The prices of most of Australia’s cheapest electric cars will not decrease under a plan by the newly-elected Federal Government to remove the import tariff on such vehicles – because they are already subject to a Free Trade Agreement.
Wealthy Australian buyers of top-end luxury cars – rather than families trying to cut their fuel bills and switch to an electric future – will be the big winners of the newly-elected Federal Government’s plan to remove the import tariff on electric vehicles, unless it excludes vehicles that exceed the Luxury Car Tax threshold.
The proposed removal of the import tariff on electric cars – a pre-election promise by freshly-installed Prime Minister Anthony Albanese – will only reduce the price of electric vehicles from Europe and the UK where luxury brands such as Porsche, Mercedes-Benz, BMW , Audi and Jaguar are manufactured.
More than half of the 23 electric cars currently on sale in Australia are already subject to a zero import tariff because of pre-existing free trade agreements with countries they are sourced from including China, Japan, South Korea and the United States.
A zero import tariff already applies to mainstream car companies such as China’s MG (which sells Australia’s most affordable electric car priced from about $ 45,000), South Korea’s Hyundai and Kia, and Japan’s Toyota (which will launch an electric car next year).
Tesla electric cars sold in Australia are already subject to zero import tariffs due to free trade deals with the US and China where those vehicles are manufactured.
Unless the Luxury Car Tax threshold ($ 79,659 for 2021-22) is applied, vehicles which would benefit from the removal of a 5 per cent import tariff on their landed cost (rather than their RRP) include the Porsche Taycan (priced from $ 156,000 to $ 346,000 ), the Mercedes EQC (priced from $ 124,000 to $ 141,000), BMW iX (priced from $ 136,000 to $ 223,000), and the Audi E-Tron (priced from $ 140,000 to $ 169,000).
The three electric passenger cars eligible for the import tariff cut are the Nissan Leaf ($ 50,990 to $ 61,490), Mini Cooper SE (from $ 55,650) and Mercedes-Benz EQA250 ($ 76,800) – which are sourced from the UK or Germany.
Although Volvo is a Swedish brand, its electric car is made in China and already attracts a zero import tariff.
Automotive industry insiders say the policy is an example of how an idea seems good on the surface but may not benefit the broader community as intended.
“As always with these policies, the devil is in the detail,” an automotive industry veteran and Canberra lobbyist told Drive. “When they announced the removal of the import tariff on electric cars they probably thought this would make electric cars more affordable.
“Because there are so many free trade agreements already in place, it turns out the top end of town is going to benefit most from this plan if it goes ahead.”
It remains to be seen if the newly-elected Federal Government will eliminate the five per cent import tariff on all electric vehicle, or limit the discount to only those below the Luxury Car Tax threshold ($ 79,659 for 2021-22), as pledged.
All other electric cars aside from those mentioned are either above the Luxury Car Tax threshold, or subject to a Free Trade Agreement where a zero import tariff applies. However if the Federal Government was to eliminate the five per cent import tariff on all electric vehicles, the majority of those that would benefit would be expensive luxury cars.