Australia’s electric vehicle market is entering a new phase, with fleet and leasing experts suggesting businesses should look beyond tax incentives and focus on long-term fleet performance and operating costs.
The Federal Government has confirmed it will gradually wind back the Electric Car Discount from 31 March 2027, ending the current Fringe Benefits Tax (FBT) exemption for eligible electric vehicles purchased through novated leasing arrangements.
While the announcement has prompted concerns about the future affordability of EVs, Streetfleet CEO James Ehmann believes it signals a maturing market rather than a slowdown in electrification.
“The government isn’t scaling back incentives because EV uptake failed – it’s scaling them back because the scheme worked too well, adding an estimated additional 100,000 EVs to the roads in the last four years,” said Ehmann.
He argues that the incentives achieved their objective of accelerating adoption and that the market no longer requires the same level of support introduced in 2022.
“The reality is that the market has matured much faster than expected and doesn’t require the same level of support it did when these incentives were introduced.”
Novated leasing remains attractive
The FBT exemption has made novated leasing one of the most cost-effective ways for Australians to transition to electric vehicles, delivering significant tax savings alongside lower running costs.
According to Streetfleet, around half of all EVs sold nationally have been financed through novated leasing arrangements.
However, from 1 April 2027, EVs priced above $75,000 will move to a discounted FBT rate equal to 75 per cent of the standard FBT amount. By 2029, most eligible EVs will transition to this discounted arrangement, while luxury EVs and some older or used vehicles will continue to attract full FBT. Existing novated lease agreements will be grandfathered and will not be affected.
Despite the changes, Ehmann says electric vehicles will continue to receive favourable tax treatment compared with petrol and diesel vehicles.
“For example, a $50,000 petrol car on a novated lease can attract close to $10,000 per year in FBT, while a $50,000 EV – which currently pays no FBT – would attract around $7,300 per year from 2029 under the revised arrangements, still representing a meaningful saving.”
Fleet strategy becoming the priority
Streetfleet believes the policy changes highlight a broader shift in fleet management, where incentives are becoming less important than whole-of-life cost analysis, emissions targets and operational efficiency.
“As the EV market matures, businesses are becoming less focused on incentives alone and more focused on long-term operational efficiency, emissions targets and understanding the total financial performance of their fleet,” said Ehmann.
He expects organisations to place greater value on strategic advice as the transition becomes more complex.
“This is where strategic advice becomes increasingly important. The landscape is becoming more complex, and customers are looking for partners who can help them identify where the long-term value and savings opportunities sit.”
The transition continues
While direct tax benefits will reduce over time, Streetfleet notes that the Federal Government continues to invest in charging infrastructure, emissions reduction initiatives and fleet electrification programs.
For fleet managers, the announcement reinforces an important message: the business case for electrification should increasingly be built on total cost of ownership, operational suitability and long-term strategy rather than short-term tax incentives alone.
As Ehmann concludes, “What businesses and drivers want most now is clarity. They want to understand what these changes actually mean for them financially, what options make the most sense for their circumstances and how they can make smart long-term decisions in a rapidly evolving market.”
