Bank confirms it will stop offering loans for fossil fuel cars

An Australian bank has announced unprecedented changes that will see it phasing out loans on new cars by 2025, in an effort to reduce emissions.

Bank Australia confirmed the news late last week. It aims to achieve net zero internally by 2035, explaining that it believes a 2050 net zero target is “too late”.

The bank terms fossil fuel vehicles as all pure internal combustion engine models and hybrid models. It’s unclear whether plug-in hybrids are applicable.

“Around 43% of Australia’s transport emissions are from passenger vehicles. Electric vehicles are a ready-to-deploy technology so they can be one of the fastest contributors to Australia meeting its climate goals,” says Bank Australia.

“We need to act urgently. That’s why we have the most ambitious net zero target of any Australian bank. And to reach that 2035 target, we have to pull every lever available. Assisting the transition to electric vehicles is a strategic one to focus on right now.

“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.

“We’ve chosen 2025 because the change to electric vehicles needs to happen quickly. And we believe it can happen, as soon as supporting policies and market forces help to bring a greater range of more affordable electric vehicles to Australia.

“We have a responsibility to do all we can to protect the planet for generations to come. […] Taking a leadership position on this now will provide momentum to the rapid acceleration in EV transition.

The customer-owned bank boasts that it has considered the impact of vehicle emissions for almost 20 years, having launched its carbon offset car loan in 2004. It introduced discounted interest rates for low-emission vehicles in 2018.

The bank will continue to offer loans for those who want to buy second-hand fossil fuel vehicles “until there is a viable and thriving market for electric vehicles”.

“Bank Australia will continue to support customers who can’t yet access an electric vehicle. We want to ensure customers who need cars can still buy them. That’s why this change will only affect new combustion engine or hybrid car purchases,” it says.

“We will be reviewing our car loan products for second-hand combustion engine and hybrid cars once there is a widespread availability of affordable and second-hand EVs in Australia.”

Reception to the news has been mixed. Bank Australia’s Facebook post announcing the change has been bombarded with questions and comments from both fans of the news and critics, with many of the latter questioning the company’s stance on farming vehicles like tractors.