As part of its 2022 election commitments, the Albanese Government introduced the Electric Car Discount to improve the affordability of battery electric and plug-in hybrid vehicles by removing customs duties and exempting eligible vehicles from Fringe Benefits Tax. The policy took effect in July 2022 and has supported EV sales, with approximately 100,000 vehicles purchased under the FBT exemption since commencement.
In December 2025, the Government commenced a statutory review of the policy, with a focus on its effectiveness in driving EV uptake and whether it should continue. The review is being conducted jointly by Treasury and the Department of Climate Change, Energy, the Environment and Water.
While the policy has improved the financial attractiveness of EVs, it has been criticised by some stakeholders as inequitable and overly generous. The Government has also faced scrutiny over the fiscal impact, with revenue forgone reportedly exceeding $1.3 billion, significantly above initial projections.
Given the interaction between demand side policy and the NVES supply side framework, the FCAI has engaged across multiple forums and lodged a submission. The FCAI has recommended that the Government maintain demand side incentives, including the FBT exemption, to complement the NVES and support consumer uptake. It has also argued that any reform should improve equity in access to incentives, and that tariff exemptions should be expanded to include light commercial vehicles with BEV or PHEV powertrains.
In the absence of effective demand side settings, higher compliance costs under the NVES are more likely to flow through to consumers.