EV discount changes

THE electric vehicle industry said that for motorists using novated leases to finance their cars, now was the time to buy an EV to ensure they qualify before new changes to the electric car discount come into force.

Government changes to the electric car discount – which exempt the fringe benefits tax – will be diluted in stages from April next year.

The change doesn’t yet affect EVs priced under $75,000, but from April 2027, will reduce the FBT exemption to 25 per cent for EVs priced $75,000 to $91,000. From April 2029, all eligible EVs under the luxury-car tax threshold (currently $91,387 for EVs) will have a 25 per cent discount on the FBT.

The Electric Vehicle Council (EVC) said the retention of the full FBT discount for EVs until April next year would give financial relief for everyday Australians and continue with a discount (at 25 per cent) “for the majority of EVs for the next three years”.

EVC CEO Julie Delvecchio said the outlook remains “good news” for people looking to buy an EV.

“The Albanese Government and Minister Bowen have listened and shown they understand EVs are a cost-of-living measure,” she said.

“This decision means most electric cars in Australia will remain eligible for the electric car discount, allowing people to save thousands on their annual fuel bills.

“This is especially important for outer suburban households – which are strongly represented in EV leasing uptake – where people drive more and spend more on fuel. Keeping EVs accessible means real savings where it matters most.”

The National Automotive Leasing and Salary Packaging Association (NALSPA) said that keeping the electric car discount unchanged for another year was expected to put “tens of thousands” more EVs on Australian roads.

It said this was triggered by volatile fuel prices and global supply disruptions that exposed Australia’s reliance on imported oil.

NALSPA CEO Rohan Martin said: “It’s never been a better time to consider buying an EV through novated leasing in Australia”.

“With the federal government continuing the electric vehicle discount for the majority of EVs for another three years, the high cost of living, and fuel price and supply remaining volatile, it makes sense for Australians to make the switch. 

“For the majority of prospective EV drivers, there will be no immediate need to rush in for an EV in order to qualify for the discount as most electric cars are priced below $75,000. Close to 85 to 90 per cent of EV novated leases are less than $80,000.

“Our advice is don’t wait until it’s too late if you want to access the electric car discount for an EV that costs between $75,000 and $91,000. 

“As we saw with the end of the EV discount for plug-in hybrid electric cars, customers had to have their vehicles in their driveways before the cut-off date in order to qualify for the discount.

“With demand for EVs soaring and customers having to wait months for some models, we recommend Australians place their orders sooner than later if they want an EV that is above $75,000.”

He said that the government’s approach “strikes the right balance between cost of living relief, market certainty and long term fiscal responsibility”.“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,” Mr Martin said.

“The discount has already helped more than 100,000 Australians overcome the upfront cost barrier to switching to a cheaper to run vehicle.

“Without it, many outer suburban families, essential workers and cost conscious households simply wouldn’t be able to make the switch.

He said that there had “never been a better time for Australians to explore their electric vehicle purchase through salary sacrifice or novated leasing as one of the most affordable and accessible ways to move away from petrol and protect household budgets from fuel shocks”.

The Australian Automotive Dealer Association (AADA) said the adjustments to the discount “ensured it remained accessible to everyday Australians while substantially improving the budget in challenging economic times”.

“As the only demand-side initiative from the federal government to incentivise the uptake of EVs, the reforms to the electric car discount are pragmatic changes that ensure the initiative can still be available to salary packaged employees,” said AADA CEO James Voortman.

“With more than 3900 new car dealerships nationwide, the AADA supports these changes to the electric car discount to ensure that this demand side initiative is a sustainable policy setting which helps our members meet the current surge in demand for EVs. 

“As electric vehicles become mainstream it is essential that the government turns its policy focus to the consequences of the transition. 

“This includes greater investment in the electricity grid for installation of charging infrastructure, legislating franchising protections and protecting small businesses who need light commercial vehicles.”

Motor Trades Association of Australia (MTAA) interim executive director Peter Jones said the phased approach strikes the right balance between fiscal responsibility and supporting the sector’s transition to a low-emissions future.

“MTAA has consistently called for policy stability and a managed transition, and this announcement delivers exactly that,” Mr Jones said.

“Abrupt changes to incentive settings would have undermined investment confidence across the automotive trades, particularly for small and regional businesses already managing the cost of upgrading workshops, training technicians and meeting new safety requirements for high voltage vehicles.

“The phased model provides certainty for businesses to plan ahead, while keeping more affordable EVs within reach of everyday Australians through salary packaging and novated leasing.”

Mr Jones said the announcement also reinforced the need to match vehicle incentives with investment in workforce capability.

“The skills gap in our sector is real and it is growing. As more electric vehicles enter the fleet, demand for qualified technicians is outpacing supply, particularly in regional areas where access to training is more limited,” he said.

“We are calling on the government to restore apprentice and employer incentives to previous levels and pair this policy with practical support for workshop capability.

“The reduction in apprenticeship incentives from January 2026 is already impacting employers’ ability to take on and retain apprentices at a time of acute skills shortage. For many small businesses, the numbers no longer stack up.

“Restoring these incentives is critical to rebuilding the pipeline, particularly as the transition to electric vehicles increases the technical complexity of the trade.”