Australia’s peak automotive body, the Federal Chamber of Automotive Industries (FCAI), is advocating for broader government incentives for electric vehicles (EVs), including plug-in hybrids (PHEVs), and light commercial vehicles. The call comes as the government prepares to review its existing EV support programs in 2026, with potential changes slated for 2027.
The Current Incentive System
The Australian government currently offers incentives like tariff exemptions on EVs imported from countries without free trade agreements (FTAs), such as the European Union and South Africa. However, these exemptions don’t apply to light commercial vehicles, meaning models like the Ford Ranger PHEV, manufactured in South Africa, are subject to a five percent import tariff (around $4,000 on a $79,990 vehicle).
This matters because expanding incentives would lower costs for businesses and consumers looking to adopt cleaner vehicles, encouraging wider EV uptake. The FCAI’s proposal would level the playing field, aligning commercial vehicle incentives with those for passenger EVs.
Why This Is Happening Now
The push for expanded incentives coincides with Australia’s tightening emissions reduction targets. The Climate Change Authority has advised that EV adoption must increase dramatically by 2035 to meet these goals. Despite a record 8.3 percent of new vehicle sales being electric in 2025 (up from 7.4 percent the previous year), PHEVs now account for around 4.3 percent of total sales, and hybrids make up 16 percent.
The government also faced criticism for removing a Fringe Benefits Tax (FBT) exemption for PHEVs in April 2025, a move that some argue undermined progress toward emissions targets. The FCAI’s submission emphasizes the need for continued incentives, alongside the New Vehicle Efficiency Standard (NVES) introduced in January 2025, which penalizes automakers exceeding carbon emission limits.
Industry Consensus
The FCAI’s position is echoed by other industry leaders. Toyota Australia has suggested including hybrid models in the NVES to lower overall emissions, while the Electric Vehicle Council (EVC) warns that prematurely withdrawing incentives could stall EV sales growth.
The FCAI’s chief executive, Tony Weber, argues that removing the FBT exemption requires alternative demand-side incentives to maintain momentum toward achieving ambitious emissions targets. He also points out that the NVES, while pushing manufacturers to expand EV offerings (now over 100 models available), has not yet translated into significant consumer demand.
In conclusion, expanding EV incentives to include PHEVs and light commercial vehicles is seen as crucial for accelerating Australia’s transition to low-emission vehicles. The FCAI and other industry stakeholders urge the government to carefully consider these changes during the upcoming review, ensuring that policies support both emissions reduction goals and consumer confidence.
