The Electric Car Discount, delivered through the Fringe Benefits Tax (FBT) exemption for eligible electric vehicles, has been one of the most significant drivers behind Australia’s record year for battery electric vehicle (BEV) sales in 2025.
According to new figures from the Federal Chamber of Automotive Industries (FCAI) and the Electric Vehicle Council (EVC), more than 103,000 BEVs were purchased last year — the first time Australia has exceeded the 100,000-unit mark in a single year.
For Fleet Managers, Sustainability Managers and Finance Managers, the milestone reinforces the importance of policy settings in accelerating fleet transition — particularly for organisations still developing their fleet emissions strategies and internal EV policies.
Incentives delivering measurable impact
The National Automotive Leasing and Salary Packaging Association (NALSPA) says the EV FBT exemption has played a central role in driving adoption, particularly through novated leasing.
NALSPA chief executive Rohan Martin said the incentive has been a critical factor behind the record result.
“The EV Discount has been one of the critical drivers of battery electric vehicle uptake in 2025,” Martin said.
“2025 was a record year for all new car sales with a range of new models, including EVs, giving Australians greater choice.
“For the first year ever, BEV sales cracked the 100,000 mark in 2025, up around 13 per cent on 2024, reflecting the impact of the incentive on consumer adoption. Without the tax incentive on electric cars, tens of thousands fewer EVs would be on Australian roads today.”
For fleet decision-makers, this highlights how taxation and salary-packaging settings can materially change Whole of Life Cost (WOLC) outcomes — often making BEVs cost-competitive or cheaper than internal combustion vehicles, even before fuel and maintenance savings are considered.
Progress made — but gaps remain
Despite the strong result, Martin warned Australia is still lagging behind other markets with longer-standing EV incentives.
“Despite a record year for EV sales, Australia still has a long way to go. Barriers to uptake in Australia persist and we still trail countries that have long benefited from necessary driver incentives,” he said.
“More EVs in Australia is crucial as transport is set to become the largest source of emissions in just a few years time.”
Advice from the Climate Change Authority underscores the scale of the challenge ahead. It estimates that around half of all new cars sold between now and 2035 must be electric to meet even the lower end of Australia’s emissions targets.
“This requires an enormous scale-up that cannot happen without continued policy support,” Martin said.
“Australia simply cannot sell the number of EVs it needs to and reduce vehicle emissions without the sustained support of the FBT exemption and other complimentary measures.”
Why this matters for fleets
For organisations at an early stage of fleet management maturity, the EV FBT exemption is doing more than boosting new vehicle sales. It is accelerating fleet turnover and building the foundations for a viable second-hand EV market — a key concern for Finance Managers assessing residual value risk and long-term affordability.
“More new BEVs on our roads builds a pipeline of used EVs, expanding access to cleaner, cheaper-to-run transport for even more Australians,” Martin said.
He added that uptake has been strongest among working Australians in outer suburbs — a pattern that aligns closely with novated leasing and employer-supported fleet arrangements.
“The FBT exemption is proving most popular with working Australians living in the outer suburbs, which makes sense, as they stand to gain the most from electric driving including reducing their cost of living,” he said.
The road ahead
For Fleet Managers and Sustainability Managers, the 2025 sales milestone should be viewed as a signal — not an endpoint. Incentives like the EV FBT exemption can unlock rapid progress, but long-term success will depend on lifting fleet management maturity through better data, clearer policies, charging planning and internal education.
As Martin concluded:
“Through the support of the EV FBT exemption, Australians are benefiting from reduced emissions, more affordable cars, and safer roads with more new vehicles on them — benefits that support the national interest.”
The challenge now is ensuring those benefits continue — and that fleets are ready to take full advantage of them.
