Australia’s light-vehicle fleet is changing, and the pace of that change is increasingly being shaped by the alignment between vehicle technology, market availability and government policy.
The latest research from the National Transport Commission shows that emissions intensity from new light vehicles has fallen sharply over the past two years, delivering some of the strongest reductions seen in more than two decades. Central to that shift is the rapid growth of electric and hybrid vehicle uptake — and the policies that have helped make those vehicles accessible.
New-vehicle decisions matter most
The NTC’s analysis tracks emissions intensity over time using new-vehicle sales data, highlighting how today’s purchasing decisions lock in emissions outcomes for decades. With light vehicles remaining in service for close to 20 years on average, improvements at the point of sale are critical.
The data shows battery electric vehicles (BEVs) accounted for around 13 per cent of new registrations in 2024, with the vast majority entering the fleet since 2021. Hybrid vehicles have also grown strongly, delivering emissions reductions across passenger vehicles and SUVs.
While internal combustion engines still dominate the total fleet, the report confirms that new-vehicle emissions are moving decisively downward — a trend closely aligned with the expansion of EV choice and supporting policy settings.
Policy signals are influencing fleet behaviour
According to the National Automotive Leasing and Salary Packaging Association (NALSPA), the timing of this emissions improvement is no coincidence.
“The rise in EV uptake and fall in Australia’s vehicle emissions go hand in hand with the introduction of the EV FBT exemption,” said Rohan Martin, chief executive of NALSPA.
“The EV tax cut is making the upfront cost of electric vehicles more affordable for everyday Australians. Many workers, including teachers and nurses, say they wouldn’t have switched without the help of the FBT exemption.”
NALSPA’s data shows that uptake has been particularly strong in outer metropolitan areas, where longer commutes make fuel and running-cost savings more valuable.
“Our data shows families in the outer suburbs are embracing the EV tax cut the most. Running-cost savings from EVs are most valuable in these areas, where residents face long commutes and higher fuel bills,” Martin said.
Progress, but plenty of road ahead
Despite the recent gains, the NTC report also reinforces how early Australia still is in the electrification journey. Electric vehicles make up only around 2 per cent of the total light-vehicle fleet, and Australia continues to lag international markets on emissions performance.
Average new passenger vehicles sold in Australia still emit around 35 per cent more CO₂ than their European counterparts, reflecting both vehicle choice and slower historic uptake of electrified powertrains.
“Encouraging the switch to more fuel-efficient vehicles through novated leasing and the EV FBT tax cut is key to reducing emissions and meeting our national targets,” Martin said.
“Novated leasing delivers emissions gains disproportionate to its share of the market, helping more people to purchase newer, more efficient vehicles more frequently and supporting faster turnover into cleaner models.”
Why fleets are central to the transition
For fleet operators, the message is clear: fleet purchasing decisions are one of the fastest ways to influence national emissions outcomes. Fleets tend to buy newer vehicles more often, creating a multiplier effect that accelerates the uptake of cleaner technology and feeds the used-vehicle market over time.
Independent modelling by Magenta Advisory, cited by NALSPA, found that extending the EV tax cut for a decade could halve vehicle emissions compared with ending the policy earlier, while delivering more than $2 in economic, health and environmental benefits for every $1 spent — rising to $3 by 2030.
“Keeping the EV tax cut in place means more new EVs on Australian roads and more affordable second-hand EVs available too,” Martin said. “Around the world, strong EV uptake always pairs buyer incentives with supply measures until key benchmarks are reached.”
Alignment is driving momentum
As the NTC report shows, Australia’s fleet transition is not being driven by technology alone. It is the alignment of policy, market supply and fleet economics that is reshaping purchasing behaviour and driving emissions down.
For fleets planning their next replacement cycle, the data provides a timely reminder: decisions made today will define emissions, costs and operational performance well into the 2030s and beyond.
