The Federal Government’s decision to commence a statutory review of the Electric Car Discount in December 2025 marks an important milestone in Australia’s electric vehicle transition.
Introduced in July 2022, the Electric Car Discount removed fringe benefits tax (FBT) and import tariffs for eligible electric vehicles, with the clear objective of accelerating early adoption and reducing transport emissions. On those terms, the policy has largely achieved what it set out to do.
Electric vehicles now account for around 10 per cent of new vehicle sales, compared with less than 2 per cent when the policy was introduced. The number of models available has grown rapidly, prices have come down, and EVs are now a mainstream consideration for many Australians.
However, from a fleet perspective, the benefits – and the gaps – are becoming clearer.
Where the benefits have flowed
The primary beneficiaries of the FBT exemption have been consumers, particularly employees accessing electric vehicles through novated leasing.
Salary packaging and novated lease providers have seen a substantial lift in enquiry volumes and business activity since 2022. Higher average vehicle prices have also translated into higher finance margins and, ultimately, increased profitability across the sector.
Vehicle manufacturers have similarly benefited. The policy has supported higher EV sales volumes, helped justify bringing more models to Australia, and improved the business case for offering electric variants across multiple segments, including SUVs and utes.
From a market-creation standpoint, the Electric Car Discount has done its job.
What hasn’t happened in corporate fleets
Where the policy has been less effective is in accelerating the direct adoption of electric vehicles into corporate and government-owned fleets.
Despite three years of incentives, many organisations have not materially changed their fleet mix. EV uptake in company-owned fleets remains uneven and, in some cases, limited to small pilot programs rather than scaled deployment.
The reasons are not financial alone.
For many organisations, electric vehicles introduce a level of operational complexity that traditional fleet structures are not yet equipped to manage. Charging infrastructure, energy management, driver behaviour, data integration, and internal governance all require coordination across multiple stakeholders – fleet, finance, sustainability, property, IT and HR.
At the same time, a large proportion of Australian fleets still operate with low levels of fleet management maturity. Policies are often underdeveloped, utilisation data is incomplete, and major fleet projects are difficult to execute without a strong foundation in place.
In that context, the FBT exemption has made EVs cheaper, but it has not removed the organisational capability gap required to deploy them at scale.
Will the FBT exemption end?
Yes – almost certainly.
The review signals what the industry has expected for some time: the Electric Car Discount was always designed as a temporary, demand-side incentive. With the market now established and supply improving, it is likely to conclude around 2027, as previously indicated.
The Government has achieved its core objective of kick-starting adoption. The next phase will rely more heavily on structural measures such as the New Vehicle Efficiency Standard, which will continue to influence vehicle availability and emissions outcomes in the years ahead.
Should fleets rush to buy EVs before the exemption ends?
No.
Organisations should rush into electric vehicle procurement simply to capture a tax benefit before it expires. Doing so risks higher costs, poor asset utilisation, and operational issues that can undermine confidence in EV programs altogether.
Instead, fleets should focus on a structured, disciplined transition, grounded in fleet management fundamentals:
- Utilisation analysis – understanding whether vehicles are actually required, and whether some demand can be met through alternative mobility options
- Fit for purpose selection – choosing vehicles based on task requirements, not category defaults or employee preference
- Whole of Life Cost (WOLC) and Best Value analysis – assessing energy, maintenance, downtime, residual value and risk, not just purchase price
- Capability and governance planning – ensuring the organisation is ready to manage charging, data, policy and change management before scaling deployment
Electric vehicles are not just a procurement decision; they are an operational transformation.
What the review means for fleets
The review of the Electric Car Discount is not a signal to panic, but it is a signal to prepare.
The incentives that helped create the market will not last forever. The fleets that succeed in the next phase will be those that lift their fleet management maturity, use data to guide decisions, and take a deliberate, staged approach to zero-emissions motoring.
For many organisations, the real work of fleet electrification is only just beginning.
Industry Feedback
The government is asking for feedback as part of the review process. Written submissions that respond to the terms of reference can be submitted by clicking here.
