Is your EV about to get pricier? The $363 plan backed by a $67.6 B reality

If you’ve made the switch to an electric vehicle (EV)—or you’re thinking about it—you might want to buckle up. 

The federal government is considering a new tax plan that could see EV drivers paying up to $363 a year just to use Australia’s roads. 

It’s a move that’s been described as ‘inevitable’ by industry experts, and it’s set to shake up the way we think about the cost of motoring in the years ahead. 

Why the change?

Let’s start with the basics. Right now, if you drive a petrol or diesel car, you’re paying a fuel excise every time you fill up—currently 50.8 cents per litre. 

This tax funnels billions into the government’s coffers, helping to fund the maintenance and development of our roads and transport infrastructure. 

In fact, Aussies paid a whopping $15.71 billion in net fuel excise in 2023-24 alone, and that figure is expected to balloon to $67.6 billion over the next four years.

But if you’re behind the wheel of an EV, you’re not paying a cent in fuel excise. You charge up at home or at a public station, and off you go—no extra tax, no fuss. 

While that’s been a nice perk for early adopters, it’s also created a growing funding gap as more drivers make the switch to electric.

The Road-User Charge: What’s being proposed?

Enter the proposed Road-User Charge (RUC). Treasurer Jim Chalmers has flagged the idea of introducing a new tax for EV drivers, designed to ensure everyone pays their fair share for using the roads—regardless of what’s under the bonnet.

Motoring expert Toby Hagon said, ‘EVs at some point need to start paying their way. It’s an inevitability that they’re going to have to start paying taxes as petrol and diesel cars do today.’

While the details are still being hammered out, the suggestion is that EV drivers could be charged around 3 cents per kilometre driven. 

With the average Aussie clocking up about 12,100 kilometres a year, that works out to roughly $363 annually.

How does this stack up against petrol cars?

At first glance, $363 a year might sound like a sting, but let’s put it in perspective. The average household currently pays about $1,200 a year in fuel excise. 

So, even with the new RUC, EV drivers would still be coming out ahead—not to mention the savings on servicing and maintenance, which are typically lower for electric vehicles.

Of course, the fuel excise hits heavier vehicles harder, since they burn more fuel and cause more wear and tear on the roads. 

That’s why some experts, including Hagon, are calling for a more nuanced approach: a universal road-user charge based on vehicle weight, rather than engine type. 

‘Don’t just single out EVs or hybrids or plug-in hybrids. Apply a road user charge across the board and get rid of fuel excise. It seems like a logical way to do it,’ he said.

Will this slow down the EV revolution?

Australia’s EV market has been growing, but sales have started to plateau in recent months. Some worry that a new tax could put the brakes on further adoption. 

However, Hagon believes the impact will be minimal. 

‘The running cost of an EV is so much lower than $363 a year, so it’s not going to be the determining factor of whether someone buys an EV or not,’ he said.

He also points out that EV prices have dropped significantly in the past few years, and competition among manufacturers is heating up. 

Plus, the ongoing savings from charging rather than filling up at the bowser still make EVs an attractive option for many Australians.

What about the states and territories?

One of the big challenges ahead is working out how the new RUC would be implemented across Australia’s patchwork of state and territory governments. 

Some states, like Victoria, have already introduced their own road-user charges for EVs, while others are still weighing their options. 

The federal government will need to coordinate with all jurisdictions to ensure a fair and consistent system nationwide.

What does this mean for you?

If you’re already driving an EV, you’ve likely enjoyed a few years of tax-free motoring. 

But change is clearly on the horizon as the government looks to future-proof its revenue streams and ensure everyone pays their way.

For those considering making the switch, the new RUC is unlikely to outweigh the many benefits of going electric, from lower running costs to a smaller environmental footprint. 

But it’s worth factoring into your calculations as you weigh up your next vehicle purchase.

Have your say

What do you think about the proposed road-user charge for EVs? Is it fair for all drivers to contribute equally to road funding, or should EVs be given more time to establish themselves before being taxed? And if you’re an EV owner, would a $363 annual charge change your mind about your next car?

We’d love to hear your thoughts and experiences. Share your comments below and join the conversation with other members!

Also read: First glimpse: Check out the plan set to massively increase electric vehicle ownership in Australia