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The FBT exemption that has resulted in more than 100,000 sales of new electric cars could be scrapped, but the Australian head of Polestar says the Government shouldn't be changing anything yet.
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The Federal Government shouldn’t scrap an important electric car incentive just because it has failed to properly budget for it, the local boss of EV brand Polestar claims.
Scott Maynard, Managing Director of Polestar Australia, told media at the launch of the updated Polestar 2 electric sedan this week that now is “not the time to change” the Fringe Benefits Tax (FBT) exemption for EVs.
In December, Drive reported that the FBT exemption could be scrapped because it has been so popular that the cost has proved much higher than originally forecast.
“This is not the time to change the settings that they've got on the FBT relief for electric vehicles,” he urged.
“The Government's published goal is to see 50 per cent of the market buying electric vehicles by 2035. They're nowhere near that, and they're not tracking towards that. So I fail to see how the program could be overspent when the results are underdone. The two simply don't line up.
“It would suggest that the problem here is that it was under-budgeted from the start.”
This particular FBT exemption is a tax break for electric cars purchased through a novated lease, paid for from an employee's pre-tax income, with the potential to save tens of thousands of dollars.
The Government estimates that almost 100,000 vehicles have benefited, at a cost of $1.35 billion in 2025-26.
However, when the policy came into effect on January 1, 2023, it was estimated to cost $110 million.
It forms part of an overall Electric Car Discount, legislation that also includes an exemption from import tariffs for electric vehicles not built in China, Japan, or countries with free-trade agreements and those priced below the LCT threshold of $91,387 plus on-road costs.
Prior to April 1, 2025, plug-in hybrids were also eligible for the exemption.
The number of electric vehicles sold in Australia increased by 38 per cent in 2025, helping EVs to account for around 13 per cent of all new cars purchased.
In a recent statement, Julie Delvecchio, CEO of the Electric Vehicle Council, cautioned that continued momentum is not guaranteed without stable, long-term policy support.
“While 2025 has been a record year, Australia cannot afford to take its foot off the accelerator,” she said.
“Australians are choosing electric vehicles in record numbers, but we know to stay on track with the Government’s 2035 emissions target, we need to increase EV sales to at least 240,000 new vehicles in 2026.”
The EVC said policies such as the Electric Car Discount have played a key role in driving EV uptake, particularly for working households and fleets.
“With the Electric Car Discount review expected to feed into the next Federal Budget, these figures underline how important it is that the scheme continues to support affordable access to electric vehicles at a pivotal point in our uptake journey.
“With budget decisions approaching, now is the time to build, not brake, EV uptake – and keep savings flowing to Australian households.”
Taking a swipe at the Federal Government, Polestar’s Scott Maynard suggested it should stop subsidising sales of high-emitting dual-cab utes before pulling funding from EVs.
“If the Government is seeking to rationalise its expense, I feel strongly that it should be looking at the money it's investing in the sale of dual-cab utes before it looks at electric vehicles,” he said.
“We all accept that electric vehicles present Australian drivers now with sufficient choice, a lower running cost, and vehicles that are fun to drive and easy to own, and we all accept that there's tangible and measurable health benefits to the cleaner air that they will provide us.
“Yet we don’t think twice about the billions of dollars that the Government is sinking into the sale of dual-cab utes to the point now where we're selling these things with an FBT subsidy of prices in excess of $200,000. That would seem to me to be a much easier win than going after a corner of the market that's doing good things with not enough of them.”
"The Australian Government should eliminate the exemption of EVs from FBT, and state and territory governments should eliminate stamp duty and registration discounts for EV owners. Now that the NVES (New Vehicle Efficiency Standard) is in place, these policies are duplicative," it said in a report.
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A born-and-bred newshound, Kathryn has worked her way up through the ranks reporting for, and later editing, two renowned UK regional newspapers and websites, before moving on to join the digital newsdesk of one of the world’s most popular newspapers – The Sun. More recently, she’s done a short stint in PR in the not-for-profit sector, and led the news team at Wheels Media.
