Interest in electric and hybrid vehicles is growing among Australian buyers, but new industry data suggests that removing key tax incentives could weaken that momentum.
New findings from the Australian Finance Industry Association (AFIA) show 39 per cent of Australians are considering a low-emission vehicle for their next purchase. However, more than a third (37 per cent) say they would be less likely to choose an EV if the Fringe Benefits Tax (FBT) exemption is removed.
Lending surge reflects growing demand
The association’s latest EV and Hybrid Finance report shows strong growth in vehicle financing, with lending for low-emission cars rising nearly 20 per cent in 2025 to reach $7.37 billion. This supported more than 129,800 purchases across EVs, hybrids and plug-in hybrids.
While hybrids and plug-in hybrids recorded higher overall sales volumes, battery electric vehicles (BEVs) showed the fastest growth, increasing by close to 30 per cent over the year.
Buyers responding to policy signals
AFIA Chief Executive Diane Tate said the data highlights how policy settings continue to shape consumer behaviour.
“One of the striking outtakes not just from our industry data but the consumer research is how sensitive consumers and businesses are to policy signals,” Tate said.
“It’s proven through the data that the FBT exemption for EVs is not only important but we should be bringing back the exemption for plug-in hybrids as well.”
The Federal Government is currently reviewing the FBT exemption, which has played a central role in supporting EV uptake through novated lease arrangements widely used in Australia.
Growth continues, but challenges remain
Tate said the shift toward low-emission vehicles is progressing, but not yet at the pace needed to meet national targets.
“It’s not fast enough if we want to make our targets,” she said.
“It’s definitely building… and we need to continue to see that happening.”
Infrastructure and incentives remain critical
The report also reinforces the need for continued support through incentives and infrastructure investment.
Tate pointed to the role of state-based rebates and faster deployment of public charging networks in helping build buyer confidence and accelerate adoption.
Electric vehicles accounted for 11.8 per cent of new car sales in February, according to the Electric Vehicle Council and the Federal Chamber of Automotive Industries, marking a sharp increase from 5.9 per cent in the same month last year.
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