Recent discussions have brought attention to a potential loophole in the New Vehicle Efficiency Standard (NVES) that could allow car manufacturers to rush higher-polluting vehicles into Australia before the official start date of the scheme in July 2025.
Unlike other markets which register imported cars at the point of sale at a dealership, Australia's imports are registered for approval at port. This means vehicles can be brought in and registered before the NVES formally begins, allowing them to be sold later without being counted under the scheme. While this loophole raises valid concerns about undermining the emissions reduction goals in the early years of NVES, addressing it must not come at the expense of innovative ownership models like car subscription, which have the potential to dramatically improve EV uptake in Australia.
It is becoming increasingly clear that tying the success of NVES and emissions reduction solely to traditional automotive sales models is shortsighted. Research has consistently shown that EV adopters are particularly attracted to flexible and hassle-free ownership options. The tremendous success of the French government's subsidized EV subscription program launched in December 2023 is a testament to this demand. Within just six weeks, the program more than doubled its yearly targets, prompting an adviser to President Emmanuel Macron to hail it as a "real success story" that was "good for the wallet and good for the planet."
Loopit research suggests that 78% of future EV adopters would prefer to subscribe rather than purchase outright. However, the appeal of car subscription extends beyond early EV adopters. New PwC research reveals that 49% of consumers are likely to take up a vehicle subscription. These findings underscore the significant potential of subscription models to accelerate the transition to zero-emission vehicles.
As the co-founder of Loopit, I've observed firsthand the transformative power of subscription models in accelerating EV adoption. Our platform, which powers subscription offerings for brands like Subaru and Polestar in overseas markets, has demonstrated that reducing barriers to entry can significantly boost EV uptake. This raises a provocative question: Are we limiting the potential impact of NVES by focusing solely on traditional sales metrics?
In Australia, our platform supports subscription programs for prominent dealership groups, demonstrating that car subscription is not a disruption to the incumbent automotive industry but a complementary solution that can work harmoniously with existing retail sales, leasing, and finance models. By leveraging our platform, OEMs can import vehicles for subscription in partnership with their dealer networks, allowing for vehicle registration and NVES compliance without the immediate pressure of sales.
While the integrity of the NVES scheme is crucial, an overly rigid approach hinged on retail vehicle sales will stifle innovation in ownership models that could propel EV adoption. Instead of viewing the loophole as a threat, policymakers should consider it an opportunity to incentivize and support alternative ownership models that align with evolving consumer preferences.
The NVES presents a chance for Australia to close the gap with other major economies in reducing transport emissions. However, the conventional approach may not be sufficient. By embracing innovative ownership models alongside traditional sales, we could potentially accelerate the transition to a cleaner future of mobility more rapidly than anticipated.
This controversial loophole in NVES should serve as a wake-up call for policymakers and industry leaders. It challenges us to think more creatively about making EVs accessible and appealing to all Australians. Perhaps, counter-intuitively, this loophole could be the catalyst needed to drive meaningful change in our approach to vehicle ownership and emissions reduction.
The path forward may not be straightforward, and it will likely involve some contentious debates. However, if we're serious about reducing emissions and increasing EV adoption, we must be open to unconventional solutions – even if they arise from unexpected places.
Michael Higgins is the co-founder of Loopit, an Australian startup leading car subscription enablement for the automotive industry. Loopit recently secured a further $3.95 million in investment to expand its platform globally.
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