HomeLatest NewsAustralian banks to waive loans for new diesel and petrol cars

Australian banks to waive loans for new diesel and petrol cars

Cars and buses in Sydney, Australia, Monday, May 25, 2020. The country’s authorities are looking to develop a national electric vehicle strategy.

Brendan Thorne Bloomberg | Getty Images

An Australian bank plans to stop lending for new diesel and gasoline cars as the country tries to encourage electric vehicle use and catch up with other developed nations.

In a statement on Friday, Bank Australia said it would phase out loans for new fossil fuel vehicles from 2025. Its chief impact officer Sasha Courville said the date was chosen “because the transition to electric vehicles needs to happen quickly.”

The bank, Courville added, believes this “can happen with the right supportive policies to bring a wider range of more affordable electric vehicles to Australia.”

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

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

On that front, the Australian government on Friday provided information on plans to establish a national electric vehicle strategy for the country, with a discussion paper on the matter to be released for consultation.

Read more about electric vehicles from CNBC Pro

In an announcement, the government said Australia was “significantly behind in electric vehicles.”

It added that, at just 2%, the country’s take-up of new low-emission vehicles is “almost five times lower than the global average – national leadership is needed to ensure we are not left behind.”

“In this context, we believe now is the time to have a disciplined and intelligent discussion about whether vehicle fuel efficiency standards can help improve the supply of electric vehicles to the Australian market, address the cost-of-living implications of inefficient vehicles and reduce emissions from the transport sector.”

Customer-owned Bank Australia traces its roots to 1957. According to its statutory financial report for 2021, it said total assets rose to 8.5 billion Australian dollars ($5.9 billion), with profit after tax coming in at 40.7 million Australian dollars.

Its strategy is not unique to vehicles powered by fossil fuels. In 2020, Denmark’s Merkur Cooperative Bank said it would stop financing new diesel and gasoline cars.

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

The UK wants to stop selling new diesel and petrol cars and vans by 2030. It will require all new cars and vans to have zero-tailpipe emissions from 2035. The European Union – which the UK left on January 31, 2020 – is pursuing similar goals.

According to the International Energy Agency, electric vehicle sales are expected to reach 6.6 million in 2021. In the first quarter of 2022, EV sales reached 2 million, a 75% increase over the first three months of 2021.

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