Albanese Government to back $150 million in low-interest EV loans

The Albanese Government has announced a $150 million program to make electric vehicles (EVs) more accessible for Australians earning under $100,000 annually and for essential workers.

Delivered through the Clean Energy Finance Corporation (CEFC) and in partnership with the Commonwealth Bank, the program provides discounted loans for new and used EVs priced up to $55K, as well as financing for home EV charging equipment.

The loans offer interest rates up to 5 percentage points lower than standard rates, potentially saving borrowers over $8000 on a $40,000 loan over a seven-year term.

Eligible applicants include those earning less than $100,000 annually and workers in key roles such as healthcare, education, policing, firefighting, and other emergency services.

Minister for Climate Change and Energy Chris Bowen said: “Discounted loans help remove barriers to ownership, helping more Australians drive cars that can save them thousands of dollars a year.”

With the New Vehicle Efficiency Standard (NVES) coming into effect on 1 January 2025, these measures aim to support the transition to cleaner vehicles.

FCAI acknowledges government action but calls for broader measures

The Federal Chamber of Automotive Industries (FCAI) welcomed the initiative but emphasised ongoing challenges in the EV market.

FCAI head Tony Weber said that battery EVs accounted for only 7.4% of new vehicle sales in 2024, significantly below the forecasted 11.1%, or approximately 135,000 units.

“Less than 84,000 battery electric vehicles have been sold in Australia this year. Frankly, this is a disappointing result and well below our forecast,” Weber said.

Weber attributed the results to several factors, including higher purchase prices, limited charging infrastructure, and a lack of models catering to work and recreational needs.

He added that international markets are facing similar challenges as government incentives are scaled back.

“It is significant that the Government has recognised the need to do more to support sales of EVs in order to get anywhere near the challenge of achieving its extremely ambitious emissions reduction targets under the New Vehicle Efficiency Standard," Mr Weber said.

“Increasing consumer demand for plug-in hybrid and hybrid vehicles shows that consumers are prepared to move to low-emission technologies. The opportunity exists for the Government to consider further policy settings that support the shift to a lower emissions economy.”

Are PHEVs the right path?

Interest in PHEV models has grown among Australian buyers, seen by many as an ideal solution to range anxiety in a land with a massive road network and an impression of there being too few reliable EV chargers outside of city areas.

However, plug-in hybrid electric vehicles (PHEVs) face criticism for prolonging fossil fuel dependency while offering limited environmental benefits or ownership cost savings when compared to fully electric vehicles (BEVs).

With a vast road network and sparse population density outside major cities, proponents of BEVs argue that investment in charging infrastructure should focus on solutions that support long-term decarbonisation, rather than transitional technologies like PHEVs.

Critics highlight that PHEVs often fall short in reducing emissions, as users in remote or regional areas may rely heavily on petrol due to limited charging opportunities, effectively turning PHEVs into conventional hybrids.

At least one PHEV-focused manufacturer, Mitsubishi, has moved to dispute that notion with a study that claims its PHEV owners are making the most of their vehicle's electrification.

Critics insist however that Australia’s unique challenges, including the need for extensive infrastructure to service remote regions, make the case for prioritising BEVs stronger.

Most PHEVs also charge far slower than the latest BEVs, which means those on roadtrips can often be found occupying valuable public charging resources for slow and relatively small battery recharges, potentially hindering BEV users who rely entirely on these networks for mobility.

While PHEVs may provide a temporary option for bridging the gap in low-infrastructure areas, critics argue that doubling down on BEV infrastructure would better serve Australia’s long-term sustainability goals and align with emissions reduction targets, particularly as more long-range BEVs become available to meet the demands of rural and remote driving.