Tesla says NSW should scrap its plans for an electric vehicle tax and Australia should adopt a national road user charge that would be paid by all drivers including those who own petrol cars.
A NSW parliamentary inquiry has exposed widespread concerns about the state tax on EVs and hybrids that is legislated to begin in July 2027 and sparked calls for reforms on a national level that could result in drivers being charged for road use on top of petrol excise.
The Minns Labor government has budgeted for $440 million from the EV charge over three years from 2027-28, revenue that has remained on the books despite the High Court striking down a similar tax in Victoria in 2023.
The NSW government is banking on tweaking the state tax to survive a challenge or replacing the revenue with a national EV road user charge, which the Albanese government has agreed to in principle but has been slow to roll out because it does not want to discourage EV uptake.
Tesla’s policy adviser Ash Densham submitted to the NSW inquiry that because Victoria’s tax was “deemed an unconstitutional excise” the NSW equivalent may no longer be legally valid.
Tesla rejected the contention that EV drivers don’t pay for road upkeep as incorrect, citing a range of other charges including vehicle registration, licence fees and stamp duty to argue they already pay their fair share.
“Tesla contends that in an ideal policy environment road funding should be decoupled from the technology that powers the vehicle,” it said. “A road user charge should be universally applied to all vehicles on the road, regardless of their powertrain: internal combustion, hybrid, plug-in hybrid EV or battery EV.”
Tesla warned that at NSW’s proposed 2.97¢ per kilometre, an EV driver who travelled the Australian average of 11,025 kilometres annually would pay $149 more in tax, or 60 per cent more, than the driver of a Toyota Yaris.
It proposed starting with a lower road user charge of 0.5¢ per kilometre, rising to 1.5¢ per kilometre because this would ensure drivers were not dissuaded from buying EVs, while retaining the petrol excise. The excise is currently 36.6¢ per litre, but is set to return to 52.6¢ per litre from August.
Hyundai, another EV car maker, warned against taxing EVs at a time when electrification of road transport is under way but said the take-up “remains fragile”. It noted reductions in EV sales in late 2024 and through 2025 before the March 2026 spike to 14.6 per cent of monthly sales “driven primarily by fuel price volatility linked to conflict in the Middle East, an external shock rather than evidence of structural market maturity”.
Hyundai argued the Albanese government’s tax settings, tapering down but retaining fringe benefit tax benefits of EVs for several years, “recognises that EVs still require demand-side support during the transition”.
“For NSW to impose a new per-kilometre charge on EV drivers at the same time the federal government is deliberately retaining support for EV uptake would be inconsistent with the national policy direction and risks undermining the transition the broader policy framework is designed to encourage,” it said.
The Federal Chamber of Automotive Industries called for a national road user charge to apply to all road vehicles, with revenue raised to be set aside for road and EV charging infrastructure.
The Electric Vehicle Council submitted the NSW tax was “likely constitutionally invalid”. It called for a road user charge that is phased; introduced only once battery electric vehicles reach around 30 per cent of the fleet; universal, applying to all vehicles, not EVs alone; and net zero-aligned, designed to encourage the uptake of zero-emission vehicles.
The National Roads and Motorists’ Association submitted that it supports the NSW EV tax as legislated but called for “a clear pathway to evolve toward a system-wide approach applying across all vehicle types” as a long-term replacement for fuel excise.
Source: https://www.afr.com/politics/tesla-calls-for-all-drivers-to-pay-road-user-charges-20260713-p60es4