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Electric Cars
While Australian consumers have shown their love for petrol, diesel and hybrid vehicles in the new car market, it's set to get harder to purchase these powertrains after one Australian bank has banned loans on them.
As of February 2025, Bank Australia said it will now only offer car loans on electric vehicles (EVs), as it looks to double down on its 2035 carbon net-zero targets.
“By phasing out car loans for new fossil fuel vehicles, we are sending a signal to the Australian market about the urgent need to accelerate the transition from international combustion engines (ICE) to electric vehicles,” a Bank Australia spokesperson told Drive.
“We recognise that the energy transition will require a wide range of policies and initiatives, and we are committed to playing our part in reaching a net-zero economy.”
However, several of the other major Australian banks told Drive that they have no plans to introduce similar car loan policy changes. This means, depending on which financial institution a new car buyer is with, it's still possible to get finance on most vehicles, regardless of the powertrain.
“We continue to offer a range of loans including for petrol and diesel vehicles,” a Westpac spokesperson confirmed.
However, Bank Australia said the ban only applies to new ICE and hybrid models – as well as demonstrator vehicles with less than 1000km on the odometer – with customers still eligible to apply for loans on second-hand petrol, diesel and hybrid cars.
“We know that not everyone will have access to new electric vehicles right now, and we want to make sure customers who need cars still buy them,” a Bank Australia spokesperson told Drive.
“That's why we still finance second-hand hybrid and combustion engines because this still avoids bringing a new fossil fuel-powered car into the market. We also recognise that it will take time to develop a second-hand car market for electric vehicles.”
The policy change is not new, with the bank announcing its plans in August 2022. However, it is now in effect, generating a mixed reaction from online users.
“And that's how they forced us into petroleum cars. I will never give up my horse cart. They can take it from my cold dead hands,” one Reddit user on the r/CarsAustralia thread said.
Another commenter remarked, “They are not forcing anyone to do anything. They can decide to whom they will lend, and people can decide to use their products or not”.
Bank Australia also told Drive its customers value climate action as “one of their top priorities, and for many of them it's a key reason why they choose to bank with Bank Australia”.
When asked by Drive if Bank Australia's EV-only car loan policy will affect the new car industry, a spokesperson for the Federal Chamber of Automotive Industries (FCAI) – Australia's industry body for new cars and manufacturers – did not comment.
“Marketing decisions by banks are a matter for them according to their own credit and lending policies and their customer relationships,” an FCAI spokesperson said.
Between January and December 2024, petrol, diesel and hybrids – including plug-in hybrids (PHEV) – accounted for approximately 89 per cent (1,093,864) of the 1,237,287 new passenger, SUV and light commercial vehicles sold in the Australian market last year.
Among the most popular models purchased in 2024 were the Ford Ranger at first (62,593), Toyota RAV4 in second (58,718) and Toyota HiLux at third (53,499).
Conversely, EVs accrued 7.4 per cent of the new car market pool in 2024, with 91,292 battery-powered cars reported as sold last year.
US electric pioneer Tesla was the most popular EV brand among its competitors, with the Tesla Model Y (21,253) and Model 3 (17,094) ranked first and second, respectively.
Ethan Cardinal graduated with a Journalism degree in 2020 from La Trobe University and has been working in the fashion industry as a freelance writer prior to joining Drive in 2023. Ethan greatly enjoys investigating and reporting on the cross sections between automotive, lifestyle and culture. Ethan relishes the opportunity to explore how deep cars are intertwined within different industries and how they could affect both casual readers and car enthusiasts.
