Imagine the government threatening to tax ex-smokers for no longer contributing to health funding via tobacco tax revenue. It would be the dumbest policy ever conceived.
The slightest disincentive to quitting is always amplified by an addict into a rolled-gold reason to avoid changing unhealthy habits. And that’s precisely what a road user charge on EVs will achieve: it will give petrol and diesel users one more excuse to keep pumping pollution into everyone’s lungs.
Punishing Good Behaviour
The health costs of particulate emissions, the NOx, the PM2.5, shortening lives near busy roads, almost certainly exceed the 3-4 cents per kilometre being proposed. EV drivers aren’t currently freeloading. If anything, it’s the other way round.
So the bad news is it’s a dumb tax that punishes the right behaviour. There are indications it will be postponed until the fuel crisis that is driving so much EV uptake subsides, but it’s likely coming sooner or later, no matter how much I moan about it.
But thankfully, there is good news: with some simple, free changes, it’s easy to claw back at least 4 cents per km – once you have an EV. Enough to wipe out the tax altogether – and hopefully remove the ‘EV tax’ as an excuse to not quit that filthy liquid fuel addiction.
Here’s how:
Charging during the day is one of the ways to cancel out the cost of an EV road user charge.
Behaviour change #1: Charge smarter. If you have solar and a car at home, charge during the day. If you’re on a time-of-use tariff, set a timer for off-peak. At 6km per kWh, you’ll save 3-10 cents per kilometre compared to charging at peak grid electricity rates.
Behaviour change #2: Drive more like a grandma. Chill mode – or the non-Tesla equivalent – reduces acceleration and tyre wear significantly. An enthusiastically driven EV might need tyres at 30,000 km; a relaxed one at 50,000 km. At $1,000 a set, that’s roughly 1 cents per kilometre saved.
In fact, now I’ve worked it out, forget this step. Keep Chill Mode off, ready for when that modified HSV ute appears at the lights. Well worth it.
Behaviour change #3: Shop around for insurance. EV premiums vary by hundreds of dollars annually across insurers – some still price EVs as exotic cars. The RUC costs around $600 a year at 15,000 km driven. One afternoon of comparison shopping can recover most of that, every year.
Behaviour change #4: Keep your car longer. Your EV at 150,000 km drives as it did at 30,000 km with little to service. So there’s no mechanical reason to replace it, and any upgrade decision is psychological, not practical. Delay it three years, and the $25,000 gap between selling your old car and buying a new one works for you. At 5-6% cost of money, that’s $450 per year saved – amortised over 10 years of ownership.
Politicians Can’t Stop EV Savings
Mix and match those behaviours, and the EV tax becomes a financial nothing-burger. The politicians may be hell-bent on a dumb tax, but they can’t change the physics of an electric motor, the price of sunlight, or the fact that your EV will still drive like new when their policy is a distant, embarrassing memory.
Phase Shift is a weekly opinion column by SolarQuotes founder Finn Peacock. Subscribe to SolarQuotes’ free newsletter to get it emailed to your inbox each week along with our other home electrification coverage.
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Great tips Finn.
One more for the politicians:
While you’re at it with a Road User Charge, introduce an CO2 emissions charge for ALL vehicles.
Now that’s a level playing field.
I’m amazed how many who love EVs and buy them even support a road user charge for them. That piece of propaganda, that EVs are ‘freeloading’, got deep into just about everybody’s brain, thank you for calling it out!
Love the smoker analogy, spot on.
I see overseas Tesla is now offering its own insurance, and linking it to use of FSD. The more you use FSD, the more safely you drive, the cheaper insurance becomes. And it’s quantifiable. Plus they then embed it in their vertical integration business model, and get more revenue by capturing insurance dollars too.
That’s incredibly smart, and is their business model, which is not spelled out or widely understood. It weaves all of its products, data and customers together into self-reinforcing feedback loops, which makes every component of that connected network more capable and less expensive over time.
Yeah probably very guilty of that excuse making – but I dont trust any politicians in the slightest.
Its not so much that they will tax us, it is how much and how that fills me with trepidation and frankly stops me buying an EV at this point.
The cost of the current taxes for an ice vehicle runs about 4c a km for a economical vehicle.
The current road use tax that is in place for trucks (heavy vehicle road user charge) runs at about 25c per litre of diesel, which runs about 10c per km.
So while we hope it will only be 4c per km, we know it will be less than 10c – but how will it be collected? I dont want an extra $500 bill added to my already exorbitant annual rego costs, paying in dribs and drabs at the pump as we do now is a lot easier to take.
As the Australian Electric Vehicle Association has pointed out, a road‑user charge is ultimately unavoidable, but to be fair, it needs to apply to all vehicles: ICE, hybrid, plug‑in hybrid and EVs.
That way the existing fuel excise can continue functioning as a pollution tax, while the RUC simply becomes a distance‑based road funding mechanism.
I think there is a far bigger story you might like to turn your mind to: the loss of revenue from solar power generated behind the meter for self-consumption.
Today the loss of revenue per annum that can be attributed to BEV [300K Units] is 0.15-0.20B and based on a full fleet of 20M vehicles $10-12B
The loss of revenue attributable to the 4.1M solar systems installed across Australia is estimated at 4B per annum [GST 0.4B], of which about 50% is due to fixed and escalating distribution costs [Grid and Retail].
And what is playing out right now is [for those who have stopped smoking, your analogy] :
1. Direct export charges [two-way tariffs]
2. Free exporst thresholds + paid excess
3. Time of use pricing to reflect network stress
4. Lower fee in tariffs as an indirect cost of recovery
All of these aim to ensure solar households contribute to distribution costs even if they import little energy.
So whilst your story is important right here right now which issue carries more weight?
Good points Finn, although a little idealistic. Australia depends on dumb taxes punishing good behaviour more than any country in the world = Income Tax. I think both laziness and a lack of imagination means politicians won’t bother with sensible alternatives.