New Savvy analysis has found that battery electric vehicle (BEV) share fell sharply in New Zealand, Canada and Germany after government purchase rebates and subsidies ended, raising questions for Australia as the Federal Government winds back the Electric Car Discount. The discount removes fringe benefits tax (FBT) from eligible EVs provided through salary packaging, making novated leasing a popular way to buy an electric car.
According to National Automotive Leasing and Salary Packaging Association (NALSPA) CEO Rohan Martin, more than half of all new BEVs sold in Australia today are through novated leasing with the support of the discount. Under the proposed changes, EVs valued above $75,000 but below the luxury car tax threshold will receive a 25% discount on payable FBT from 1 April 2027. EVs valued at $75,000 or less keep the full exemption until 1 April 2029, when all EVs below the threshold will receive the 25% discount.
However, Martin expects a limited impact:
“We believe the changes to the Electric Car Discount from April 2027 won’t have a material impact on sales because most Australians are buying EVs priced below the $75,000 threshold, and a majority of EVs in Australia sit below this price point.”
According to Savvy Benefits General Manager Adrian Taylor, the threshold mostly catches higher-spec models:
“The main difference between EV sales now and a few years ago is that there’s now far more vehicles to pick from. The incentive changes will have less of an impact now as there’s far more EVs below $75,000.” Martin commented.
The bigger unknown is what happens from 2029, and whether demand will hold once nobody has the full exemption. One of the proposed solutions is the introduction of a road-user charge, which would likely be paid on a per-kilometre basis, to combat the lost excise revenue. Martin believes the Government’s staged approach gives the market a good chance:
“While EV sales have slowed down in some countries when demand-side incentives ended, we believe the Federal Government has taken a sensible approach by phasing the discount gradually to prevent demand from stalling.”