The future of the Electric Car Discount — particularly the Fringe Benefits Tax (FBT) exemption for eligible electric vehicles — remains one of the most closely watched policy issues for Fleet Managers and Leasing Companies.
While much of the discussion has focused on new vehicle demand, there is another dimension that deserves attention: the potential impact on the used vehicle market.
As fleets plan replacement cycles over the next three to five years, understanding how policy changes could influence residual values is becoming an important part of procurement and disposal strategy.
According to Mike Costello, Corporate Affairs Manager at Cox Automotive Australia, any change to the FBT exemption is likely to have a direct effect on second-hand demand — and potentially support stronger resale outcomes.
“A lot of it’s also going to depend on policy. So if, as has been reported, the fringe benefits tax exemption is removed, and by the time you’re selling an EV you buy today, in a few years’ time that may be the case, then that’s only going to probably improve the secondary value, or used value of that asset too.”
Policy Changes Could Shift Demand to the Used Market
The logic behind this outlook is relatively straightforward. If government incentives for new vehicles are reduced or removed, the price advantage of buying new may narrow. That change could push more buyers into the used market, increasing competition for second-hand vehicles.
For fleets, this dynamic creates an interesting scenario. A policy change that reduces support for new vehicle purchases could simultaneously strengthen resale values for vehicles already in service.
This is particularly relevant for organisations purchasing EVs today with an expected disposal window later in the decade.
Costello said policy settings will remain one of the most important external factors shaping future residual values.
“A lot of it’s also going to depend on policy.”
Market Fundamentals Still Matter
While policy plays a role, it is not the only factor influencing used EV values. Market maturity, pricing trends, and consumer confidence in technology continue to shape long-term outcomes.
One of the strongest indicators of improving stability is the reduction in new vehicle pricing, which is helping to normalise resale expectations.
Lower purchase prices reduce the gap between acquisition cost and disposal value, making residual value forecasting more predictable for fleet buyers.
At the same time, growing familiarity with EV technology — particularly battery longevity — is reducing uncertainty among used vehicle buyers.
These trends suggest the market is becoming more resilient, regardless of short-term policy adjustments.
Planning for Uncertainty Is Part of Fleet Strategy
For Fleet Managers and Leasing Companies, the key lesson is not to rely on a single policy setting when forecasting asset values.
Instead, organisations should consider multiple scenarios — including the continuation, modification, or removal of incentives — when developing fleet replacement plans.
The current market conditions provide a useful reminder that policy risk can create both challenges and opportunities.
If incentives remain in place, demand for new vehicles may stay strong. If they are reduced, demand for used vehicles may increase. In either case, the underlying direction of the EV market appears to be moving toward greater stability.
A More Predictable Future for Residual Values
As the EV market matures, the role of government incentives will evolve, but the fundamentals of supply, demand, and operating cost savings will continue to drive buyer behaviour.
For fleets making investment decisions today, the outlook is becoming clearer: policy settings may influence timing, but the long-term trajectory for used EV values is increasingly defined by market confidence rather than uncertainty.
