A group of coalition backbenchers has warned Environment Minister Josh Frydenberg they don't want the federal government to subsidise electric cars.
Labor wants the Turnbull government to get on with setting tougher emissions standards on vehicles while coalition backbenchers are reportedly threatening yet another revolt if electric cars are further subsidised.
Environment Minister Josh Frydenberg revved up interest in electric vehicles a week ago, noting the consumer interest was already there but prices were too high.
But coalition backbenchers who have repeatedly opposed any moves on policies to combat climate change, including Craig Kelly, Andrew Broad and John Williams, have told The Australian they will ask the party room to resist any new subsidies for electric cars.
They've seized on a report from the federal infrastructure department which warned because Australia's electricity generation is highly reliant on coal, electric vehicles could have a larger overall carbon footprint than equivalent petrol or diesel vehicles.
"The risk here is you'll have the rich person in Balmain buying a Tesla, subsidised by a bloke in Penrith who's driving a Corolla and the Tesla will have more carbon emissions than the Corolla," Mr Kelly said.
But Labor says the government has been sitting on recommendations for new emissions standards that would help address this issue for nearly three years.
"We've got very low take-up of electric cars and one of the reasons for that is because we are the only advanced economy not to have a proper emissions standard for our vehicles," frontbencher Jim Chalmers told Sky news on Monday.
"The reason they haven't implemented that recommendation is because the knuckle-draggers in the Liberal Party run the show."
A ministerial forum on vehicle emissions was set up in late 2015 and was supposed to have reported on a draft plan for new measures in March 2017.
The government's climate policy review released in December said while there were just 4000 electric cars on Australia's roads now, there would likely be 12,000 by 2020 and one million by 2030.
It said an efficiency standard for cars could save drivers up to $519 a year in fuel costs while cutting emissions.
Meanwhile, the British billionaire who bought the Arrium steelworks in Whyalla is now considering building electric cars at the former Holden site in Adelaide, News Corp reports.