Opinion: Governments should stop incentivising electric cars… here’s why

It's time the government stopped giving our tax money to buyers of electric cars

Let’s get to the first item on the agenda – the Luxury Car Tax or LCT. What started out as a barely justifiable tax to ‘protect our local industry’, is well overdue for a trip to wherever it is government ideas go when they are scrapped. I’d probably prefer to replace ‘barely justifiable’ with ‘ridiculous’, while I’m at it.

However, I say barely justifiable because we really didn’t build ‘luxury’ cars in Australia. Let’s at least be honest about that. Even the most strident Ford or Holden fan would have to admit that. And, furthermore, I’m yet to be convinced that making a luxury car more expensive encouraged more Australians to buy a Fairlane or a Statesman anyway.

Those Aussies who wanted and could afford a luxury car, just did what we always do when government ratchets the price up. Dug into their pockets and coughed up for the car they wanted.   If you just paid five bucks for a coffee, you’re doing exactly what I’m referring to.

I realise that governments, both state and federal, often have no clue what’s going on in the motoring world – you only need to look at their various approached to electric cars to work that out – but just in case any elected officials are reading this, we stopped building cars in Australia quite some time back. So, protection is no longer a justification.

It’s not often you’ll find me agreeing with car companies finding inventive ways of others making their new vehicles cheaper, but on this one, I agree with BMW.

The German brand recently joined a chorus – from head office mind you – to push the Albanese government to cut the cost of (yep you guessed it, EVs) by slashing the LCT that affects cars over the $89,332 threshold.

There’s no LCT on watches, high-end fashion, handbags, or anything else that is effectively a ‘luxury’ good. So why cars? Like many things government sticks its nose into, it’s never made much sense. And BMW is making a fair point on this one.

“We urge the government to consider revising the Luxury Car Tax for all fuel-efficient vehicles – and not just those that sit under the $89,332 threshold, as well as enabling this wider range of vehicles to benefit from other incentives such as the fringe benefits tax exemption,” BMW Australia spokesman Nick Raman told The Sydney Morning Herald.

Hear, hear…

But, and here’s the clincher, the idea that we should be subsidising the purchase of an electric vehicle is one of the dumbest concepts currently being peddled by government – and surprise, surprise – lobby groups.

Before you start hammering away at your keyboard to tell me I’m an idiot (which I love by the way, so go for it), take a deep breath and consider two things.

One, a lobby group is just that. It lobbies for an outcome. That is, it has a vested interest. When I read that the Electric Vehicle Council of Australia wants us all to buy an EV tomorrow and the government needs to do more, it’s akin to reading about the Butcher’s Association telling everyone we should be buying more meat. And that the government should subsidise the purchase of every Scotch fillet or ribeye. I’m not sure if there is even a Butcher’s Association, but there should be… (ED: You could try Cattle Australia, Meat & Livestock Australia, and the Red Meat Advisory Council…)

Two, and here’s the even more pertinent point the way I see it. When the government gives away money, it is your money. Yours and mine. Taxation that it has taken from us. And in theory, we elect a government to spend our money sensibly.

here could be few more dopey ways of giving away our money than via a cashback on expensive vehicles, most of which already having a waiting list.

Healthcare? Homelessness? Cost of living? Housing supply? The rental market? I’d probably prefer the government spent my tax dollars on helping to solve some of those issues.

Or, and here’s a novel concept, instead of handing cash back to someone who can already afford an electric car, how about the government tip that money into building a reliable public charging network?

Here’s a scenario, Person A buys an EV, slides the incentive into their pocket, then on sells the car two minutes later – for a further profit – to someone with the money to buy it who doesn’t want to wait in line. You happy with that? I’m not. The person who is dining out on the incentive, is probably driving a diesel dual-cab to work the next day. Defeats the purpose, doesn’t it?

What about this scenario. Two-person household in a regular working-class suburb. One parent is at home looking after their first child, while the other parent drives to work in a 10-year old car; Not because they want a 10-year old car, but because that’s all their budget will allow. Can’t afford an electric car at the moment and there’s no crime in that. A short drive down the road, another family has trousered a government incentive to buy an EV, via tax that has been collected from families like the first one.

It’s nonsense and it’s a graphic example that whenever a government comes up with a scheme like this, it’s ripe for people to take advantage of it. They do say it’s only a rort if you’re not in on it…

Currently, we’re drowning in a torrent of complaints from car companies about what governments need to do to incentivise the purchase of EVs. These same car companies, that are telling us EVs will save the world, that they are environmentally responsible all of a sudden, that they’ve seen the light, that ICE is so last century, are also telling us HQ will only send electric vehicles here if they are threatened with fines for not meeting emissions standards? Or Australians are given a handout to buy one? Give me a break.

Where were luxury car companies when they crept the price of nearly everything up over the LCT threshold? Why weren’t they all asking governments to remove it then? Why weren’t luxury car companies doing everything they could to make their vehicles more affordable for the same Aussies they are now so desperately trying to ‘help’ buy an already expensive EV?

EVs will stand up on their own. The technology is clever, innovative, and EVs are fantastic to drive. Aussies already want them, and most still have either a waitlist or supply shortage. There’s no scenario in which EVs won’t make their own case to Australians in the market for a new car. Using our taxation to encourage people to buy them is just stupid.

What do you think? Is it time stop incentivising electric cars? And would that money be better spent on EV infrastructure? let us know in the comments below?

Trent Nikolic

Trent Nikolic has been road testing and writing about cars for almost 20 years. He’s been at CarAdvice/Drive since 2014 and has been a motoring editor at the NRMA, Overlander 4WD Magazine, Hot4s and Auto Salon Magazine.

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