Subsidies and other EV incentives

[jonescg]

I thought I might start a thread which will be of great interest to the AEVA membership and all EV owners and enthusiasts. As an association, it is written into our charter that we "To promote the use, development and knowledge of electric vehicles for industrial, commercial, public, domestic and/or other purposes."

Three big impediments to the widespread uptake of electric vehicles are (in order of importance)

1. High upfront cost
2. Limited range compared to an ICE vehicle
3. Insufficient charging infrastructure

So how do we address the first one? Many nations around the world employ 'green car' subsidies, where the state or federal government offers a cash advance of $7,000-$10,000 towards the cost of the EV purchase. All countries which have done this are seeing far more rapid uptake of electric vehicles than in nations who don't have schemes, such as Australia.

Would a government issued, tax payer funded subsidy achieve more EV uptake? And if it worked, would it be good value for money?

I personally think that while it might not be the most efficient use of public funds, there can be little doubt it would result in more EVs on the roads, in the same way solar subsidies resulted in every 5th rooftop in the country bearing solar panels.

Is there another way? Can government offer tax incentives to EV manufacturers to assemble (or heaven forbid, actually build from scratch) EVs here in Australia? Locally produced EVs would be cheaper and have more local benefits than imports, but not an easy initiative.

Let's put our heads together and come up with a strategy!

And keep it civil

[marty11]

Hi,

I address point no.2 first, which is , I bought a Holden Volt for the extended range generator. This is because I mainly use it daily for short trips, but occasionally have a 5 hour round trip, and occasionally a 15 hour round trip, so extended range is for longer trips, and daily short are electric only.

As far as subsidies go, I am not sure .. people who have bought production EV's such as Imievs appear to have bought on price, and were happy to buy older stock (not current year)

I bought the Volt after getting it down almost $8000 off MRSP. (And 0.5% finance)

Manufacturing in Australia is almost impossible because of our wages structure.. the labour cost is too high for each vehicle produced.. even with high levels of automation in manufacturing. This is why Ford is quitting in Australia. (yes I have been involved in manufacture in Australia - so am familiar with labour costs in manufacture - am not advocating cheaper labour in Australia. .have as much per hour as you want-- but then the cost of the manufactured item will make you buy imported every time)

If you designed an EV in Australia, and had it made overseas and shipped to Australia for sale, might be possible.

My bet would be for an assistance like in the US of $7500 GOVT rebate to get EV production cars to start selling, combined with 0% finance deals, and a sharp price which is market researched properly by the Auto Vendors such as for the Holden Volt, Imiev, Holden Spark EV, Tesla, Via , etc.

The Govt assistance would cut out say after 50,000 new production EV's are registered on Australian roads, or suggestion as follows...

$7500 Govt rebate for the first 50,000 registered
$3000 Govt rebates from 50,001 - to 75,000 registered.

Then no more rebate ,as sales should then be self -sustaining.

Thanks for posting the question...

Cheers.. Marty

[jonescg]

Yes I do believe that all uptake-inducing subsidies should be clearly stated as such, and removed in stages as sales increase.

I also believe that we should show some urban responsibility, and suggest the Australian public exchange their petrol burning runabouts with electric. I think there are plenty of cars on the road as there is, and most Aussie households already have two cars, and perhaps even a third of all households might have three.

Some kind of trade scheme might be a winner - if you have a 25 year old car which you no longer care for you can recycle it before qualifying for a new electric car subsidy?

Are Volts and Leafs considered luxury cars? Will the Tesla S attract the luxury car tax? Might be worth saying all pure electrics are exempt from it for a set period?

EDIT - yes labour in Australia is very expensive, that's why I figure if we're going to prop up the automakers, it should come with "to be used for electric car assembly only" strings. A locally produced car should be cheaper, but that's rarely the case.

[BigMouse]

I agree that some sort of incentive is needed, but I worry about tactics I've seen in many Australian businesses being repeated here. There needs to be incentive for the entities selling the car to keep the price down. Currently there is none. For example, the Honda CR-Z in Australia costs double what it does in the US. This example was taken when the AUD/USD exchange was at parity. Any retailer (cars included) seems to charge as much as they can get away with for a given product. This is difficult with smaller items which consumers can import themselves from overseas for a substantial savings, but the regulation surrounding cars means that you HAVE to buy it from a dealer.

My worry is that any incentive that would be offered would simply be absorbed by an increasing of the dealers'/manufacturers' margin.

One way I've seen some US states combat this is by offering it as a tax credit. This way, the buyer still has motivation to argue for the lowest possible price when signing the papers and the dealer has a harder time using the rebate/incentive as a bargaining tool. The side effect of this, of course, is that the incentive has less appeal due to the time delay associated with the tax year.

It's a tricky balance.

One one extreme, you make it an instant rebate, the dealer makes a big point of including it on the invoice and uses it as a way to maximize their margin. "Sorry, I can't go any lower, look, you're already getting it for $7500 less than sticker price. Let me talk to my manager and see if I can knock another $500 off for you."

