The Federal Government has confirmed that the current Fringe Benefits Tax exemption for electric vehicles will be gradually reduced, while retaining support for lower cost vehicles.
Under the revised structure, the full exemption will remain in place until April 2027. After that, it will apply only to vehicles priced up to $75,000, with a 25 per cent discount applying to higher priced eligible vehicles. By April 2029, all eligible EVs below the luxury car tax threshold will receive the 25 per cent discount.
The Government states the changes are designed to deliver a more financially sustainable system while continuing to support the shift to vehicles that are cheaper to run. The policy also reflects changes in the market, where more affordable models are now available.
This adjustment follows rapid growth in EV uptake. In March 2026, electric and plug in hybrid vehicles accounted for 22.9 per cent of new car sales, compared to 1.8 per cent in May 2022.
Running costs remain a primary driver for business adoption
For businesses, the financial case for EVs continues to be shaped by operating costs rather than upfront purchase price.
Analysis from the Climate Council indicates that EV drivers spend about 40 per cent less on annual vehicle running costs, with savings of around $1,400 per year on fuel and maintenance compared to petrol vehicles.
Electric Vehicle Council Chief Executive Julie Delvecchio said the policy changes still allow most vehicles to benefit from the existing settings in the near term.
“This is good news for everyday Australians who are doing the sums on going electric,” Ms Delvecchio said.
She also pointed to ongoing cost savings as a key factor.
“Electric vehicles are increasingly a cost-of-living solution, saving households around $3,000 per year in fuel and maintenance,” Ms Delvecchio said.
While these figures relate to households, the same cost dynamics apply to businesses operating fleets, where fuel and servicing form a large share of ongoing expenses.
Fleet incentives target business transition barriers
At the state level, targeted programs are addressing the practical barriers businesses face when shifting to electric fleets.
The NSW Government’s EV fleet incentive provides co-funding to support the purchase of battery electric vehicles and associated charging infrastructure.
The program is structured to help businesses trial EVs or scale their fleet transition, with support available for both vehicles and smart charging equipment installed at workplaces or employee homes.
Fleet adoption plays a central role in the broader transition. Around half of new passenger and light commercial vehicles in NSW are purchased by business and government fleets, and these vehicles typically enter the second hand market after several years, increasing access to more affordable EVs.
For businesses, this means early adoption can influence both internal cost structures and the wider vehicle market.
Charging access expands local viability
Local infrastructure is also shaping how practical EV adoption is for businesses.
In Newcastle, council data shows the number of EVs has increased by about 8 per cent since March, with charging sessions across the public network up 20 per cent. Sixty per cent of those sessions are from first time or infrequent users.
The city has expanded to 53 chargers across 15 locations, forming the largest council owned and operated EV charging network in NSW.
Programs such as Go Electric Newcastle are providing businesses with independent advice on ownership, charging and costs, helping reduce uncertainty around operational changes.
Reducing exposure to fuel price volatility
Beyond direct cost savings, EV adoption is increasingly linked to managing exposure to fuel price volatility.
Australia imports more than 90 per cent of its refined fuel, leaving businesses exposed to global supply disruptions and price swings.
Recent geopolitical tensions have again demonstrated how quickly petrol prices can rise, adding to operating costs for transport reliant businesses.
Electrification changes that exposure. Charging vehicles with electricity, particularly when paired with renewable energy, reduces reliance on imported fuel and stabilises long term costs.
For businesses with vehicle fleets, this shifts transport from a variable cost tied to global markets to a more predictable operating expense, which is increasingly relevant as the energy system continues to change across regions like the Hunter.
