuel excise, given their road use was the same as other cars. "If you have a car running around with the same footprint and the same wear and tear, there has to be an argument that it should be paying the same excise," said Mr Gwilym. However, while Mr Gwilym said the VACC was against subsidising electric cars to encourage their uptake, he acknowledged a new taxation system could be helpful as we move into the era of alternative energy. "I think ultimately governments will move to a road user charging system for petrol and electric vehicles, which means it doesn't matter what vehicle you're in or what fuel you're using, you'll be charged by kilometre based on size, weight or distance travelled," said Mr Gwilym. "We've got a system of taxation that's old and we've got new electric vehicles – how do we get money to help run the road system? We charge vehicles per kilometre on the road like GST and then it equalises any type of fuel whether hydrogen, petrol or electric." Mr Gwilym added: "It's hard for the government to do because they've already got the infrastructure for the fuel excise so this would mean retrofitting things to cars or getting people to make an annual statement on the amount they've travelled." Mr Jafari agrees this kind of approach would make "a lot of sense", but he'd still like to see electric vehicles receive a tax break compared to petrol or diesel cars. "Using a more holistic pricing method is something that makes a lot of sense – if we already had that, electric vehicles could slot in a lot better," said Mr Jafari. "The part of the fee that pays for the road upkeep, that can be the same across (electric) and (conventional) cars, and then the rest can be charged accordingly." -
That last article makes the very good point about the public health benefits of EVs.
I think if you want to tax externalities like road wear, then you need to tax on public health effects as well.
IMHO the simple answer is to introduce and then increase carbon pricing on fuels - fuel-efficient ICEV benefit as well as EVs - and then start moving the goal posts as adoption increases.
As a last note: Victoria's tax may double-charge PHEV owners as they'll pay RUC (at "only" 2c/km compared to 2.5 for EV) and fuel excise when they switch over to the petrol engine. That's a dilly of a pickle.
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@jc said in Electric Vehicles:
@nzzp I'm interested in this too. I'm looking into a PHEV but the one I'm interested in is 375kgs heavier than the petrol version.
are you NZ based? In which case RUC will be the same for passenger vehicles (you shouldn't get close to the limit).
If we're serious about reducing carbon from personal transport, we need to make it a rational financial decision. Calc below
2.3kg per litre of petrol, assuming 12L/100km (for bigger vehicles), and 12,000 km12ar, that gets 3.3T of carbon for a normal car.
Air NZ will offset about 200kg of CO2, for $4.50, so about $100/tonne of carbon. That means a cost of about $330/year to offset the carbon.
Compared to 12,000 km at 8c/km = $1,000 in RUC.
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@nta said in Electric Vehicles:
The report argues the federal government should instead upgrade the nation’s energy grid and push the mining sector to convert from diesel to electric-powered off-road vehicles.
**Electric vehicle taxes not needed to offset falling fuel excise revenue: report** Declining fuel excise revenue doesn’t need to be replaced with new taxes on electric vehicles, a report has found, arguing the federal government should instead upgrade the nation’s energy grid and push the mining sector to convert from diesel to electric-powered off-road vehicles. The Institute for Energy Economics and Financial Analysis (IEEFA) report argues obstacles are being put in the way of large-scale take-up of electric vehicles because of concerns about the potential loss of revenue from fuel excise, without recognition it has been dropping for years with little impact. Instead of state-based taxes, it urges the federal government to accelerate the mining industry’s shift towards electric vehicles by winding back the fuel rebate for off-road vehicle use, and consider a 10-year, 0.1¢/kWh tax on retail electricity to create a $7 billion fund to upgrade Australia’s energy infrastructure.Always the solution for some people; "tax others to fund my interests". Not like Australia doesn't already have disproportionately expensive electricity and completely ignores two fundamental issues:
- Taking the productive areas of the economy to subsidise others, and
- Rio Tinto is investing massively in EV and autonomous vehicles anyway.
The fuel rebate for off-road vehicle use, mainly in the mining sector, is 40 per cent of the total excise raised.
This is a duplicitous argument, it's irrelevant how much of the total is rebated when that's done for the perfectly valid reason that the excise doesn't apply to private roads.
But IEEFA, a think tank largely funded by environmentally focused private foundations, said states considering their own tax and subsidy structures should concern “all thinking citizens” because “when states drive economic policy, multi-gauge rail networks get developed”.
Reminds me of the quote by Franklin Adams: When the political columnists say 'Every thinking man' they mean themselves, and when candidates appeal to 'Every intelligent voter' they mean everyone who is going to vote for them.
The Australian Automotive Association, the peak organisation for Australia’s motoring clubs, including the RACV and NRMA, has argued that irrespective of technological shifts, the fuel excise is an inequitable tax. It has called for urgent national leadership and co-ordination to move to a single road-user charge.
The Federal Chamber of Automotive Industries last month urged the federal government to lead a national overhaul of vehicle registration, stamp duty, licence fees and fuel excise and replace them with a single road-user charge based on kilometres driven.
Not sure they've been paying attention to what's happened to "cooperative Federalism" lately. No State is going to willingly hand those powers to the Federal government.
I also laugh at reports 'conducted by consultancy firm EY and commissioned by Australia's Electric Vehicle Council (EVC)'. If the "Australian Internal Combustion Vehicle Council" commissioned EY, EY would invent externalities that said the opposite.
Ultimately all Australians need to move away from the common misconception that certain payments are directed to road maintenance. It all goes into consolidated revenue.
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@antipodean said in Electric Vehicles:
Not sure they've been paying attention to what's happened to "cooperative Federalism" lately. No State is going to willingly hand those powers to the Federal government.
I don't think it is suggestion change in power - just alignment of process. The states probably won't lose any revenue under most options.
All the states have pretty much some form of stamp or transfer duty, but the rates are sometimes stupidly configured.
