Australian bank to stop giving loans to new ICE cars by 2025, in drastic move to encourage EV ownership

It’s a good look for organisations to support to green initiatives such as electric vehicles (while they have no tailpipe emissions, whether or not EVs are truly good for the environment is a debate for another day), but here’s one company putting its money where its mouth is. Literally, because we’re talking about a bank.

Bank Australia (BA) has announced that it will stop issuing loans for new internal combustion engine (ICE) vehicles from 2025. The Aussie bank says that this move is part of a commitment to reach net zero carbon emissions by 2035 – a commitment the company says no other Australian bank has made.

The bank announced this rather drastic move at the National Electric Vehicle Summit in Canberra, reported by CarExpert. BA says that the reason behind its decision is the significant contribution passenger vehicles make to Australia’s overall transport emissions, 43%.

“By ceasing car loans for new fossil fuel vehicles, we are sending a signal to the Australian market about the rapid acceleration in the transition from internal combustion to electric vehicles we expect to see in the next few years. We’ve chosen 2025 because the change to EVs needs to happen quickly, and we believe it can with the right supporting policies in place to bring a greater range of more affordable electric vehicles to Australia,” said Bank Australia chief impact officer Sasha Courville.

“We think that the responsible thing for us to do next, is to ensure that our vehicle lending doesn’t lock our customers in to higher carbon emissions and increasingly expensive running costs in the years ahead,” she added.

The alternative to ICE vehicles is of course EVs, and the bank will gladly finance new EV purchases. Courville touted the announcement as “the beginning of a conversation with our customers” and a signal to the wider Australian market that motorists should consider an EV not only for the impact on the climate but also for lifetime cost savings.

However, BA will still offer loans for used ICE vehicles “until there is a viable and thriving market for EVs” and that it is “deeply aware that we need to support people not yet able to afford an EV while the market grows”.

According to CarExpert, BA has for some time fashioned itself as a more progressive, sustainable financial institution – in 2019, it became the first Australian bank to switch to 100% renewable electricity. BA also says that it has never invested and will never invest money in fossil fuels, adding that the organisation has been carbon neutral since 2011. The bank’s previous incentives for greener cars included a carbon offset car loan in 2004 and discounted interest rates for low-emission vehicles in 2018.

While drastic, one bank yanking auto loans for ICE cars won’t be enough to force the hand of consumers. However, if more banks join in, it won’t be the case of weaning motorists off fossil fuels, it will be “here’s electric, take it or starve”. What do you think of this strong arm move?

By the way, Australia has been among the countries hardest hit by climate change – massive floods, longer and more severe forest fires, you name it, they’ve been weathering it in recent years. Among developed nations, Australia is not known to be very progressive when it comes to clean energy, so perhaps big moves such as BA’s are needed.