Tesla Lobbies for Universal Road User Charge Alongside Existing Fuel Excise

Tesla has submitted a formal recommendation to the Australian Government advocating for a universal, distance-based road user charge (RUC) to be applied across all passenger vehicle powertrains, rather than exclusively targeting electric vehicles (EVs).

In a detailed submission to the Select Committee on Productivity, the manufacturer argued that implementing an EV-only RUC acts as a financial penalty for decarbonising personal transport, potentially encouraging motorists to retain internal combustion engine (ICE) vehicles. Furthermore, Tesla proposed that the current fuel excise must remain in place for petrol, diesel, and hybrid vehicles to account for the ongoing "societal costs" of liquid fuel consumption, meaning ICE owners would eventually be subject to both forms of taxation.

The Argument Against the Fuel Excise Standard

Currently, internal combustion vehicles are subject to a fuel excise of 53.7 cents for every litre of petrol or diesel sold. Tesla argued that because this tax is hidden within the aggregate pump price, it fails to function as a transparent usage fee and does not effectively discourage marginal or discretionary car journeys.

A transparent cents-per-kilometre RUC, the company contends, would introduce a clear price signal to push motorists toward public and active transport. However, Tesla noted the fuel excise must be retained concurrently to cover societal costs outside of ordinary pavement degradation, including local air pollution, health externalities related to respiratory disease, greenhouse gas emissions, and inflationary effects from global oil supply shocks.

Polestar Australia Managing Director Scott Maynard echoed these sentiments in a separate statement, noting that because Australia lacks a dedicated congestion or pollution tax, any future road user charge must be levied fairly across all motorists rather than isolating early EV adopters.  

Government Position and Market Dynamics

Federal Treasurer Jim Chalmers publicly raised the prospect of an RUC in 2025, stating at the time that the government's focus was on ensuring increasing numbers of EV drivers contribute to road upkeep.

However, progress on the policy has slowed. Minister for Climate Change and Energy Chris Bowen confirmed in August that an RUC was omitted from the May 2026 budget because the "very big undertaking" requires more work and should not be rushed. Federal Transport Minister Catherine King also previously cautioned in April that introducing the charge could discourage EV uptake.

Despite legislative delays, EV adoption in Australia has continued to accelerate. In September, EVs captured a record 24.2 per cent of all new-vehicle sales, outpacing both petrol (23.9 per cent) and diesel (23.1 per cent) models. Tesla's Model Y remains the best-selling EV locally, notably topping the overall monthly new-vehicle sales charts in May, June, and August 2026.

Proposed Rollout and Projected Costs

Acknowledging that a universal RUC will face "justifiable community pushback," Tesla's submission proposed grandfathering the tax, suggesting it apply only to newly registered vehicles from January 2030 onward.

The Australian Electric Vehicle Association (AEVA) has floated a similar universal policy. AEVA proposes a gradual rollout—or an application strictly to vehicles manufactured after 2021—that calculates the annual RUC by multiplying a vehicle's weight and annual kilometres travelled by a maximum of three cents.

Under the AEVA's weight-based formula, heavier vehicles would pay a higher premium for road degradation, while ICE vehicles would continue to incur fuel excise costs.

Estimated Annual RUC (Based on AEVA's 3c per tonne-km model at 20,000km/year)