The Australian federal government has announced it will review the electric vehicle (EV) discount, which has been in place for more than three years.
Introduced on July 1, 2022, the discount sees EVs costing below $91,387 – the Luxury Car Tax (LCT) threshold for ‘fuel-efficient vehicles’ – exempt from Fringe Benefits Tax (FBT).
It also delivered tariff exemptions on vehicles imported from countries Australia does not have a Free Trade Agreement (FTA) with.
The Australian Treasury estimates almost 100,000 buyers have benefited from the discount, with EV sales share growing from 3.8 per cent at the end of 2022 to 8.2 per cent year-to-date at the end of November 2025.
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The exemption will be reviewed by the federal government, with public submissions on its effectiveness open until February 6, 2026.
“The take-up of electric vehicles over the past few years has exceeded expectations and that’s been good for drivers, good for business and good for the climate,” Treasurer Jim Chalmers said in a statement.
“The electric car discount has made EVs cheaper to support early adoption, and the next step is to review the policy as we committed to do when we legislated it.
“This is all about supporting Australians to make the switch to more efficient vehicles and ensuring we have the right settings in place for the transport sector over the long term.”
In announcing the statutory review, the government has made no suggestion the discount will end but has also not committed to its renewal.
According to the National Automotive Leasing and Salary Packaging Association (NALSPA), the discount has been instrumental in the increase in EV sales in Australia.
“This policy is playing a pivotal role in helping to drive EV uptake in Australia,” said NALSPA chief executive Rohan Martin in a statement.
“The FBT exemption on EVs is demonstrably effective and is working exactly as the Parliament intended. It is encouraging and helping more everyday working Australians to switch to an electric vehicle to reduce transport emissions, while providing much-needed cost-of-living relief and getting more affordable used EVs into the secondary market.”
Plug-in hybrid vehicles (PHEVs) such as the BYD Sealion 6 and Mitsubishi Outlander PHEVdropped off the list of eligible vehicles on April 1, 2025, to widespread criticism.
The review comes as the Australian government makes several moves to reduce carbon dioxide emissions, including the introduction of the National Vehicle Emissions Standard (NVES) on January 1, 2025. NVES sees automakers face fines if they breach strict carbon-dioxide limits applied across all models they sell in Australia.
Earlier this week, the government launched the Vehicle-to-Grid Network (VGN), designed to encourage PHEV and EV owners to feed electricity back into the national electricity grid.
Prime Minister Anthony Albanese has also recently suggested dropping LCT entirely – not only on specific low- and zero-emission vehicles – as part of negotiations on a Free Trade Agreement with the European Union.