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Bank Australia announced it will no longer supply car loans to ICE vehicles by ’25

Bank Australia has announced that it will no longer supply loans for ICE vehicles by 2025.

The bank will continue to offer loans for used ICE vehicles until more affordable electric offerings become available. Despite the unprecedented move in a country with only 2% EV adoption, there may be a good reason for the switch.

Tweet on Bank Australia’s decision on EV trend

When addressing the shift in policy, the bank stated that it was done to help minimize customers’ carbon footprint while incentivizing a more affordable transportation option. And while this policy change could help the bank achieve its goal of carbon neutrality by 2035, the bank did not discuss how the change could positively affect its business.

By not continuing to offer loans for gas vehicles, the bank may be achieving two things; reducing the risk of default from loan takers and possibly preventing stranded assets in the future.

One possible reason for the bank’s new policy is that they recognize that EVs are the cheaper mode of transportation and require less maintenance. EVs would limit the chance that the vehicle requires service that the owner cannot afford, leaving the customer with a loan to pay and an out-of-service vehicle,

As EVs become far more prevalent and gas vehicles lose tremendous amounts of value, if the bank is forced to seize and sell the vehicle, the bank would be stuck with an asset worth less than the loan taken out on it (losing them money).


Source: Bank Australia/Fox news
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