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Australian bank to scrap loans for new diesel and gasoline cars as country looks to increase EV uptake

Australian bank to scrap loans for new diesel and gasoline cars as country looks to increase EV uptake
KEY POINTS
  • While there will be no more loans for new combustion engine vehicles — including hybrids — from 2025, Bank Australia will continue to provide them for used ones.
  • Australian government says it’s “significantly behind the pack when it comes to electric vehicles.”
  • According to the International Energy Agency, electric vehicle sales hit 6.6 million in 2021.

Australian bank to scrap loans for new diesel and gasoline cars as country looks to increase EV uptake

An Australian bank plans to stop giving loans for new diesel and gasoline cars as the country tries to encourage the use of electric vehicles and catch up with other developed countries.

In a statement Friday, Bank Australia said it would scrap loans for new fossil fuel vehicles from 2025. Sasha Courville, its chief impact officer, said that date had been picked “because the change to electric vehicles needs to happen quickly.”

The bank, Courville added, believed this could happen “with the right supporting policies in place to bring a greater range of more affordable electric vehicles to Australia.”

While there will be no more loans for new combustion engine vehicles — including hybrids — from 2025, Bank Australia will continue to provide them for used ones.

“We’ll continue to offer loans for second-hand fossil fuel vehicles until there is a viable and thriving market for electric vehicles,” it said.

On that front, Friday also saw the Australian government provide information about plans to set up a National Electric Vehicle Strategy for the country, with a discussion paper on the matter due to be released for consultation.

In an announcement, the government said Australia was “significantly behind the pack when it comes to electric vehicles.”

It added that, at just 2%, the country’s uptake of new low-emission vehicles was “nearly five times lower than the global average — national leadership is needed to ensure we don’t continue to be left behind.”

“In this context, we believe that now is the time to have an orderly and sensible discussion about whether vehicle fuel efficiency standards could help improve the supply of electric vehicles into the Australian market, to address the cost-of-living impacts of inefficient cars, and to reduce emissions from the transport sector.”

Customer-owned Bank Australia traces its roots back to 1957. According to its Statutory Financial Report for 2021, it said total assets had grown to 8.5 billion Australian dollars ($5.9 billion), with profit after tax coming in at 40.7 million Australian dollars.

It is not unique in its strategy toward vehicles powered using fossil fuels. In 2020, Denmark’s Merkur Cooperative Bank said it would halt financing for new diesel and gasoline cars.

All of this comes as major European economies are laying out plans to move away from road-based vehicles that use diesel and gasoline.

The U.K. wants to stop the sale of new diesel and gasoline cars and vans by 2030. It will require, from 2035, all new cars and vans to have zero-tailpipe emissions. The European Union — which the U.K. left on Jan. 31, 2020 — is pursuing similar targets.

According to the International Energy Agency, electric vehicle sales hit 6.6 million in 2021. In the first quarter of 2022, EV sales came to 2 million, a 75% increase compared to the first three months of 2021.

This article was originally published on cnbc.com

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