New record for electric vehicle sales in Australia

Annual sales of new battery-electric vehicles (BEVs) in Australia broke through the 100,000-unit barrier for the first time in 2025, prompting automotive lobby groups to warn against axing buyer incentives.

BEV sales grew 13.1 per cent from 91,29 in 2024 to 103,270 in 2025.

The new record means the powertrain technology’s share of the total new-vehicle market reached 8.3 per cent, up slightly from 7.4 per cent in 2024 in a static sales market.

It came despite market leader Tesla’s sales dipping 24.8 per cent as Model 3 sedan sales collapsed, and in the first year of the NVES CO2 reduction scheme that’s designed to gradually strangle ICE and encourage the transition to EVs.

But the symbolic breaking of the 100k barrier also comes as the federal government commences a statutory investigation into the future of the Electric Car Discount.

A road user charge for EVs and PHEVs to replace revenue lost from the petrol excise is also potentially on the federal government’s agenda.

The key component of the Electric Car Discount is a Fringe Benefits Tax (FBT) exemption that can save thousands of dollars on an EV priced below the Luxury Car Tax (LCT) purchased via novated lease.

The exemption has reportedly aided the purchase of almost 100,000 vehicles since its introduction in July 2022, including PHEVs, which were eligible until April 1, 2025.

However, Treasury estimates the policy will cost $23.4 billion in lost revenues if it continues out to the middle of the next decade.

In a statement accompanying yesterday’s release of annual sales figures, Federal Chamber of Automotive Industries chief executive Tony Weber counselled against the removal of incentives.

“The NVES has provided policy certainty and has led to an increased availability of EVs in Australia. However, it has had little discernible effect on EV demand,” he said.

“Countries such as Germany, the Netherlands, New Zealand and the United States have seen sharp declines in EV sales when incentives were reduced or removed.

“In Australia, remaining support mechanisms such as Fringe Benefits Tax concessions are currently under review. Any policy changes must recognise the clear relationship between incentives and consumer demand, not just vehicle supply.”

Rohan Martin, the chief executive of the National Automotive Leasing and Salary Packaging Association (NALSPA) also backed the extension of the FBT exemption.

“Without the tax incentive on electric cars, tens of thousands fewer EVs would be on Australian roads today,” he said.

“The Climate Change Authority advises that half of all new cars sold between now and 2035 must be electric to hit even the lower end of Australia’s emissions target.

“This requires an enormous scale-up that cannot happen without continued policy support.

“Australia simply cannot sell the number of EVs it needs to and reduce vehicle emissions without the sustained support of the FBT exemption and other complimentary measures.”

The Electric Car Discount policy review will be led by the Australian Centre for Evaluation, which is located within the Commonwealth Treasury, with the Department of Climate Change, Energy, the Environment and Water also contributing.

Written submissions can be made until February 6 here. Findings are expected by mid-2027.

“The take up of electric vehicles over the past few years has exceeded expectations and that’s been good for drivers, good for business and good for the climate,” Federal Treasurer Jim Chalmers said.

“The electric car discount has made EVs cheaper to support early adoption and the next step is to review the policy as we committed to do when we legislated it.

“This is all about supporting Australians to make the switch to more efficient vehicles and ensuring we have the right settings in place for the transport sector over the long term.”

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