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ABC News
24-04-2025
- Automotive
- ABC News
Coalition vow to end EV lease discount may inflate prices by $15,000
The Coalition's promise to end electric vehicle subsidies could drive up prices for popular EVs by more than $15,000 under a typical novated lease and have an almost immediate effect on sales. The good news for customers is market analysts expect it to be "a good year to buy cars" regardless of who wins the election, with a wave of new EVs due to put downward pressure on prices overall. Opposition Leader Peter Dutton seemed to confirm on Wednesday that the Coalition would not touch the exemption from fringe benefit tax (FBT) for electric vehicles, which saves customers from paying the additional tax imposed when they buy a car through a novated lease. Catch the latest interviews and in-depth coverage on But Mr Dutton later clarified he had misheard a question and the Coalition did in fact intend to press ahead with plans to end the tax discount. The National Automotive Leasing and Salary Packaging Association (NALSPA) said the scheme saved the typical wage earner with a four-year novated lease about $3,500 per annum on a $45,000 car like an MG4. For a $60,000 EV such as the BYD Sealion 7, the exemption saves about $4,700 a year, while for a $75,000 EV it saves about $5,500 a year. Peter Dutton is in no mood for reversing with just days left in the campaign. ( ABC News: Ian Cutmore ) NALSPA chief executive Rohan Martin said the tax discount appeared in keeping with the Coalition's other cost of living proposals, and winding it back would hurt working Australians. "The EV exemption is providing real cost-of-living relief for motorists," Mr Martin said. "We also felt that the EV exemption provided real support to [the Coalition's] other policy initiatives around the fuel excise and … the New Vehicle Efficiency Standard (NVES), about making sure motorists aren't paying more for their vehicles." Potential 'rapid' hit to EV sales The FBT exemption was introduced in July 2022 and had an immediate impact on EV uptake: NALSPA estimates close to half of EV sales today are through novated leases (including plug-in hybrids, which were eligible for an FBT exemption until April this year). That has also had a cost to the federal budget, with the price of the scheme blowing out to almost half-a-billion dollars a year, far above initial Treasury estimates. Cox Automotive market analyst Mike Costello said it was "pretty cut and dry" that if the exemption was removed it would cause a notable and "rapid" softening of EV sales. "Compared to the overall market where EVs and PHEVs are about six per cent of the market … you can sort of see it's been a massive driver of uptake of those vehicles, it really does remove some of the pain points people perceive around electric cars," Mr Costello said. " Of all of the different government policies, whether it is subsidies, rebates or tax breaks introduced over time, it has definitely been the most effective in driving a volume uptick of those vehicles. " Mr Martin warned that if the FBT exemption was dumped it would also have a greater impact in some of the electorates the Coalition was hoping to flip on May 3, with a greater share of EVs currently being bought by families in outer suburban parts of the country compared to the inner city. Read more about the federal election: Want even more? Here's where you can find all our 2025 Separately, a NALSPA survey last year of 625 people who bought plug-in hybrids under a novated lease found the main reason for doing so was the then-exemption from FBT. Nine out of ten said the savings from the FBT exemption would be an important consideration for their next vehicle purchase. The Coalition knows the scheme is popular and while it has Climate Change Minister Chris Bowen asserted that plan would "make employers and employees pay higher taxes on EVs". "[The government's policies] are already helping Australian families save on petrol especially in middle and outer suburbs," Mr Bowen said. Chris Bowen introduced the FBT exemption on electric vehicles in 2022. ( AAP: Mick Tsikas ) The industry expects if the Coalition wins, its promise to unwind the EV exemption and its promise to unpick the NVES would in combination damage demand for electric vehicles. But it may also create a complication for car makers. Photo shows Peter Dutton with candidate Matt Moran There are now more utes and SUVs in Australia than there are tradies as a constellation of tax policies made these big cars an attractive option. The Coalition has promised to set the penalty rate attached to the NVES emissions reduction scheme to $0, but retain the standard's underlying structure. That would mean car makers would still incur credits or debits depending on whether the fleet of vehicles they sold each year fell under or over an emissions limit set by the government — they just would not have to pay a fine for exceeding that limit. However, penalty notices for any debits accrued would not be issued until 2028, after the next federal election, with one industry insider saying it would force car makers to "roll the dice" on whether they would end up paying nothing for the debits sitting on their books, or whether fines would be reinstated by a future government. And if the "carrot" of FBT exemptions is removed by the Coalition, insiders say that would ultimately add to the debit side of car maker ledgers. EV market still set to explode With the EV market already "lethargic" now that most early