Taxpayer-funded concessions for electric cars are likely to have "only limited success" in driving uptake and risk benefiting households which would have made the switch regardless, according to the federal government's economic advisory body.
Subscribe now for unlimited access.
or signup to continue reading
The Productivity Commission has told the federal government that with EVs predicted to be commonplace after 2035, attempts to force the transition before then "should be avoided".
But it has backed the introduction of vehicle emissions standards, a policy which experts and industry agree is key to increasing supply of EVs into the local market.
The commission made the arguments in a submission to the Albanese government's national electric vehicle strategy, which aims to accelerate the sluggish take up of electric cars in Australia.
The federal government has already introduced tax breaks for some models and is considering fuel emissions standards.
Countries such as Norway have used generous concessions to increase demand for EVs, which has helped to turbocharge the electrification of their transport sectors.
About two-thirds of new passenger vehicles sold in Norway are electric, compared to just 3.3 per cent in Australia.
The ACT has among the most generous incentives in Australia, including the offer of zero-interest loans of up to $15,000 to purchase a new electric car, stamp duty exemptions and two years' free registration.
At face value, the policies appear to be working.
READ MORE:
Canberra leads the nation when it comes to buying electric cars, with EVs accounting for about 9.5 per cent of new car sales in 2022 according to the Electric Vehicle Council's latest report.
The Barr government has set a target of 80-90 per cent of new car sales being zero emissions by 2030, and will ban the sale of new fossil-fuel powered cars from 2035.
The use of concessions to increase EV demand has been called into question by the Productivity Commission, which has pointed to a range of factors which "temper our desire" to accelerate the transition from petrol-powered cars.
The commission argued that as the biggest barrier to EV uptake was a lack of supply, "demand side measures" were likely to have only "limited success" in getting motorists to make the switch.
There is also an equity argument, with the risk taxpayer-funded subsidies end up helping higher income households and businesses which would have bought an electric car regardless.
The cheapest electric car in Australia is $42,500, meaning even with concessions, it is still out of reach for many motorists.
The commission said with electric vehicle technology evolving so rapidly, encouraging motorists to switch now could see them buy a model which would be quickly superseded.
"The broad-based electrification of the Australian transport fleet might best wait until EV technology further matures, and costs fall," the submission stated.
Shifting to electric cars is an important part in reaching Australia's net zero goal, with the transport sector responsible for about 19 per cent of national emissions.
In its submission, the Productivity Commission suggested other sectors can and should be prioritised, allowing more time for EV technology to mature.
It referred to its research which showed that of all the options to abate greenhouse gas emissions, policies designed to increase demand for electric vehicles were among the most expensive on a cost-per-tonne basis.
"The achievement of Australia's 2030 and 2050 emissions reduction targets does not require that all emissions sources be reduced simultaneously," the commission's submission said.
Dan Jervis-Bardy
Dan covers federal politics from Parliament House, with a special focus on climate policy and the NDIS. He has previously reported on ACT politics and urban affairs since joining the Canberra Times in 2018.
Dan covers federal politics from Parliament House, with a special focus on climate policy and the NDIS. He has previously reported on ACT politics and urban affairs since joining the Canberra Times in 2018.
