A carbon neutral bank since 2011 (meaning they compensate for any emissions generated), Bank Australia is looking to go further and reach net zero carbon emissions by 2035 (this requires zero carbon emissions from the get-go).

Since passenger vehicles contribute 43 percent to Australia’s total transport-related emissions, to get to net zero, Bank Australia needs to do something drastic. And that move signals the end of car loans for ICE-equipped vehicles.

“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.

With that, Bank Australia will finance only new EV purchases, although they will still offer loans for used ICE engines “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.”

Bank Australia’s move is certainly drastic, especially since a majority of consumers (up to 70 percent in some segments) rely on financing to purchase a new vehicle. However, if more banks join in stopping loans for new ICE vehicles, it could very well accelerate the shift towards electric, even if buyers and the infrastructure isn’t ready for it.