adopters have bought into electric vehicles, Mr Costello said sales could go backwards in relative terms without the "pull factor" of an NVES backed up by fines. However, while unwinding those policies may dampen EV uptake, market forecasters still expect the number of new electric vehicle models due to enter Australia by the end of this year to explode. Photo shows The Words ABC News Daily with the ABC Listen logo beside it. Blue and pale green striped background. Submit your election questions and tune in for a weekly explainer of the latest election news. Listen to ABC News Daily on ABC listen. And as car brands — especially in China— pivot away from the United States after President Donald Trump's "liberation day" tariffs, more are eyeing the Australian market. At the end of 2022 there were just 39 EV models or variants available in Australia, but that number now stands at over 79 and is due to leap to 143 by the end of this year. And within that, the number for sale between $40,000 to $60,000 is also due to rise from 18 at the end of last year to 42 by the end of this year. That added competition would also put downward pressure on prices. One analyst pointed to how BYD Dolphin prices were dropped after MG4 offered large discounts in the back half of last year as a recent example. Mr Costello agreed there had already been more discounting activity in the market. "There are lots of vehicles coming into the country and with cost of living being what it is, the private market is quite cool at the moment, so we're already seeing discounts increase in prevalence and that will likely become more pronounced as the year goes by," he said. " We are seeing an avalanche of electric vehicles principally coming out of China, but also the established brands … there's going to be some really keen pricing as the year goes on. " A swathe of new models due to enter Australia could force car brands to price more competitively. ( AAP: James Ross ) On the Labor side, forecasters are downplaying the impact its legislated NVES penalty scheme would have on petrol car prices when it takes effect from July. The Coalition has cited modelling by data agency Blue Flag that suggests the total cost to industry of those penalties would be as much as $2.7 billion by 2028 when penalty notices would be first issued. But that is considered a high-water mark or worst-case scenario and modellers have been reducing that estimate "every six months", as rumours of new models such as an electric variant of Toyota's RAV4 SUV have spread through the industry. The NVES was introduced to encourage EV uptake and help to pull Australia from the "back of the queue" for low emissions cars, but analysts suggest with supply issues improved and new models entering the market, whether the NVES stays or goes is unlikely to have an "existential" impact on supply planning. Loading Having problems seeing this form? Try
Perth Now
24-04-2025
- Automotive
- Perth Now
Drivers could pay more tax after electric car U-turn
The cost of buying an electric vehicle could rise by thousands of dollars for some motorists if fringe benefits tax rules are changed after the election. Automotive groups warn drivers in outer metropolitan suburbs could be hit hardest by the change, which would raise transport costs for some while fuel tax cuts lowered costs for others. The warnings come after the coalition revealed it planned to remove fringe benefits tax subsidies for low-emission vehicles if it won government, calling the tax policy "wasteful spending". The policy change could save the government more than $3 billion, according to coalition figures. But the change would raise costs for Australians buying electric vehicles by thousands of dollars each year, National Automotive Leasing and Salary Packaging Association chief executive Rohan Martin said. Under the current policy, electric and hydrogen-powered vehicles do not attract fringe benefits tax if they fall under the luxury car tax threshold of $91,387 and are purchased through a salary packaging program. "For an EV around the $45,000 mark, we estimate a worker would pay another $3500 per year without the exemption to own and operate that car," Mr Martin told AAP. "If it was a $60,000 EV, such as a (BYD) Sealion 7, then it would be about $4700 more per annum without the exemption." Rising costs would hit families in suburbs hardest, he said, as households with longer commutes, solar panels and off-street parking had proven most likely to use the tax exemption. "It's average, everyday working Australians living in outer metropolitan suburbs that are the main beneficiaries of this existing policy and are the main users of this policy," Mr Martin said. Coalition leader Peter Dutton denied plans to remove the tax exemption represented a change in policy as the party opposed its introduction in July 2022. The federal opposition has also announced plans to cut fuel excise by 25 cents a litre for one year - at a cost of $6 billion - and remove penalties for car companies exceeding emissions limits under the New Vehicle Efficiency Standard. The election policies would only lower transport costs for some motorists, Electric Vehicle Council chief executive Julie Delvecchio said, while punishing those who had invested in low-emission vehicles to cut pollution, fuel and maintenance costs. "The FBT exemption passed by parliament has been highly effective," she said. "Scrapping it now will drive up the cost of owning and running an EV for Australians and stall progress towards cleaner, cheaper-to-run transport."
