While the aim is to ensure fairness among all motorists, the change may also influence the direction of the EV market.
At present, drivers of petrol or diesel vehicles contribute 51.6 cents per litre in fuel excise, generating over $17 billion each year for road maintenance. EV drivers currently pay none of these charges, despite their growing numbers. Although this exemption was initially designed to encourage low-emission driving, there is now increasing support for EV users to contribute to road costs.
EVs have been available in Australia since 2010, but demand has climbed rapidly due to government tax incentives. One example is a novated lease program, which allows EV purchases with significant pre-tax savings, reducing the upfront cost by as much as 47%. When combined with lower running costs, especially for drivers charging via solar power, these incentives have helped increase EV numbers to 350,000 across the country.
The federal government is now looking to implement a per-kilometre road-use charge similar to one previously proposed in New South Wales. Early estimates suggest this could range from 2.5 to 3 cents per kilometre. Given that the average Australian vehicle travels about 11,000km annually, this could mean an extra $275 to $330 each year for EV owners. While this is unlikely to discourage most buyers, it may help create a more balanced system.
Though some EV owners may oppose the tax, many agree that contributing to road funding is reasonable. EVs are generally heavier due to their battery systems, leading to greater wear on road surfaces and reinforcing the argument for their inclusion in long-term funding plans.
Even with the added cost, EVs remain financially appealing when considering fuel savings, lower depreciation, and tax reductions. According to recent data from the Victorian motoring association, monthly expenses for entry-level EVs such as the BYD Dolphin are comparable to or even lower than those for petrol or hybrid cars. As battery technology advances, replacement systems may offer improved range and durability, which could help manage maintenance expenses over time.
Looking forward, the federal government will need to strike a balance between encouraging EV uptake and securing funds for transport infrastructure. If EV ownership continues to rise, more investment in publicly accessible charging stations will also be needed to prevent congestion at existing outlets, a challenge California is already confronting.
