Victorian electric vehicle owners to pay controversial road tax

From July 1, Victorian electric vehicle (EV) owners will be charged an additional tax for driving on main roads, expected to cost motorists $330 a year on average.

The controversial new charge will require EV owners to pay between 2c and 2.5c per kilometre in which reportedly helps support the maintenance and development of road infrastructure, or owners risk having their vehicle registration cancelled.

The law, which was introduced by the Victorian government has been met with plenty of criticism, many worried it’s setting the state’s zero emissions target back and further discouraging drivers from switching to electric.

Victorian Greens transport spokesperson Sam Hibbins said the new law would undermine the steps already being taken toward climate action in the state.

“Labor’s EV tax comes at a time when transport is our biggest growing source of emissions in Victoria and we are lagging behind the rest of the world in the uptake of electric vehicles. Passing the ‘worst electric vehicle policy in the world’ will now make Victoria a global laughing stock, and we will continue to be a laggard in EV uptake,” he said.

According to the ABC, there are currently 7,000 registered electric vehicles in Victoria, with only 20,000 registered Australia-wide.

Under the proposed road-user charge, drivers of an electric car would be looking to pay up to an additional $330 a year on average – $260 if driving a hybrid vehicle – for their use of main roads to compensate for the lack of GST paid for charging an electric vehicle.

Information sourced from VicRoads website, under the ZLEV Road-user charge page. Accurate as of May 2021.

With the cost of owning an electric vehicle already being quite expensive, there are fears this additional charge may deter drivers from transitioning to greener vehicles, despite the financial incentives and positive public response towards this technology.

A recent report by the Electric Vehicle Council showed that public interest in zero emissions vehicles had increased, with over half the surveyed consumers saying they would consider purchasing an EV.

However, one of the biggest pushbacks for consumers to take the leap has been initial costs, with 50 per cent of Australians saying they were discouraged by the purchase costs of an electric vehicle in comparison to that of a diesel or petrol car.

In addition to upfront costs, availability of charging stations, performance and endurance of vehicles were also amongst the reasons Aussies avoided EVs.

Canstar Blue Energy Editor, Jared Mullane, said this charge is yet another cost Victorians will need to consider before purchasing an EV, and that existing owners will need to ensure they keep ongoing costs as low as possible.

“Not only is electric vehicle ownership associated with high upfront costs, consumers will now need to think about additional ongoing expenses, like this annual road tax as well as additional electricity costs for charging their car at home,” he said.

“Although this road tax isn’t good news for electric car owners in Victoria, it is a reminder to make sure you’re getting a fair price on energy to help soften the blow of this charge, and there are some companies offering competitive deals targeted at EV owners.”

As most states move towards zero emissions goals in the coming years, some electricity providers have begun offering plans and financial incentives to help encourage customers to reduce their carbon footprint. Some companies have even gone as far as to offer better electricity deals to EV owners. To see what savings you could make on your electricity plan with an EV, check out our table below.

AGL Electric Vehicle Plan VIC

Here is AGL’s Electric Vehicle Plan on our database that includes a link to the retailer’s website for further details. This is a product from a referral partner†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Red Energy EV Saver Plan VIC

Here is Red Energy’s Electric Vehicle Plan on our database that includes a link to the retailer’s website for further details. This is a product from a referral partner†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Why has an EV road tax been introduced?

The road-user charge for electric vehicles was introduced to help cover the costs of road maintenance in the absence of GST on fuel purchases by EV drivers. As electric cars don’t require petrol, diesel or LPG to run, when more people begin to switch to EVs, it’s proposed there will be a drop in revenue from the GST on fuel. In order to continue receiving this revenue, the government proposed a road-user charge to alleviate this.

How does the road-user charge work in Victoria?

The charge works by tracking the kilometres driven on a main road in an electric vehicle. Victorian EV owners will be required to photograph their odometer after each trip and record the kilometres travelled. Motorists then need to upload these pictures to a myVicRoads account in order for a bill to be generated based on each trip. These bills can either be paid during registration renewal, quarterly or semi-annually.

Will this EV road tax be rolled out to other states?

At this stage the road-user charge for electric vehicles has only been introduced in Victoria. Both New South Wales and South Australia have expressed interest in implementing a similar charge, but have since delayed any further action. In contrast, the ACT has recently announced an offering of free registration for two years for all new electric vehicle owners. New owners will also pay no stamp duty upon purchasing an EV.

Are there any subsidies for purchasing EVs in Victoria?

To help speed up the sales of EVs by 50 per cent by 2030, the Victorian government introduced the Zero Emissions Vehicle (ZEV) Subsidy in May 2021. The ZEV subsidy encourages drivers to purchase an EV by reducing the upfront costs, with a financial benefit of up to $3,000, which can be claimed through car dealerships and then deducted from the final cost. Victorian residents and businesses who purchase an electric vehicle for less than $68,740 after 2 May 2021 are eligible for this subsidy.

The Victorian government also offers a $100 discount on electric vehicle registration in the state.

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