Federal government passes EV incentive bill

THE Australian federal government has passed its Treasury Laws Amendment (Electric Car Discount) Bill, which will provide up to $2000 off the purchase price of battery electric and plug-in hybrid vehicles, as well as fringe benefits tax (FBT) exemptions for fleets and novated leases.

Discounts apply to electric vehicles (EV) and plug-in hybrid vehicles (PHEV) that retail below the luxury car tax (LCT) threshold of $84,916 and are offered in addition to other state and territory incentives.

Electric vehicles will also be prioritised in government fleet purchasing decisions to both reduce government transport emissions and provide more electric cars to the used market.

The Bill passed the Senate with 31 votes against 24 after a deal was struck between Labor, Greens and independent Senator David Pocock.

A change to the Bill means PHEVs will initially be covered by the Bill but face a sunsetting clause that sees the offer expire on 1 April 2025.

Electric Vehicle Council (EVC) chief executive Behyad Jafari said the passing of the Bill was a win for thousands of Australian EV buyers, including those in the used-car market.

“This is a landmark moment for EV policy in Australia. It’s a powerful demonstration of how far we’ve come in just a few short years,” he said.

“This Bill will allow thousands more Australians to get behind the wheel of an EV where they can access the benefits of lower fuel bills, cutting pollution and an enjoyable driving experience.

“Making new EVs easier to buy will turbocharge the creation of a strong second-hand market for EVs, which is vital for affordability.

“By achieving stronger EV uptake, we will significantly lower Australia's carbon emissions and reduce our precarious dependence on foreign oil.”

The Australian Automotive Dealer Association (AADA) joined the EVC in welcoming the legislation, saying the move will encourage the uptake of zero- or low emissions vehicles by Australian consumers.

“This is a good outcome which delivers on the government’s election commitment to exempt eligible electric vehicles from fringe benefits tax,” said AADA CEO James Voortman.

“The passage of this Bill will come as welcome relief to all employers and their employees who have leased an eligible EV since 1 July 2022, and it will also give certainty to those who are considering doing so in the future.

“We would have preferred to see the Bill pass without sunsetting provisions for plug-in hybrid vehicles but we acknowledge this represents a consensus position.

“We believe PHEVs provide a good solution for many Australian families with certain mobility needs, particularly in regional areas. We should not lose sight of the fact that PHEVs enjoy significant emission reduction benefits over internal combustion engine vehicles.

“It is imperative that employees taking out a lease on a PHEV before 1 April 2025 are provided with the FBT concessions across the life of their lease, so the latest amendments proposed by the Australian Greens and Senator David Pocock are critical.

“This Bill represents a good first step for the National Electric Vehicle Strategy, and we look forward to working with the government and our automotive industry colleagues to progress the transition to net zero,” he said.

Mr Voortman’s sentiments were echoed by the Federal Chamber of Automotive Industries (FCAI).

The FCAI said the removal of the import tariff for zero and low emission vehicles beneath the luxury car tax (LCT) threshold will help to cement the building blocks required for future EV uptake, but that more still needs to be done.

“Car-makers support financial incentives as part of a wider range of policy measures,” said FCAI chief executive Tony Weber.

“This is an important step that complements the government’s plan to develop an electric vehicle strategy and the current review into fuel quality. Ideally, the new year will see action in the area of a federally mandated emissions target for the light vehicle sector.

“This is a positive move, but more action is required. We look forward to engaging with

government to achieve strong, practical, and challenging policy settings which will support Australia’s goal of decarbonising the light vehicle fleet.”