Tax breaks for hybrids

EVs valued below $90,000 and bought under a novated lease are exempt from FBT, which could save a buyer more than $11,000 on a $50,000 purchase price. That exemption runs out for plug-in hybrid vehicles on April 1.

EVs create the least emissions of all. Plug-in hybrids, which have a petrol engine and battery that can be recharged at the socket, create about double the emissions of an EV.

However, plug-in hybrids generate around half the emissions of a traditional hybrid vehicle. Compared to a traditional petrol-powered car, hybrids produce about 30 per cent fewer emissions.

Motor Trades Association of Australia chief executive Matt Hobbs said the government should capitalise on hybrids’ growing popularity by extending the financial incentive for plug-ins.

“The real shame with plug-in hybrids is we’ve got this great policy at the moment, which is the fringe benefits tax … But that gets grandfathered on the first of April and it’s not being extended,” Hobbs said.

“The shame about that is the good plug-ins are starting to arrive just as the policy turns into a pumpkin.”

EVs are powered by an electric battery recharged from the grid or rooftop solar panels. Hybrid cars cannot be plugged in, which means EVs emit about half the amount of greenhouse gases of a hybrid car, when taking into account pollution generated during vehicle manufacture.

Federal Chamber of Automotive Industries chief executive Tony Weber also thinks the government should extend the tax exemption for plug-ins, which he argues deliver many of the benefits of an EV but have the safety net of a petrol engine in case a charging station is unavailable.

“For many people, they are an avenue that addresses the tyranny of distance and also reduces their reliance on petrol use and thus reduces the CO2 dramatically,” he said.

Despite one in four vehicles sold last year being a lower-emissions model, Weber argues that international experience shows it is not inevitable that the cleanest car options will continue to grow.

“Germany has seen a drop of 27.4 per cent in EV sales last year, and when you think that they’ve been on this journey a lot longer than Australia to electrification, that’s an interesting number. New Zealand’s EV number is 5.2 per cent lower than last year,” he said.

The Albanese government’s new vehicle efficiency standard, which kicks in this year, aims to boost EV sales by limiting the average emissions of a carmaker’s overall fleet of vehicles.

Climate Change Minister Chris Bowen did not respond to questions about the FBT exemptions, but said Australians would enjoy “more choice in cheaper-to-run cars”.

The purchase price of EVs is approaching parity with combustion engine vehicles. Chinese carmaker BYD recently released Australia’s first EV under $30,000 and its first PHEV ute, priced at $55,000.

“We look forward to more PHEV [plug-in] choices getting prioritised for Australia now that we are no longer next to Russia as one of the only developed countries without standards,” Bowen said.