Bank Australia announces plans to only offer financing for used or electric vehicles
While Australia is five times lower than the global average in its uptake of new low-emission vehicles, at just 2% of all new car sales, Bank Australia
, Australia’s first customer-owned bank has announced it will no longer provide loans for petrol and diesel cars from 2025.
In a move aligned with the bank’s efforts to reach net zero carbon emissions by 2035, Bank Australia has announced its intentions to cease car loans for new fossil fuelled vehicles models at the National Electric Vehicle Summit in Canberra.
This cessation of loans for petrol and diesel cars
is a clear message to the market about the expected acceleration of the transition from internal combustion to electric vehicles over the next few years.
“We have chosen 2025 because the change to electric vehicles needs to happen quickly, and we believe it can with the right supporting policies in place to bring a greater range of more affordable electric vehicles to Australia,”
said Bank Australia Chief Impact Officer Sasha Courville.
The Victorian-based bank has been offering reduced interest rates on low emission vehicles
for four years. The company believes that this new move is a responsible choice and will ensure that their vehicle lending would not lock customers into ownership of vehicles that incur increasing running costs and produce higher carbon emissions.
With both traditional and plug-in hybrid models
excluded from eligibility, Bank Australia’s new-car loans will be limited to pure battery powered vehicles.
However, the bank, acknowledging the affordability issues and long waitlists that are keeping electronic vehicles out of reach for some, will continue to support loans for second-hand fossil fuel vehicles
while the market grows.
Bank Australia is not the first to embrace such a lending model. Denmark’s Merkur Cooperative Bank announced it would cease financing for new diesel and gasoline cars back in 2020. However, at this stage, no other Australian financial institutions have hinted at taking a similar position.
In spite of this, Bank Australia is not alone in its mission to encourage a move towards electronic vehicle use. With Australia the only OECD country, aside from Russia, without plans currently in motion to move away from petrol and diesel, the Australian Government has come to the party, introducing an EV incentives bill
exempting low-emissions cars from fringe benefits tax to Parliament in July, and announcing its National Electric Vehicle Strategy (NEVS).
The new strategy will be taking the somewhat belated steps to introduce vehicle fuel efficiency standards. It is hoped the move will result in an increase in the supply of affordable, low-emission vehicles to Australian drivers while reducing emissions
from the transport sector. A discussion paper seeking submissions from the car industry and other stakeholders will be released over the coming weeks.