Yahoo
31-03-2025
- Automotive
- Yahoo
$30,000 EV change from today despite desperate pleas: 'Worst possible time'
The fringe benefits tax exemption for plug-in hybrids (PHEVs) ends today, despite experts begging for it to be extended. The 2022 policy served as a financial incentive for drivers to dump their internal combustion engines (ICE) and hop on the electric vehicle (EV) bandwagon. It helped shave tens of thousands of dollars off the cost of buying a PHEV, and, despite its success, the government has committed to ending it on Tuesday, April 1. founder Paul Maric told Yahoo Finance that PHEVs had become the perfect middle ground between ICE cars and EVs. "People are switching away from electric vehicles to plug-in hybrids," he said. Electric car drivers lose out in Coalition's $6 billion plan to lower petrol prices: 'Save $700 per year' Rare $1 coin worth up to $3,000: 'Crazy errors' Centrelink blow for millions on JobSeeker, Age Pension as federal budget denies cash boost "It's the worst time possible for this kind of thing because the people just don't want to buy electric vehicles and they're going to be removing the only real subsidy that is currently sort of gaining traction." Research released in October showed that 61 per cent of PHEV owners bought their cars specifically because of the FBT exemption. Additionally, 90 per cent said the tax break made a "big difference" in their data from the National Automotive Leasing and Salary Packaging Association also found PHEVs were the perfect "stepping stone" between an ICE and a battery-powered electric vehicle (BEV). It's because PHEVs gave drivers the best of both worlds. They can use petrol on longer journeys where they might have range anxiety or worries about where the next charger might be, and then they can switch to the battery for short trips. That's why Maric said it was such a shame that the FBT exemption was being dumped today. "When you do the sums on it, you can actually go down the path of buying a $20,000 to $30,000 more expensive electric vehicle and still have it cost the same as a cheaper vehicle once you take into account the tax benefits that you get out of it," he told Yahoo Finance. Several peak industry bodies begged for the FBT exemption to be extended well beyond April 1 as the electric car sector continued to find its feet in the market. They're worried that removing incentives will cause more people to stick with or switch back to an ICE vehicle. "We know the FBT exemption is an important tool that is helping more Australians afford and access the latest EVs," Electric Vehicle Council policy head Aman Gaur said. PHEVs have been growing in popularity, according to the Australian Automobile Association, with 7,556 sales in the December quarter, compared to 4,476 a year earlier. However, BEVs have stagnated. There were 21,331 sales in the last three months of 2024, compared to 21,474 in 2023's December quarter. National Automotive Leasing and Salary Packaging Association chief executive Rohan Martin said removing the tax cut was a "lost opportunity". "Once the bulk of people move into a plug-in hybrid, they're on their electrification journey," he said. Back in October, the government revealed that PHEVs would no longer be considered "a zero or low emissions vehicle" under FBT law and therefore wouldn't be "eligible for the electric cars exemption". The only people who will be exempt from this change will be those who continue to have a "financially binding commitment" that was in place before the April 1 deadline. That type of commitment is what's known as a novated lease. There are a few ways to ensure that the FBT can still apply to you after April 1: Optional extensions to your agreement, but it has to be for a pre-determined period of time. Breaks in novation agreements, however, the car cannot be used or available for personal use during that time off Changes to the financial obligations under the lease, which include alterations to lease payments or the residual value of the car Changed employer for FBT purposes, as that results in a new commitment to the application or availability of the car by the new employer Other changes in the pre-existing commitment for your PHEV on or after April 1, then the FBT exemption will no longer apply. Ending the exemption means car owners will likely have to fork out more for their payments, and their balloon payment at the end could be higher than expected. Maric said the second-hand PHEV market could soon be flooded with cars as people seek to offload their rides. He also said the tax change could see a shakeup in the EV industry. "I think we're going to see a big shift towards regular hybrids," he said. "People realise that that is the type of vehicle you need to buy if you want to protect your re-sale value, and if you still want the benefits of having a fuel and energy efficient vehicle. "Stepping up to a plug-in hybrid or even an electric vehicle, you're adding the complexity of having these batteries and then the charging equipment. "Whereas with a hybrid, we're seeing them hold their value extremely well, and anything electric at the moment is depreciating."
