Drivers of high-priced electric vehicles costing more than $78,000 that were bought over the last two years will be spared the EV road tax that will be brought into effect in mid 2027.

The NSW Labor government dropped a bombshell over the weekend by announcing that rebates of $3,000 for EVs under the price of $68,750, and stamp duty exemptions for EVs under $78,000, will be removed at the end of 2023.

Just to be clear, the rebates will remain open to any eligible EVs ordered before the close of trade on December 31, 2023, even if the car is not delivered by that time.

But in a weird twist to this policy, the EV road tax to be implemented – as previously advertised – from the middle of 2027 will  not apply to EVs costing above $78,000 that are bought or ordered by end of this year.

On Saturday, the government said in its release: “A Road User Charge will commence as planned from 1 July 2027 (or, if earlier, when battery EVs make up 30 per cent of new light vehicle registrations) and will apply to all zero and low emissions vehicles, including plug-in hybrids, registered for the first time or transferred from 1 January 2024.”

We asked the government to confirm if this meant, as indicated, that all EVs registered or transferred before January 1, 2024 would be exempt from the road user charge.

Apparently not.

“EVs purchased before Jan 1, 2024 that did not receive a stamp duty exemption will not be subject to Road User Charge,” a spokesperson for energy minister Penny Sharpe told The Driven by email on Monday in response to a question.

“Any EVs that received a stamp duty exemption will need to pay this charge.”

It’s a strange incentive. So weird in fact that we double checked, and then triple checked, and the government confirmed it again on Tuesday: Any EV that paid stamp duty. i.e those that cost more than $78,000 and did not get a stamp duty exemption,  and those bought before the stamp duty exemptions was introduced two years ago, will be exempt from the road user charge.

It means that the wealthiest owners of EVs – including such cars as the electric Mercedes and Porsche Taycan that are priced at more than $300,000 – will not be subject to the road tax. Neither will those with the biggest batteries and biggest weights.

But it is also good news for those that bought EVs before the stamp duty exemption was introduced in September, 2021, because it means that they, too, will be exempted from the road-user-charge – a reward for the early adopters.

EVs bought after January 1, 2024, will pay both stamp duty and the road user charge. The removal of the stamp duty exemptions is expected to save $498.0 million over the four years to 2026-27 – the equivalent of around 310,000 EVs priced at an average $50,000.

The road tax, when originally flagged, was set at 2.5c per kilometre for full EVs, rising with inflation. In 23/24, even though it has not been imposed, it stands at 2.8c/km, and 2.24c for plug-in hybrids. By 2027/28, at current rates of inflation, it could be approaching 4c/km, or up to $800 a year for a car travelling 20,000kms a year.

Government data shows that only 8,391 EV rebates were provided between between September 2021 and August 2023, or a total of $25.2 million. The rebates, introduced by the previous Coalition government, were designed to support 25,000 EV purchases.

The Labor government justified the rebate removal on the basis that it was likely to push prices higher, despite the fact that the two most popular EVs in the country, the Model 3 and Model Y that account for nearly two thirds of the country’s sales, have seen several big price cuts in the past year.

However, if the lesson from changes to solar rebates and premium tariffs a decade ago are any guide, the end of the rebate at the end of the year could spark a rush to order EVs, particularly those newly released models priced at less than $40,000.

These include models such as the base variants of the MG4, BYD Dolphin and GWM Ora – where the rebates and stamp duty exemptions amount to nearly 10 per cent of the purchase price.

The rebates will be replaced by a $260 million funding commitment from the NSW government for new EV infrastructure, including regional fast charging stations, and road-side charging in major population centres. The government spokesman said that the exact details of that funding will not be released until a “refreshed” EV Strategy is unveiled in 2024.

Extracted in full from: NSW Labor’s weird EV policy means expensive electric cars will be spared road tax (