The Federal Chamber of Automotive Industries (FCAI) has urged the Federal Government to retain targeted incentives for battery electric vehicles, warning that supply-side regulation alone will not deliver the nation’s transport emissions goals.
In its submission to Treasury’s review of the Electric Car Discount, the FCAI argued that demand-side measures such as the Fringe Benefits Tax (FBT) exemption remain critical alongside the New Vehicle Efficiency Standard (NVES).
FCAI chief executive Tony Weber said recent sales results demonstrate the importance of the exemption in driving consumer uptake.
“Manufacturers have responded to the NVES by expanding the range of BEVs available, with more than 100 models now on sale,” Mr Weber said.
Supply must be matched by demand
Mr Weber said the expansion of model choice reflects industry efforts to comply with the NVES. But he warned that regulation targeting vehicle supply will not achieve emissions reductions without parallel support for consumers.
“Supply-side regulation alone will not deliver the transition. Consumer demand must also be supported if Australia is to meet its emissions reduction objectives in an affordable and practical way,” he said.
He cautioned that removing the FBT exemption without replacement support could slow uptake.
“If the FBT exemption is removed, then the Federal Government must consider other forms of demand-side incentives that can support the ambitious targets of the NVES by having more Australians in battery electric and other forms of low emissions vehicles.”
EV uptake remains sensitive to cost
Battery electric vehicles accounted for 8.3 per cent of new vehicle sales in 2025. The FCAI noted that purchasing decisions remain highly sensitive to upfront price, total cost of ownership and charging access.
“As NVES targets tighten over coming years, any changes to demand-side incentives must be carefully designed to improve accessibility and avoid undermining consumer confidence,” Mr Weber said.
The industry body pointed to international experience. It has noted that the abrupt withdrawal of incentives in overseas markets has led to temporary declines in EV uptake.
Industry recommendations
The FCAI’s submission calls on the Federal Government to:
- Continue demand-side incentives to complement the NVES
- Ensure any reform of the FBT exemption improves accessibility for consumers
- Extend tariff exemptions to include electrified light commercial vehicles
The FCAI believes that a coordinated mix of regulation and consumer support will be essential. This will help Australia meet its emissions reduction targets. It also stresses that affordability and market stability must be maintained throughout the transition.
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