Bank Australia to Reject Loans for Petrol and Hybrid Cars

The move comes as new EV car sales begin to stall.

A sign directing towards electric vehicle charging points is seen in a car park in Manchester, Britain, dated Sept. 8, 2023. REUTERS/Phil Noble

A progressive-focused Australian bank has announced it will automatically decline loan applications for customers trying to buy petrol-powered vehicles.

Bank Australia, formally Bankmecu, says it will now only fund loans for fully electric vehicles.

“Loans for new combustion engine vehicles, including low admission and hybrid vehicles, will no longer be eligible,” the financial institution said in a statement.

The lender considers any vehicle with less than 1,000 kilometres as new.

The purchase of new internal combustion engine vehicles will be classified as an unacceptable loan purpose, and the bank will limit increases or cash-outs against residential securities.

Bank Australia lists some of its core interests as climate action, nature and biodiversity, Indigenous recognition and respect.

Electric Vehicle Sales Stall

But the bank’s stance may be entering already troubled waters when it comes to car sales.

New vehicle sales in Australia have stalled, according to latest data released by the Federal Chamber of Automotive Industries on March 5.

Purchases of new vehicles are down overall, and electric vehicles are no exception to the rule.

According to the industry body, electric cars made up 5.9 percent of all new vehicle sales compared to 9.6 percent in February 2024.

Federal Chamber of Automotive Industries CEO Toby Weber said it was a disappointing result for electric cars considering the widespread availability.

“We are now two months into the government’s New Vehicle Efficiency Standard and while the supply of battery electric vehicles has risen dramatically, consumer demand has fallen by 37 percent this year compared with the first two months of 2024,” he said.

“Our grave concern has always been the rate of EV adoption.”

Sales of Tesla electric vehicles dropped by 71.9 percent in Feb., compared to the same time last year.

Purchases of Tesla’s Model 3 fell by 81 percent alone.

Sales of new hybrid vehicles, which are not approved or loans by Bank Australia, have weathered the sales storm somewhat better than their fully electric cousins.

Hybrid vehicle sales increased by 34 percent compared to Feb. last year.

New Emissions Standard

The New Vehicle Efficiency Standard is a government policy aimed at incentivising the provision of passenger and light commercial vehicles with low carbon emissions.

The policy sets out to provide greater choice in low emission vehicles and ultimately reduce transport emissions by providing manufacturers with set targets they must “meet or beat.”

The changes came into effect on Jan. 1.