Bank Australia to stop lending on internal combustion cars

As a nation, we are currently behind the global average in EV adoption, but a small Australian bank wants to do something about it. By 2025, Bank Australia will stop providing new car loans to customers who purchase a gasoline or diesel vehicle, including hybrids. From then on, the bank will only offer new car financing on electric vehicles.

The bank says it is part of a plan to accelerate the adoption of electric vehicles in the country, according to CNBC, and to discourage buyers from investing more money in internal combustion machines. Our rate of adoption of electric vehicles currently stands at 2%, compared to an average of 9% in the rest of the world.

It’s a bold move given that buyers can easily ignore Bank Australia and buy a loan from another bank. Again, it is the bank’s right to prioritize lending to what it considers responsible practices.

Photo: James D. Morgan, Getty Images

In a statement at an EV summit on Friday, the bank’s impact director, Sasha Courville, said the self-imposed ban on funding ICE-powered cars was a responsible move both for the environment and borrowers, adding that Bank Australia refused to “lock […] customers in higher carbon emissions and ever-increasing operating costs,” such as the Guardian reports.

Bank Australia claims to understand that not everyone can afford a new electric vehicle, and won’t be able to by 2025. And with the shortage of cheap electric vehicles in markets around the world, it would be hard to reject borrowers who couldn’t afford a fancy new electric car.

So, in order to help those who cannot afford a new electric vehicle, Bank Australia will continue to approve used car loans on fossil fuel vehicles after 2025. The no-ICE policy from the bank will only apply to newly purchased vehicles.

Courville said Bank Australia chose this policy to send a message. The bank is already putting a lot of emphasis on its use of renewables, so that’s all following. And it’s a relatively small bank, with about 185,000 customer accounts. It’s not like a national financial institution telling you what to do with your money. Courville added“If you’re considering buying a new car, you should seriously consider an electric vehicle, both for its climate impact and lifetime savings.”

And she’s not wrong. I’ve already thought about taking the plunge and going EV. It seems like the most responsible decision, even though electric vehicles still have an impact on the environment.

Yet spending – and lending – money for a clear environmental goal is one of the most effective ways for a consumer to send a message. That message, as far as Bank Australia is concerned, is “buy the VE already!”

Bank Australia to stop lending on internal combustion carsPhoto: Bank of Australia

Kevin A. Perras