Following Victoria and New South Wales, South Australia also eliminates subsidy for electric cars.

South Australia Scraps $3,000 Electric Car Subsidy

The state of South Australia has announced that it will be discontinuing its $3,000 subsidy for electric and hydrogen vehicles from January 1, 2024, just over two years after the scheme was introduced. This announcement comes as part of the state’s 2023/24 financial year mid-budget review, which outlines the phaseout of the rebate after having granted 2,500 repayments since it was introduced on October 28, 2021.

The $3,000 subsidy, which applies to electric vehicles and hydrogen-powered cars valued below $68,750 plus on-road costs, will continue to be available to motorists who place an order for an eligible vehicle before the specified deadline. However, with approximately 4,500 subsidies yet to be claimed, the scrapping of the scheme represents a saving of around $13.5 million for the state government’s budget.

In addition to the subsidy being phased out, South Australia will also continue to offer free registration for three years to eligible electric and hydrogen vehicles until June 30, 2025, the end of the 2024/25 financial year.

This move comes as South Australia becomes the third local jurisdiction to repeal its subsidy for buyers of new electric and hydrogen cars. The decision follows similar moves by Victoria and New South Wales to discontinue their electric car subsidies, signaling a broader shift in government policies towards electric and hydrogen vehicles.

In a related development, the South Australian government also abandoned plans to introduce a controversial road user tax on electric cars earlier this year. The tax was initially due to come into force from July 2027 or when electric vehicles reached 30 per cent of sales of new cars in the state, but after public scrutiny, the plans were shelved.

Electric car sales in Australia have been on the rise, with the 80,446 battery-powered vehicles sold between January and November 2023 representing a significant increase of 184 per cent from the same period last year. In 2022, 33,410 electric cars were sold in the 12 months of the year, compared to 5,149 sales in 2021, marking a remarkable surge in the adoption of electric vehicles in the country.

This significant growth in sales indicates a growing interest and demand for electric and hydrogen vehicles in the Australian market, indicating a shift toward more environmentally-friendly transportation options. The removal of subsidies in South Australia, Victoria, and New South Wales, however, may have an impact on the affordability and accessibility of these vehicles for prospective buyers.

Jordan Mulach, a journalist with Drive who specializes in automotive topics, noted that the decision has stirred up discussions within the industry and among consumers. Jordan describes himself as an iRacing addict and can be found on weekends behind the wheel of his Octavia RS or cursing at his ZH Fairlane.

As the availability of subsidies plays a significant role in influencing consumers’ decisions when it comes to purchasing electric or hydrogen vehicles, the removal of these incentives may need to be carefully monitored and explored in the context of wider government initiatives to promote sustainability and innovation in the automotive industry. While the decision in South Australia represents a notable policy shift, it remains to be seen whether similar changes will be implemented in other states, and how they would impact the further adoption of electric and hydrogen vehicles in the country.

The growing popularity of electric and hydrogen vehicles in Australia may lead to additional debates and policy changes in the future, as the country seeks to achieve broader goals for reducing emissions and transitioning towards sustainable transportation solutions. As the automotive industry continues to evolve and adapt to changing consumer preferences and global developments, these changes in government policies are likely to impact the trajectory of electric and hydrogen vehicles in Australia in the years to come.