Electric Car Discount could halve vehicle emissions if continued to 2035

15 September 2025

New modelling by Magenta Advisory reveals that extending the Electric Car Discount for a full decade could halve vehicle emissions compared to ending the policy in 2027. The analysis shows that maintaining the Fringe Benefit Tax (FBT) exemption for battery electric vehicles (BEVs) and reinstating it for plug-in hybrids (PHEVs) would significantly accelerate Australia’s transition to cleaner transport. The research also estimates a strong return on investment, with every dollar spent on the EV Discount generating $2.25 in environmental, health, and economic benefits; expected to rise to $3 by 2030.

Commissioned by AFIA, Electric Vehicle Council, NALSPA, the study found the EV Discount has already helped place over 105,000 new electric cars and hybrids on Australian roads between 2022 and 2024. Used electric car sales have surged 157% since early 2022, with 61,000 vehicles entering the second-hand market; growth that would have been far slower without the exemption. If the policy continues through 2035, it could result in an additional 1.5 million new electric cars, 200,000 new hybrids, and 870,000 used electric cars, expanding access for more Australians.

The research also highlights the top 10 postcodes for electric car novated lease sales are in outer suburban areas of major cities, indicating that middle-income families are embracing the transition. These findings will inform submissions to the Productivity Commission’s net zero transformation interim report, to which AFIA has made a submission.

AFIA CEO Diane Tate emphasised the EV Discount’s role in making cleaner vehicles more accessible and affordable, noting that over 100,000 Australians have already benefited. She called for a broader suite of national policies, including upfront discounts, faster charging infrastructure, and stronger public-private partnerships, to maintain momentum. Ms Tate stressed that the finance industry is actively supporting the transition but warned that without consistent government policy, progress could stall just as public interest and market growth are accelerating.

See the PDF version of this Media Release here.