Bank Australia to stop approving loans for new fossil fuel cars, will only handle car loans for EVs
A bank in Australia has announced that it will stop approving loans for new gas- and diesel-powered vehicles and will instead only provide car loans for electric vehicles
Bank Australia, a customer-owned bank and the seventh-largest banking institution of a similar nature in the country, made this announcement on Friday, Aug. 19. Sasha Courville, chief impact officer of the bank, noted that new loans for fossil fuel vehicles will end in 2025
This date was picked "because the change to electric vehicles needs to happen quickly." Courville added that the bank believes this change can happen "with the right supporting policies in place to bring a greater range of more affordable electric vehicles to Australia."
"We think that the responsible thing for us to do next is to ensure that our vehicle lending doesn't lock our customers into higher carbon emissions
and increasingly expensive running costs in the years ahead," said Courville in a statement.
"Ultimately, our announcement today is the beginning of a conversation with our customers and a signal to the wider market that if you're considering buying a new car, you should think seriously about an electric vehicle – both for its impact on the climate
and for its lifetime cost savings," she continued. (Related: GO GREEN, GET BROKE: Test finds new electric Hummer costs over $100 to charge – more than it costs to fill up most gas tanks
Bank Australia, which recently set a target date of 2035 for the business to achieve net-zero emissions, said it will continue to offer loans for second-hand gas- and diesel-engine cars after the 2025 deadline "until there is a viable and thriving market for electric vehicles."
"We are deeply aware that we need to support people not yet able to afford an electric vehicle while the market grows," said Courville.
Bank Australia is not the first financial institution to ban all loans for new fossil fuel vehicles. In 2020, Merkur Cooperative Bank in Denmark became one of the first banks to halt financing for new gasoline and diesel cars. The number of banks ending loans for all but electric vehicle cars has only grown since.
Australia lagging behind in electric vehicle rollout
Bank Australia's announcement comes as the country's government noted that it was "significantly behind the pack" when it comes to the rollout of electric vehicles.
The Electric Vehicle Council, a national organization representing the industry, noted that there were 20,665 electric vehicle purchases in Australia in 2021, representing only about two percent of the market. Tesla accounted for more than half of all electric vehicle sales, with Australians purchasing the popular Tesla Model 3 by the thousands.
To support the growth of the electric vehicle industry, the Australian government recently published information about plans to set up a National Electric Vehicle Strategy.
In the announcement of the strategy, the government admitted that the country's uptake of electric and other so-called 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," said the government in a statement.
According to the International Energy Agency, 6.6 million electric cars were sold in 2021. During the first quarter of 2022, electric vehicle sales reached two million, a 75 percent increase compared to the first quarter of 2021.
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