The Australian Government’s incentives for electric vehicles (EVs) should include light commercial vehicles – both electric vehicles (EV) and plug-in hybrids (PHEV), the nation saysis the leading automotive industry organization Federal Chamber of the Automotive Industry (Fcai).
The federal government will review its current electric vehicle incentives, first introduced in July 2022. Public submission begins February 6, 2026, ahead of possible changes in 2027.
In response, a 16-page report appeared FCAI submission in response to: Electric car rebate review was released on February 10, 2026, calling for existing incentives to continue prior to the federal government’s review, but with some changes.
The key change is that light commercial vehicles will be included in tariff exemptions for electric vehicles imported from countries with which Australia does not have a free trade agreement (FTA), such as the European Union (EU) and South Africa.
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Currently, light commercial vehicles from non-free trade agreements are not eligible for federal fundingCustoms exemption.
“In view of the increasing supply from markets without an active free trade agreement, the duty exemption for passenger vehicles should be extended to BEV (battery electric vehicle) or PHEV light commercial vehicles,” the FCAI submission said.
The proposal would extend incentives to the Ford Ranger PHEV, which was launched in Australia in 2025 and is manufactured in South Africa, meaning it would be subject to a five percent import duty.
For the range-topping Ranger PHEV, which costs $79,990 before on-road launch, five percent equates to about $4,000.
The rest of the Ranger range sold here is made in Thailand, which already has a free trade agreement with Australia – as well as China, where the hot-selling BYD Shark 6 PHEV and GWM Cannon Alpha PHEV are made.
It won’t make any difference for the upcoming Toyota HiLux EV, which will also come from Thailand.
The federal government was widely criticized for ending the Fringe Benefits Tax (FBT) exemption for PHEVs in April 2025. She contradicted the Climate Change Authority, which announced its “2035 Targets Advice” in September, which requires more than 20 times the number of electric vehicles currently on Australian roads to meet emissions reduction targets.
While electric vehicles accounted for a record 8.3 percent share of Australia’s new car sales in 2025 – up from 7.4 percent the previous year – the share of PHEVs rose to around 4.3 percent, while hybrid sales accounted for around 16 percent of total sales.
FCAI’s filing also recommends continuing current incentives – including an exemption from the Fringe Benefits Tax (FBT) for electric vehicles priced below the luxury car tax threshold of $91,387 for “fuel efficient vehicles”.
FCAI chief executive Tony Weber said the FBT exemption had worked effectively alongside the New Vehicle Efficiency Standard (NVES), introduced on January 1, 2025, which is also due to be reviewed by the federal government in 2026.
The NVES limits the allowable amount of carbon dioxide emissions for each brand’s entire model range, with financial penalties for those who exceed these limits, although credits can be purchased from other automakers that operate below these limits.
Emissions limits under the NVES will become stricter every year until 2029, but this has done little to boost consumer demand for electric vehicles, according to Mr Weber.
“Manufacturers have responded to the NVES by expanding the range of BEVs available, with more than 100 models now on offer,” Weber said in a statement.
“If the FBT exemption is removed, the federal government will need to consider other forms of demand-side incentives that can support the ambitious goals of the NVES by getting more Australians into battery-electric and other forms of low-emission vehicles.”
“As NVES targets tighten in the coming years, any changes to demand-side incentives will need to be carefully planned to improve accessibility and not undermine consumer confidence,” Weber said.
The report reflects the views of Toyota Australia, whose vice president of sales and marketing, Sean Hanley, told the media last year that hybrid models should be included in the NVES to reduce emissions from new vehicles.
“NVES will undergo further review at the end of 2026. We would ask (the) government to look very carefully at NVES to have (a) ZLEV (Zero and Low Emissions Vehicle) approach,” Mr Hanley said.
“That means zero to low emission vehicles – that would be plug-in hybrids, BEVs, fuel cell electric vehicles… We would suggest that hybrids should still play an integral role in any NVES development, but we will have to wait and see whether that comes to fruition.”
The Electric Vehicle Council (EVC) has also called for the incentives to continue, saying in a statement that early withdrawal would slow progress in electric vehicle sales.
“The rebate has also stimulated a wave of affordable off-lease electric vehicles now flooding into the used market, making them accessible to more everyday Australians,” the EV lobby group says.
“However, the work is not done. Electric vehicle adoption in Australia needs to be accelerated to reach the target of 5 million electric vehicles by 2035, and international experience clearly shows that removing demand-side incentives too early can have a dramatic impact on electric vehicle adoption.”
MORE: The Australian government is considering changes to electric vehicle incentives
