Almost two in five Australians are considering an electric or hybrid vehicle for their next car purchase, but many could change their minds if the government puts the brakes on a tax discount.
The Australian Finance Industry Association revealed the findings on Tuesday in their annual report, which also showed low-emission car loans had accelerated by almost 20 per cent during 2025.
The results come as the federal government reviews the fringe benefits tax exemption on some electric cars and after motorists bought a record number of new EVs during February.
The association’s EV and Hybrid Finance report revealed loans for the cars jumped to $7.37 billion during 2025, financing more than 129,800 vehicle purchases.
Hybrid and plug-in hybrid vehicles outnumbered their electric counterparts by more than 13,800 sales, the report found, but the popularity of electric cars grew the most, rising by nearly 30 per cent.
The low-emission vehicles could take off even faster in 2026, however, as a survey of more than 1000 Australians conducted for the report found 39 per cent planned to buy an electric or hybrid model for their next car compared with 46 per cent for petrol and diesel cars.
The change in attitudes towards electric and hybrid vehicles was promising, association chief executive Diane Tate said, although swifter progress would be needed to cut transport emissions.
“It’s not fast enough if we want to make our targets,” she told AAP.
“It’s definitely building… and we need to continue to see that happening.”
But the report also warned the removal of financial concessions could impact sales.
One in three Australians surveyed (37 per cent) said they would be less likely to purchase an electric vehicle if the fringe benefits tax exemption was removed, and plug-in hybrid car loans had declined swiftly after they were removed from the scheme, Ms Tate said.
“One of the striking outtakes not just from our industry data but the consumer research is how sensitive consumers and businesses are to policy signals,” she said.
“It’s proven through the data that the FBT exemption for EVs is not only important but we should be bringing back the exemption for plug-in hybrids as well.”
State governments should revive rebates for electric car purchases, Ms Tate said, and fast-track charging infrastructure through private-public partnerships to give buyers greater confidence.
Electric cars represented 11.8 per cent of new car purchases in February, according to the Electric Vehicle Council and Federal Chamber of Automotive Industries, setting a record and rising from 5.9 per cent during the same month in 2025.
Source: AAP