The Albanese Government has released the terms of reference for the statutory review of the Electric Car Discount.
This policy has helped deliver a car market with more choice and cheaper to run cars for more Australians and has helped motorists slash their emissions and fuel bills for good.
The discount has applied since July 2022, providing a fringe benefits tax exemption and tariff exemption to eligible cars to kick start take‑up of electric vehicles and help reduce transport emissions in the longer term as part of the Government’s broader climate action agenda.
When we came to office, the market for electric vehicles was nascent, with EVs accounting for less than 2 per cent of new vehicle sales in Australia.
Today, industry data show electric vehicles comprise around 10 per cent of new vehicle sales and Treasury estimates almost 100,000 vehicles have benefitted from the fringe benefits tax exemption, with this milestone achieved much sooner than expected.
When we came to Government, there were 56 EVs on the market – now there are over 160.
There were only two EVs under $40,000 – now there are around 10 and, for the first time, one model under $30,000.
New EVs that weren’t on the market in Australia before include affordable family SUVs and a price competitive 4x4 ute.
It’s no surprise that leasing data shows the strongest uptake of the Electric Car Discount is in outer suburbs like Baulkham Hills in NSW, Werribee in Victoria, and Springfield in Queensland.
The Electric Car Discount works in concert with our New Vehicle Efficiency Standard and over $500 million investment in charging infrastructure. Together, these policies are providing easier access to cheaper to run cars for the Australian market that consumers around the world have enjoyed for years.
The strong uptake of the Electric Car Discount will be reflected in the Mid‑Year Economic and Fiscal Outlook (MYEFO), with the value of the tax expenditure for the FBT exemption for electric vehicles estimated to be $1.35 billion in 2025–26.
As required by the legislation, the review will consider the operation of the electric car discount over the first three years it has been in place.
The Australian Centre for Evaluation, in Treasury, and the Department of Climate Change, Energy, Environment and Water will conduct the review in collaboration with other relevant Commonwealth agencies.
The review’s findings will help inform broader policy development on how to continue expanding electric vehicle choices for more Australians and bring transport emissions down.
The review is seeking submissions from the public, with submissions closing on 6 February 2026. Further details of the review of the electric car discount, including the terms of reference and submission details, can be found on the Treasury website.
Comments attributable to the Minister for Climate Change and Energy, Chris Bowen
“We want more Australians to have more choice of cheaper to run cars that save them money at the bowser – and our policy settings are encouraging this.
“Since coming to Government our suite of policies, including the electric car discount, investing in more charging and the delivery of our long overdue New Vehicle Efficiency Standard, have seen more brands enter the market and demand for lower emitting vehicles increase, especially in the outer suburbs.
“We’ll keep refining our policies to make sure that we have the right settings to help more Australians into cheaper to run cars as the market matures over time.”
Comments attributable to the Treasurer, Jim Chalmers
“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.
“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.”