The Federal Government’s decision to extend the Electric Car Discount for another year before gradually phasing in changes has been welcomed by industry and energy groups, while also reigniting debate around how Australia should fund its roads in an increasingly electrified transport future.
The Albanese Government confirmed the fringe benefits tax (FBT) exemption for eligible electric vehicles will remain unchanged until March 2027. After that, EVs priced above $75,000 will move to a 25 per cent FBT discount, while vehicles below that threshold will retain the full exemption until April 2029 before transitioning to the lower rate.
The National Automotive Leasing and Salary Packaging Association (NALSPA) described the move as a win for household budgets, emissions reduction and energy security.
NALSPA chief executive, Rohan Martin, said the Electric Car Discount had already helped more than 100,000 Australians overcome the upfront cost barrier associated with EV ownership.
“At a time when Australians are feeling real pain at the pump, the Electric Car Discount is helping households take control of their fuel bills while reducing emissions and reliance on foreign owned oil,” Martin said.
NALSPA argued retaining the policy unchanged for another year would put tens of thousands more EVs on Australian roads at a time of volatile fuel prices and ongoing global energy uncertainty.
Martin said the policy also provided critical certainty for both consumers and industry investors.
“The Electric Car Discount is Australia’s most effective demand side lever for EV uptake,” he said.
“International experience shows that withdrawing incentives too early stalls adoption, delays emissions reductions and leaves households exposed to ongoing fuel price volatility.”
Meanwhile, energy transition advocacy organisation Rewiring Australia welcomed the extension but warned the country remained “a long way from mass EV adoption”.
Rewiring Australia chief executive, Francis Vierboom, said recent sales growth needed to be viewed in perspective.
“Even in a record-setting month, during a national fuel crisis, when filling up an EV costs a small fraction of the petrol equivalent, six in seven new car buyers still chose a petrol car,” Vierboom said.
“That tells us we are still at the foothills of the switch to electric.”
Vierboom said continued incentives, affordable supply and expanded charging infrastructure would all be necessary to drive broader adoption.
At the same time, fresh research from the McKell Institute, backed by the Electric Vehicle Council (EVC), has added another dimension to the EV policy debate by proposing a progressive road user charge linked to income.
The report found EV registrations in western Sydney had grown 119 per cent annually since 2021, while Melbourne’s west recorded annual growth of 125 per cent.
According to the report, middle-income earners and outer suburban commuters are now driving EV adoption faster than higher-income inner-city motorists, largely due to the potential savings in fuel and maintenance costs.
McKell Institute chief executive, Edward Cavanough, warned poorly designed road user charges could unfairly penalise working families with long commutes.