“From a trickle to a real market:” Government urged to retain FBT exemption for EVs

Two of Australia’s leading electric vehicle (EV) proponents have called on the federal government to retain the fringe benefit tax (FBT) exemption for electric vehicles, saying its removal will stymie further growth in sales.

The Electric Vehicle Council (EVC) and the National Automotive Leasing and Salary Packaging Association (NALSPA) have separately described the Electric Car Discount – introduced in 2022 and now under review by the government – has been a proven success that has fulfilled its purpose of driving EV uptake and reducing transport emissions.

The EVC says the FBT exemption has helped drive more than 105,000 additional EV purchases, delivered up to $3 in economic and health benefits for every dollar invested, and maybe most importantly, tripled the size of the second-hand EV market.

“The Electric Car Discount has helped take Australia from an EV trickle to a real market for people who want to drive cleaner cars and save up to $3,000 each year on fuel and maintenance,” said Julie Delvecchio, EVC CEO.

“With EV upfront costs still higher than comparable internal combustion engine cars, tens of thousands of Australians living in outer suburbs – including firefighters, teachers and nurses – could only afford their first EV thanks to the Electric Car Discount.

“The Discount has also stimulated a wave of affordable, off-lease EVs that are now flowing through to the second-hand market, putting them within reach of more everyday Australians.”

Rohan Martin, the CEO of NALSPA, says the policy aimed to add around 5,000 EVs to Australia’s roads in its initial years, but its success to date has meant that it’s delivered more than 100,000 EVs and counting.

“The Electric Car Discount is most popular with outer-suburban families and it is estimated it is responsible for at least half of all EVs sold in Australia today,” he said.

A review of the Electric Car Discount is required by legislation and was announced in December. Submissions to the review closed last week.

The EVC warned that premature withdrawal of the FBT exemption for EVs would stall progress, much as it did when the Electric Car Discount for plug‑in hybrids ended in March 2025, resulting in novated‑lease settlements for PHEVs collapsing by 94 per cent within a single quarter and subsequently returning to pre‑policy levels.

It pointed to the experience in Germany, where changes to EV subsidies resulted in the EV market share sliding from 31 per cent in 2022 to only 19 per cent in 2024, prompting a new €3 billion support scheme which came into effect in January. Canada also reintroduced its own EV subsidy scheme.

Similarly, across the Tasman Sea in New Zealand, the repeal of its own Clean Car Discount reversed market share from 27 per cent to 11 per cent.

“We know the risks that come with removing EV incentives too early,” said Delvecchio.

“Canada and Germany have both recently re-introduced EV subsidies worth $CAD2.3 billion and €3 billion, respectively, after the premature withdrawal of incentives reduced EV sales by up to 12 per cent.”

Both the EVC and the NALSPA called for the government to maintain the Electric Vehicle Discount until Australia was able to increase its share of EVs to a more appreciable level rather than rely on arbitrary dates for an end to the policy.

The NALSPA also called for the government to create more opportunities for greater EV uptake by including incentives to encourage vehicle-to-load, vehicle-to-home, and vehicle-to-grid, as well as greater investment in charging infrastructure.

Similarly, the EVC advocated for the expansion of demand-side incentives for Australians who cannot access novated leasing, including ideas such as direct consumer rebates or GST exemptions.