End of tax breaks for hybrid vehicles drives row over future of EVs
Hybrid electric car sales spiked this year before plunging as tax breaks for the vehicle class ended, fuelling calls for the government to do more to boost clean vehicle sales amid concerns such incentives disproportionately benefit the wealthy.
A fringe benefits tax (FBT) exemption on sales of some hybrid electric vehicles ran out on March 31. The discount saved a buyer up to $30,000 on some vehicles when combined with a novated lease arrangement with their employer.
In the month before the cut-off, 7904 hybrids were purchased under a leasing arrangement. But in April, the number of buyers sank to 4726, according to new figures from the Australian Finance Industry Association.
Sales of plug-in hybrid vehicles had almost doubled from 7556 vehicles in the last four months of 2024 to 13,698 in the first three months of this year.
Electric vehicle makers and leasing companies have slammed the Albanese government's decision to end the tax break for certain types of hybrid vehicles.
Traditional hybrids, which have a diesel or petrol engine as well as an electric motor that recharges as the car decelerates, were never eligible.
But plug-in hybrid vehicles, with a petrol engine and battery that can be recharged at the socket, had been included in the scheme for the past two years. They were removed under a commitment to the Greens in return for the minor party's crucial support for legislation to establish Australia's fuel efficiency standards, that force car companies to reduce pollution across their range of vehicles sold in Australia.
Australian Finance Industry Association chief executive Diane Tate called for plug-in hybrids to have FBT exemptions reinstated, arguing the vehicles are particularly popular with regional drivers, where lower population density makes it harder to access charging stations needed for electric vehicles on long drives. She also called for other measures to cut the cost of traditional hybrids.
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