The Federal Government has released the terms of reference for a statutory review of the Electric Car Discount, a policy credited with accelerating electric vehicle uptake and expanding model choice across the Australian market.
Introduced in July 2022, the Electric Car Discount provides a fringe benefits tax exemption and tariff concessions for eligible electric vehicles, with the aim of encouraging early adoption and reducing transport emissions.
EV market growth outpaces early expectations
When the policy was introduced, electric vehicles accounted for less than 2 per cent of new vehicle sales in Australia. Industry data now shows that EVs represent around 10 per cent of new vehicle sales, with Treasury estimating nearly 100,000 vehicles have benefited from the tax exemption.
The number of electric models available has also expanded rapidly. The market has grown from 56 EVs in 2022 to more than 160 today, including a broader range of lower-priced options. There are now around 10 models priced below $40,000, including one priced under $30,000, alongside new family SUVs and a competitive electric 4×4 ute.
Outer suburbs driving uptake
Leasing data indicates the strongest take-up of the Electric Car Discount has occurred in outer suburban areas, including Baulkham Hills in New South Wales, Werribee in Victoria and Springfield in Queensland. The Government says this reflects growing access to lower running-cost vehicles beyond inner-city markets.
The discount operates alongside other federal measures, including the New Vehicle Efficiency Standard and more than $500 million in investment in public charging infrastructure.
Fiscal impact to be reflected in MYEFO
The strong uptake of the policy will be reflected in the Mid-Year Economic and Fiscal Outlook, with the value of the fringe benefits tax exemption for electric vehicles estimated at $1.35 billion in 2025–26.
Under legislation, the review will assess the operation of the discount over its first three years. It will be conducted by the Australian Centre for Evaluation within Treasury, in collaboration with the Department of Climate Change, Energy, the Environment and Water, and other Commonwealth agencies.
Public submissions open
The review is seeking public submissions, with consultation closing on Friday, 6 February this year. The findings will inform future policy settings aimed at expanding EV choice and reducing transport emissions as the market continues to mature.
Further details, including the full terms of reference, are available here.
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