​​Electric and hybrid vehicle finance surges to $7.37 billion as policy rollback threatens momentum​

17 March 2026

​​Electric and hybrid vehicle financing surged to $7.37 billion in 2025 – a 20 per cent year-on-year jump – as nearly 130,000 Australians made the switch to cleaner transport according to new Australian Finance Industry Association (AFIA) industry data. 

​AFIA’s latest Electric Vehicle (EV) & Hybrid Finance Report shows that EVs and hybrids are taking a growing share of Australia’s financed vehicle market. But, with 22 per cent of emissions in Australia still coming from the transport sector1, there is still a long way to go to achieving our net zero ambitions, and changing the mix of vehicles on the road is key to reducing emissions and addressing energy security.  

​Removing the Fringe Benefits Tax (FBT) exemption (called the Electric Car Discount) at this point threatens to stall this momentum, with polling confirming more than one in three Australians (37 per cent) would be less likely to purchase an EV and nearly half of Australians (47 per cent) still believing their next vehicle will be an internal combustion engine (ICE) vehicle. 

​AFIA CEO Diane Tate said this is clear evidence that government incentives are shifting the dial. 

​“The data tells a clear story: government incentives are working. Nearly 130,000 vehicles and $7.37 billion in finance in a single year shows this has been an incredibly effective policy in helping Australians make the switch to vehicles that are cleaner and cheaper to run. 

​“When policy is clear, consistent and future-focussed, consumers and businesses respond positively – our data shows commercial finance is powering the transition to cleaner vehicles, helping drive down Australia’s emissions. 

​“Conversely, when policy is uncertain and there are mixed signals from Government, Australians take that signal and take their foot off the pedal, and not just in their views about vehicles, but in their views about clean and renewable energy all round,” said Ms Tate.  

​Hybrid vehicles remain the bridge technology – but the market reacts fast to policy change

​The report contains a direct cautionary finding for policymakers. The removal of the FBT exemption for hybrid vehicles in March 2025 had an immediate and measurable negative impact, with hybrid financing in the novated leasing channel recording a sharp, one-off drop in April – down by about 70 per cent from March – and then remaining low and relatively flat for the rest of the year, without any significant rebound.  

​“The removal of the FBT exemption for hybrid vehicles was a natural experiment we didn’t ask for. The market responded immediately and negatively, showing how sensitive consumers and businesses are to policy change. Policymakers should take that as a warning, not a template,” Ms Tate said. 

​New polling: Australians divided on their next car – and tax concessions are pivotal

​The report also includes new AFIA-commissioned research conducted by Pyxis Polling & Insights that reinforces this point. It shows Australians remain divided on their next vehicle purchase, with almost four in ten (39 per cent) saying they are likely to choose an electric or hybrid vehicle, while almost half (46 per cent) indicate a preference for an ICE vehicle. 

​The research also highlights a significant risk to consumer confidence: more than one in three Australians (37 per cent) say they would be less likely to purchase an EV if the Government removed the FBT exemption for EVs. 

​“Australians want to make the switch, but they need the Government to hold the line on incentives. The polling is unambiguous: remove the FBT exemption and uptake of EVs will fall. It’s that simple,” Ms Tate said. 

​“The finance industry is already doing the heavy lifting to fund Australia’s transition, deploying billions of dollars into EV and hybrid vehicle lending each year. What we need from the Government is certainty – without national, consistent, long-term policy, we risk stalling just as momentum is building and starting to make a difference.” 

​“To make cleaner vehicles accessible for all Australians and stay on track for net zero, we need a suite of national policies that are proven to deliver, such as upfront discounts, like retaining the FBT exemption for EVs. We also need to fast-track charging infrastructure, and stronger public-private partnerships, like those with the Clean Energy Finance Corporation (CEFC). Now is the time to double down, not pull back. In fact, we shouldn’t just be continuing our support for the FBT exemption for EVs, we should bring it back for plug-in hybrids, particularly as the technology in these vehicles has improved making them cleaner and the concerns with range and charging anxiety continue to make Australians nervous about change.” 

​“At a time when global conflict is highlighting potential fragilities in our supply chains, and Australians are looking at ways to manage their household energy needs and costs, EVs and hybrid vehicles are a critical ingredient of our economic resilience, financial security, and future wellbeing,” Ms Tate said.  

A copy of the report can be viewed here.

A copy of AFIA’s submission to Treasury’s statutory review of the Electric Car Discount is available here.