The Australian federal government has announced it will review the electric vehicle (EV) rebate that has been in place for more than three years.
The rebate, introduced on July 1, 2022, will see electric vehicles costing less than $91,387 – the Luxury Car Tax (LCT) threshold for “fuel efficient vehicles” – exempt from the Fringe Benefits Tax (FBT).
Customs exemptions have also been introduced for vehicles imported from countries with which Australia does not have a free trade agreement (FTA).
The Australian Treasury estimates that almost 100,000 buyers have benefited from the rebate, with the share of sales of electric vehicles increasing from 3.8 percent at the end of 2022 to 8.2 percent year-to-date at the end of November 2025.
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The exemption is being reviewed by the federal government. Public comments on their effectiveness can be submitted until February 6, 2026.
“Electric vehicle adoption has exceeded all expectations in recent years and that has been good for drivers, good for business and good for the climate,” Treasurer Jim Chalmers said in a statement.
“The electric car rebate has made electric cars cheaper to support early adoption and the next step is to review the policy, as we promised at the legislation.
“This is about helping Australians transition to more efficient vehicles and ensuring we create the right environment for the transport sector for the long term.”
When announcing the statutory review, the government gave no indication of an end to the rebate, but neither did it commit to an extension.
According to the National Automotive Leasing and Salary Packaging Association (NALSPA), the discount has contributed significantly to the increase in electric vehicle sales in Australia.
“This policy plays a critical role in driving the adoption of electric vehicles in Australia,” NALSPA chief executive Rohan Martin said in a statement.
“The FBT electric vehicle exemption is proven to be effective and works exactly as Parliament intended. It encourages and helps more daily working Australians to switch to an electric vehicle to reduce transport emissions, while providing much-needed cost of living relief and bringing more affordable used electric vehicles to the secondary market.”
Plug-in hybrid vehicles (PHEVs) such as the BYD Sealion 6 and Mitsubishi Outlander PHEV were removed from the list of approved vehicles on April 1, 2025 due to widespread criticism.
The review comes as the Australian government takes several steps to reduce carbon dioxide emissions, including the introduction of the National Vehicle Emissions Standard (NVES) on January 1, 2025. NVES will see carmakers face fines if they breach strict carbon dioxide limits that apply to all models sold in Australia.
Earlier this week, the government launched the Vehicle-to-Grid Network (VGN), which aims to encourage PHEV and electric vehicle owners to feed electricity back into the national grid.
Prime Minister Anthony Albanese also recently proposed scrapping LCT entirely – not just for certain low and zero-emission vehicles – as part of free trade agreement negotiations with the European Union.
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