NSW waives stamp duty for EVs: Will green transport be more affordable now?

As part of its 2021/2022 state budget, the NSW government has pledged $200 million to waive stamp duty fees for eligible, new and secondhand zero and low emission cars. 

This waiver is part of a bigger $489.5 million package the Berejiklian government has announced to encourage the uptake of EVs in New South Wales over the next four years. The question is will these new measures make EVs more affordable in the state?

NSW’s EV package

To start with, let’s have a look at what exactly the NSW government is promising its residents. Here’s a quick rundown:

• Stamp duty waiver for EVs over the next four years
• $3,000 rebate for the first 25,000 BEVs and fuel cell EVs sold for less than $68,750 (including GST), from 1 September 2021
• $171 million investment in charging infrastructure in NSW over the next four years.

Tune in to episode 34 of Mozo's podcast, The Finance Burrito, for more insights on these changes.

To get a rough idea of the actual savings in dollars and cents, we had a look at how much someone might pay for the popular Nissan Leaf EV with and without the NSW government’s incentives.

Example EV cost, with and without incentives

According to carsguide.com.au, a base Nissan Leaf will set you back at least $49,990 before on road costs. A calculator on the NSW government website shows that stamp duty for a vehicle costing this much would be around $1,600. As well as this, registration costs could be around $381 per year, according to prices set out on the Transport for NSW website. That includes a $68 per year registration fee, plus tax which is dependent on the weight of the vehicle (Nissan Leaf is around 1,490kg according to carexpert.com.au).

This means that without government incentives, the Nissan Leaf could set you back around $51,971. 

With the government incentive, however, the $1,600 stamp duty would be waived. Plus, if the person was one of the first 25,000 people to purchase an EV from September this year, they could also receive the $3,000 rebate. To put that into perspective, in 2020 there were 6,900 electric cars sold in Australia, in 2019 that figure was 6,718, according to the Electric Vehicle Council.

So with the government incentives, the initial purchase price and registration for the Nissan Leaf could go down to around $47,371. That’s a saving of around $4,600. The savings for a more expensive EV could be bigger, as the stamp duty would be higher.

Other EV costs

Of course the above example doesn’t take into account CTP cover (compulsory third party insurance), which is a legal requirement to drive in Australia. Plus, if you want to make sure that your precious EV is insured against any mishaps, you may also have to purchase comprehensive car insurance. 

In 2020, Mozo’s research found that comprehensive car insurance for an EV (excluding Teslas) could be around $1,415 annually.* This is a bit higher than the average comprehensive car insurance premium for all cars (including combustion engine vehicles), which at the time Mozo estimated to be around $952.*

Despite the higher insurance premiums though, EVs could offer savings in other areas. In an interview late last year, Alexandra Kelly from the Electric Vehicle Council told us that the higher insurance costs would not outweigh the savings on fuel. Indeed, according to the EV Council: 

• an average combustion engine car costs around $14 per 100km, 
• while an average electric car costs around $4 per 100km.

Finally, besides the usual service checks, there is another potential cost for EVs on the horizon. In its newly released budget, the NSW government outlines plans to introduce a road user charge for electric vehicles in the future. The government says that at this stage it will not introduce the charge until 1 July 2027, or when battery electric vehicles make up at least 30% of new vehicle sales. According to the EV Council’s stats, in 2020 EVs made up just 0.7% of new car sales in Australia.

EV makers in Australia

Part of the NSW government’s reason for this new package is most probably also to encourage EV makers into the Australian market. 

At the moment, a lack of federal policy to encourage uptake of electric cars is leaving EV makers uninspired to sell in Australia. Indeed, recently Renault actually made the decision to withdraw its Renault Zoe EV from the Australian car market. The car maker cited the lack of federal policy as its reason, saying there wasn’t enough incentive for drivers to purchase EVs.

By introducing this new package, the NSW government likely hopes to encourage more EV makers to the country, including ones with lower cost electric cars. A lower cost electric car with a lower agreed or market value, may even come with lower insurance premiums.

We shall have to wait and see how the state’s plans unfold. In the meantime if you are looking to insure your electric wheels, you’ll be happy to hear that most insurance providers in Australia offer cover for EVs. Head to Mozo’s compare comprehensive car insurance page to see what policies are on offer right now, or have a quick gander at the deals below.

*These averages are based on over 10,000 different car insurance quotes for 66 different comprehensive car insurance policies, collected as part of the 2020 Mozo Experts Choice Awards for Car Insurance. These awards are conducted yearly to highlight comprehensive car insurance policies available in Australia that Mozo believes either offer exceptional quality or exceptional value. Read the full methodology report here, to learn more about the awards.