On the other extreme, you make it a tax rebate and people still hesitate because they have to include the value of the rebate in their financing. This is where 0% financing would help, but there's still that hurdle of seeing a bigger number on the invoice.

A trade-in scheme could be good, but it's easily abused. There was a big "cash for clunkers" thing in the US a few years back. People can hop on gumtree and buy some $300 car with a day of rego on it to qualify for the incentive. If you put a minimum time of ownership on the deal to try to combat this, you end up making the rebate unavailable to anyone who wants to trade-in their late-model car or somebody looking to buy their first car. There are plenty of cashed-up city dwellers who don't have a car that would consider an EV.

I think one of the best ways to make EVs an incentive is to offer concessions which add value to owning an EV on a daily basis.

Road/bridge toll concessions
Rego concessions
Dedicated EV parking in CBD areas (with charging of course)
Public transport concessions would do a lot to encourage people with longer commutes (like Wollongong to Sydney) to get an EV. The range might not get them to the city, but it'll get them to the train station. 45 minutes in a car and 30 minutes on the train is a hell of a lot more pleasant than 2hrs on the train.

We could implement a London-style "congestion charge" and make EV's exempt.

I guess the most extreme form of incentive that could be presented would be removing subsidies from petrol, but I don't think the economy could afford something that drastic quite yet.

Another idea could be to implement an EV car-sharing scheme. I noticed that there are a few car-sharing options in Sydney, but they use Corollas and other small petrol cars. Offering a subsidy or grant to a company wishing to start something similar but with EVs could do a lot to boost the public perception of them.

[Adverse Effects]

I figure if we're going to prop up the automakers, it should come with "to be used for electric car assembly only" strings. A locally produced car should be cheaper, but that's rarely the case.

i totally agree with that

[offgridQLD]

I have to say that the 38 cents pr litre fuel tax is something the government is not going to be keen on giving up.

Just In QLD alone there are over 4.4 million registered vehicles. Lets just work on some very rough averages and say that each vehicle consumes 10lt - 100km traveled and is driven 10,000km PA.

10,000km at that rate = 1000lt of fuel pa x $0.38 lt tax = $380 pa x 4.4 million is just over 1.6 billion dollars in fuel tax just in QLD alone.

I don't see the government wanting to give up that kind of easy money. The only way I see Ev's being predominant in Australia is if there is no government insensitive payed at all for owning them.

In actual fact the only way I see them working is if you actually have to pay more tax in the order of several hundred dollars pa to drive a EV just to make up for the lost fuel tax revenue.

I like things as they are now. With the low uptake of electric cars us few early adopters can fly under the radar and let the guy next door and his Holden commodore pay the fuel tax.

Don't rely on the government for anything other than taxing you. Just like the rebates on rainwater tanks and so on. I never take up this kind of offer as all your doing is setting your self up to be a registered tank owner. Perhaps being forced to pay for your own collected water down the track.

Kurt

[Johny]

You are not alone Kurt. I must admit to not wanting to draw too much attention to the fact that I don't pay any fuel tax. There is a little voice inside me that thinks that garage/carport installed EVSEs are a red flag....

[offgridQLD]

Approximately 75% of that multiple billion dollar tax collected each year is lumped back into the general revenue and 25% of it is used to fund the roads and infrastructure that you drive your EV on without paying any fuel tax.

There is defiantly huge environmental and health positives to be gained cleaning up our emissions. Personal financial gains could be some what eroded if the government has to much to do with it.

Kurt

[Adverse Effects]

25% of it is used to fund the roads and infrastructure that you drive your EV on

and yet we are getting more and more toll roads

[jonescg]

All great points guys!

The world may have reached peak car already. The USA experienced peak car (in terms of registered vehicles) in 2005, and the number of cars on the road is actually decreasing. So there is a big hit to revenue right there.

Are we already paying the equivalent of the fuel excise through our higher upfront EV purchase prices? The road networks which have been built for us (mostly through our taxes) need maintenance, and it is only fair that the users pay for it through some kind of per-kilometre-travelled rate. Then again, the government can save money by not subsidising any fossil fuel extraction efforts...

I personally believe that odometer readings at the time of rego payment, multiplied by the weight of the vehicle and the number of axels. But between us we can surely come up with a system which is fair.

[Shirker]

While riding my bike through the underground parking at my office, I thought the city could perhaps provide a rates-based incentive to the building owner or tenant to set aside a couple of bays for EV charging... These incentives could be offset by raising everybody's rates across the board to keep it revenue-neutral. Perhaps the incentive could be increased or only given where renewable power sources are used?

This approach would raise EV awareness, especially amongst the upper management folks whose primo parking spots would be set aside, and who like to drive trendy new cars. Plus they can afford the current EV purchase premium - and cycle through new cars, thus increasing the second hand EV market...