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“Rebate for electric cars” to pass Parliament and reduce the cost of low-emission cars

Tax breaks for plug-in hybrids will end by 2025, and rebates that lower the price of popular electric and low-emission cars are due to pass Parliament after crossbenchers approved a deal with Labour.

The “electric car rebate” policy was a Labor party campaign pledge, and the legislation aims to make an electric vehicle like the Nissan Leaf up to $2,000 cheaper for Australians and $9,000 for employers who run fleets close.

In addition, it exempts eligible low-emission vehicles from import duties and taxes on ancillary services.

The coalition opposes the policy, which is estimated to cost the budget $4.5 billion over the decade to 2033, and the legislation is stuck in the Senate over a dispute with the crossbench over plug-in hybrids.

Plug-in hybrids have an electric charger and an internal combustion engine.

The Greens and Independent Senator David Pocock had argued that their inclusion in the program was effectively a new fossil fuel subsidy, while Treasurer Jim Chalmers had insisted they be retained for people in regional areas to address low-emission range concerns to clear cars.

Senator Pocock was negotiating the end of the tax break for plug-in hybrids, arguing it was akin to a fossil fuel subsidy.(ABC News: Matt Roberts)

Plug-in hybrids will be phased out of the range by April 2025 as part of a compromised strike this week.

The Crossbench also expects the government to buy internal combustion engines and plug-in hybrid cars for the Commonwealth’s large fleet only in exceptional circumstances.

“The Government has worked in good faith with the cross bench on changes,” Mr Chalmers said.

“These changes are a win for motorists, a win for business and a win for climate protection.”

Reporters hold up microphones for Treasury Secretary Jim Chalmers as he holds a stack of budget papers.
Mr Chalmers said the Government negotiated its EV rebate bill in good faith.(ABC News: Nick Haggarty)

As part of the deal, the IRS will also issue new guidance on when to claim home charging infrastructure, which can cost thousands of dollars.

“The government fleet will be electric and if these cars are sold second-hand it will help reduce the cost of electric vehicles [down] for normal people,” said Green party leader Adam Bandt.

The bill is backdated to July 1 this year, and car dealers and electric car groups have urged Parliament to reach an agreement as soon as possible.

The industry had campaigned for the temporary inclusion of plug-in hybrids, partly because of the global shortage of electric vehicles and the enormous waiting times for some models.

“Bold and decisive action is needed to address high electric vehicle prices,” Senator Pocock said.

“This gives security to fleet companies and allows the government to deliver on its promises regarding the deployment of charging infrastructure over the next three years.”

Electric car companies now want fuel efficiency standards

Electric vehicle groups and environmental lobbyists have long argued that the much bigger test for electric vehicles and low-emission cars is the introduction of fuel efficiency standards.

Efficiency standards apply to the entire fleet of vehicles that manufacturers sell in a country – and those who exceed the standards are penalized.

The stricter the standards, the more automakers are encouraged to offer electric vehicles or low-emission options.

Energy Secretary Chris Bowen is a fan of them and published a discussion paper in September.

The Government argues that standards will be key to increasing the availability of certain car models in Australia and ensuring manufacturers send more EVs Down Under.

A white car with the power cord plugged in in the front.
Popular electric vehicles like the Nissan Leaf were set to be discounted by thousands of dollars after the bill passed for households and businesses.(abc news)

About 3 percent of the cars currently sold are electric, lagging behind many other industrialized nations.

EV lobby groups argue that demand is unlikely to be accurately reflected as waiting lists for some popular models are very long.

Beyhad Jafari of the Electric Vehicle Council said while the bigger challenge is yet to come, today’s decision is a good first step.

“The passage of the EV rebate bill is a huge achievement for Australia, showing our country is finally in the driving seat and taking this issue seriously,” he said.

“Combined with far lower running costs, this move will make driving an electric car the most affordable option for many Australians.”

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