Australian Government aims to boost EV uptake with low-interest loans

As more Australian states phase out their electric vehicle (EV) incentives, the Australian Government is stepping in with a new one: low-interest loans.

The Federal Government has announced it will offer these loans for workers earning less than $100,000 a year, as well as essential workers such as police officers, teachers, firefighters and nurses.

This will apply to new and used EVs worth up to $55,000, as well as home EV charging equipment.

The scheme is backed by $150 million from the Clean Energy Finance Corporation (CEFC).

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Interest rates on these loans will be up to five percentage points lower than standard rates, which the government says could save EV buyers more than $8000 for a $40,000 loan with a seven-year term.

The $55,000 cutoff would mean only one brand-new Tesla would qualify: the base Model 3 RWD. Other new vehicles which fall under this threshold include other popular EVs such as the MG 4 and BYD Atto 3.

This latest incentive joins the existing Fringe Benefits Tax and import tariff exemptions the Government already offers.

It comes as EV sales growth has slowed in Australia following a bumper couple of years.

For the January-November period of this year, EV sales were up 3.1 per cent in a market up by 1.7 per cent. However, sales of hybrid vehicles were up by 79.3 per cent, while plug-in hybrid (PHEV) sales were up by 100.4 per cent.

In contrast, in the first 11 months of 2023, EV sales were up by 184 per cent on January-November 2022, when they were in turn up by 516.2 per cent.

EV sales therefore continue to grow, but not as sharply as they have done over the past couple of years. However, the number of EV options has swelled in Australia, not only from established brands but also from brands new to our market such as BYD and Chery.

More new brands are coming to Australia in the coming months with EVs, including Zeekr, Deepal, Xpeng and Cadillac.

“Only the Albanese Labor Government is making sure more Australians are able to get behind the wheels of cheaper to run cars and begin saving on their commutes,” said Chris Bowen, Minister for Climate Change and Energy.

“Discounted loans help remove barriers to ownership, helping more Australians drive cars that can save them thousands of dollars a year.”

Key industry figures have welcomed the announcement.

“One of the main barriers to owning an EV is the upfront cost, so low interest loans for low and middle-income Australians will help overcome this,” said Aman Gaur, the policy and legal head for the Electric Vehicle Council lobby group.

“Financial support is essential to accelerate the transition to EVs and drive the next wave of adopters. Low interest loans, purchase incentives, rebates and registration concessions, are all effective and necessary measures that make EVs more affordable and accessible to a broader range of consumers.

“We are pleased that second hand battery EVs can be purchased with these low interest loans. Most Australians buy used cars instead of new ones, but the pre-owned EV market is still developing so targeted financial incentives and support is required to boost uptake and create a self-sustaining market.”

“The Government has listened to industry. The settings to decarbonise transport need to be both carrot and stick—not just all stick through the fuel efficiency standard,” said Motor Trades Association of Australia (MTAA) CEO Matt Hobbs.

“Ultimately, for the automotive industry to succeed in the transition, consumers need to buy the cars. As we have seen overseas, targeted consumer incentives are crucial to making that happen—they are a key part of the decarbonisation jigsaw puzzle that we are working to solve.”