Yahoo
30-03-2025
- Automotive
- Yahoo
$30,000 EV change from tomorrow despite desperate pleas: 'Worst possible time'
The fringe benefits tax exemption for plug-in hybrids (PHEVs) ends this week, despite experts begging for it to be extended. The 2022 policy served as a financial incentive for drivers to dump their internal combustion engines (ICE) and hop on the electric vehicle (EV) bandwagon. It helped shave tens of thousands of dollars off the cost of buying a PHEV, and, despite its success, the government has committed to ending it on Tuesday, April 1. founder Paul Maric told Yahoo Finance that PHEVs had become the perfect middle ground between ICE cars and EVs. "People are switching away from electric vehicles to plug-in hybrids," he said. Electric car drivers lose out in Coalition's $6 billion plan to lower petrol prices: 'Save $700 per year' Rare $1 coin worth up to $3,000: 'Crazy errors' Centrelink blow for millions on JobSeeker, Age Pension as federal budget denies cash boost "It's the worst time possible for this kind of thing because the people just don't want to buy electric vehicles and they're going to be removing the only real subsidy that is currently sort of gaining traction." Research released in October showed that 61 per cent of PHEV owners bought their cars specifically because of the FBT exemption. Additionally, 90 per cent said the tax break made a "big difference" in their data from the National Automotive Leasing and Salary Packaging Association also found PHEVs were the perfect "stepping stone" between an ICE and a battery-powered electric vehicle (BEV). It's because PHEVs gave drivers the best of both worlds. They can use petrol on longer journeys where they might have range anxiety or worries about where the next charger might be, and then they can switch to the battery for short trips. That's why Maric said it was such a shame that the FBT exemption was being dumped tomorrow. "When you do the sums on it, you can actually go down the path of buying a $20,000 to $30,000 more expensive electric vehicle and still have it cost the same as a cheaper vehicle once you take into account the tax benefits that you get out of it," he told Yahoo Finance. Several peak industry bodies begged for the FBT exemption to be extended well beyond April 1 as the electric car sector continued to find its feet in the market. They're worried that removing incentives will cause more people to stick with or switch back to an ICE vehicle. "We know the FBT exemption is an important tool that is helping more Australians afford and access the latest EVs," Electric Vehicle Council policy head Aman Gaur said. PHEVs have been growing in popularity, according to the Australian Automobile Association, with 7,556 sales in the December quarter, compared to 4,476 a year earlier. However, BEVs have stagnated. There were 21,331 sales in the last three months of 2024, compared to 21,474 in 2023's December quarter. National Automotive Leasing and Salary Packaging Association chief executive Rohan Martin said removing the tax cut was a "lost opportunity". "Once the bulk of people move into a plug-in hybrid, they're on their electrification journey," he said. Back in October, the government revealed that PHEVs would no longer be considered "a zero or low emissions vehicle" under FBT law and therefore wouldn't be "eligible for the electric cars exemption". The only people who will be exempt from this change will be those who continue to have a "financially binding commitment" that was in place before the April 1 deadline. That type of commitment is what's known as a novated lease. There are a few ways to ensure that the FBT can still apply to you after April 1: Optional extensions to your agreement, but it has to be for a pre-determined period of time. Breaks in novation agreements, however, the car cannot be used or available for personal use during that time off Changes to the financial obligations under the lease, which include alterations to lease payments or the residual value of the car Changed employer for FBT purposes, as that results in a new commitment to the application or availability of the car by the new employer Other changes in the pre-existing commitment for your PHEV on or after April 1, then the FBT exemption will no longer apply. Ending the exemption means car owners will likely have to fork out more for their payments, and their balloon payment at the end could be higher than expected. Maric said the second-hand PHEV market could soon be flooded with cars as people seek to offload their rides. He also said the tax change could see a shakeup in the EV industry. "I think we're going to see a big shift towards regular hybrids," he said. "People realise that that is the type of vehicle you need to buy if you want to protect your re-sale value, and if you still want the benefits of having a fuel and energy efficient vehicle. "Stepping up to a plug-in hybrid or even an electric vehicle, you're adding the complexity of having these batteries and then the charging equipment. "Whereas with a hybrid, we're seeing them hold their value extremely well, and anything electric at the moment is depreciating."
