The Fringe Benefits Tax (FBT) exemption for electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) has transformed Australia’s fleet and novated leasing landscape. As Ben Wilks, Director at CUPRA Australia, shared with Fleet News Group, PHEVs are an essential stepping stone as the market prepares for a fully electric future.
“Plug-in hybrids offer a really viable opportunity for Australia,” Wilks explains. With many fleet operators and individual drivers still cautious about making the full shift to EVs, PHEVs offer a practical, flexible, and familiar solution. “You can drive up to 50 kilometres in pure electric mode, covering most daily commutes, while still having the petrol engine for longer trips,” he adds.
Making the Transition Easier
Wilks emphasises the need for diverse powertrain options as Australia moves towards electrification. “In this transition phase, there will be different drivetrains that suit different customers,” he says. The FBT exemption plays a critical role in encouraging fleets to consider PHEVs, which allow drivers to experience electric mobility without committing entirely to EVs.
The exemption has already made a noticeable impact. “We’ve seen nearly a 70% increase in our plug-in hybrid business year-over-year,” Wilks reveals. This surge in interest highlights the growing demand for vehicles that balance low emissions with the reassurance of a backup petrol engine.
The Cost and Efficiency Advantage
Wilks also sees PHEVs as an effective cost-saving tool for fleets. “You’re getting significant fuel efficiency, especially when plugging it in regularly,” he notes.
Wilks, however, acknowledges that driver education is crucial for maximising these benefits. “We can work with fleet teams to help drivers understand the advantages of plugging in regularly,” he explains. The combined effect of reduced emissions and lower fuel costs aligns perfectly with the government’s goals for the FBT exemption.
Future Uncertainty and Hope for PHEVs
The FBT exemption for PHEVs is currently set to end on 31 March 2025, which has raised concerns about its impact on the market’s transition.
“It’s frustrating that just as we’re introducing a fantastic PHEV with over 100 kilometres of electric range, the incentives might end,” Wilks says.
“We’d love to see it continue, as it’s an effective change management tool that gets people into electrified driving without overwhelming them.”
Despite the potential end of the exemption, Wilks remains optimistic. “If someone drives a PHEV today, they’re likely to be more comfortable going fully electric for their next vehicle,” he notes. The exposure to electrified driving, combined with the flexibility of a petrol engine, makes PHEVs a valuable transitional tool.
A Positive Step Forward for Fleets
For fleet managers and novated buyers not quite ready to go fully electric, PHEVs, supported by the FBT exemption, present a balanced and accessible option. “PHEVs are efficient, cost-effective, and help drivers ease into the electric journey,” Wilks says.
As he explained to Fleet News Group, “It’s all about meeting people where they are and making the transition work for them.” Whether or not the FBT exemption continues, PHEVs have already proven their role in shaping Australia’s sustainable transport landscape.
