Federal Election 2025: Dutton move will kill Aussie EV industry

A Peter Dutton backflip could cost Aussie families up to $20,000 and torpedo a growing industry, experts have warned.

Peter Dutton has promised to put the brakes on a popular electric vehicle discount in a policy announcement set to cost green car buyers around $20,000.

Dutton’s decision comes just days after he said there were no plans to touch the Fringe Benefits Tax (FBT) exemption.

The electric vehicle (EV) discount intended to turbocharge sales of electric vehicles in Australia, has proved surprisingly popular with drivers looking for a good deal on new cars.

The tax break currently allows Australians to lease EVs more affordably through novated leases – and industry groups warn its removal could have serious cost implications.

According to the National Automotive Leasing and Salary Packaging Association (NALSPA), scrapping the FBT exemption would add around $4,500 to $5,000 per year to the cost of a typical four-year lease on an EV – costing drivers up to $20,000 over the life of the lease.

Peter Dutton has backflipped on an earlier promise not to touch Fringe Benefits Tax exemptions for EVs. Picture: NewsWire

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The Opposition says the move is about cutting ‘wasteful spending,’ estimating it could save more than $3 billion over the forward estimates and $23 billion over the medium term.

It’s ignited outrage from the industry.

The Electric Vehicle Council (EVC) warns it’s a major blow to working Australians, especially those in outer suburbs and regional areas, who are already struggling with the cost of living.

EVC chief executive officer Julie Delvecchio said “when Australians make the switch to an EV, they stand to save up to $3,000 per year on fuel and maintenance costs, but the biggest roadblock is the upfront cost. The FBT exemption has been helping to lower that barrier.”

The exemption was also designed to make EVs more accessible in the second-hand market when people finish their leases.

MORE: Green car advocates slam ‘toothless’ policy

Aussies looking to buy an EV will be worse off under Peter Dutton’s plans. Picture: Getty Images

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EV manufacturers like Polestar Australia are also calling out the decision. They’ve pointed to the longstanding FBT exemptions for high-emission utes and commercial vehicles, which have been around for years.

Polestar Australia Managing Director Scott Maynard said “for 39 years Australians have subsidised the dirtiest, and most inefficient vehicles, with at least 1.5 times as many utes as tradespeople now on Australian roads. The recently introduced FBT exemption for EVs levelled the playing field.”

Car giants like BMW and Audi have said the FBT exemption has completely changed how Aussies buy cars, with BMW even claiming that it’s responsible for about a quarter of their EV sales.

But the EV tax break isn’t the only thing in the firing line. Dutton’s also taking aim at the New Vehicle Efficiency Standard (NVES), which kicked in back in January.

The policy gives carmakers until mid-2025 to hit emissions targets – or cop a fine if they don’t. Now, the Opposition wants to scrap those penalties altogether.

The Coalition is also pitching a 12-month cut to the fuel excise, potentially saving a two-car household around $1,500. Sounds good on paper, but the EV industry believes it’s a step backwards.

An Opposition spokesman said “our position is a matter of principle – policy settings must deliver choice for Australians, not add additional cost, and achieve genuine emissions reduction. Labor’s policies fail on all three counts.”

While the debate rages in Australia, however, other countries are racing ahead.

Last year, China’s EV sales soared to 11 million, a nearly 40 per cent increase on 2023. While Norway is aiming for 100 per cent of new car sales to be electric by 2025.

Meanwhile, Australia’s EV ambitions are looking increasingly uncertain – without the right green incentives, Aussies risk being stuck in the slow lane.