Chris Bowen announces slashing of major tax exemption as federal budget looms
Updated ,first published
Electric vehicle sales have surpassed a quarter of all car sales following the war-induced gas price shock, as Energy Minister Chris Bowen declared progressives were winning the climate wars.
After Bowen claimed he had won a cabinet debate over whether to pursue a pricey tax incentive for electric vehicle owners, new data showed Australians are rapidly turning to electric vehicles after years of poor sales.
In April, 27.5 percent of light vehicle sales consisted of electric, plug-in hybrids or hybrids. This rate was 23 percent in March and 14 percent the previous year.
EVs, including plug-in hybrids, accounted for 16.4 percent of sales in April, also a record. According to Bowen’s figures, the other 11.1 percent consists of hybrids that do not require charging but are not considered very important in terms of emissions reduction. The government is providing hundreds of millions of dollars in subsidies to car companies, including Chinese manufacturers, to sell low-emission cars in Australia.
Bowen will address the Smart Energy Council on Wednesday to declare that the Coalition has failed to turn Australians against green energy, which he says is “the cheapest and also the more dominant form of energy”.
“In the outer suburbs and regions, they are losing the debate, with suburban and regional Australians adopting renewable energy faster than anyone else. And they are losing the debate globally,” he said, according to speech notes.
Labor is set to boost Australia’s fuel stocks and change road regulations to allow more EV trucks. But government figures do not foresee any major green energy investments in next week’s tight budget as Prime Minister Anthony Albanese prioritizes fuel security.
While voters are faced with high electricity prices, Bowen pointed out that conservatives’ predictions that power outages will continue are not correct.
“We went from 33 percent renewable energy in 2022 to 50 percent in 2025,” he will say, as the government strives to meet tough climate targets. “I believe we can achieve 82 percent by 2030.”
“But only if we keep our collective foot on the gas pedal. Only if we move even faster.”
Opposition Leader Angus Taylor responded to the byline on Tuesday saying his budget speech would focus on a promise to increase fuel stocks to 60 days.
“Instead of obsessing over Chris Bowen’s favorite technologies, it’s an energy system that’s affordable and abundant,” Taylor said. “The workmanship has completely failed.”
Before the war in the Middle East, this imprint reported that Chalmers’ shaver gang was pushing for a significant rollback of tax concessions on EVs, whose cost had risen to 15 times its original estimated size.
However, the war changed the government’s thinking. Bowen tried to maintain caution for a while to continue increasing electric vehicle purchases even as the oil shock boosts sales.
The government has moved into a slower phase-out than originally planned, as announced on Tuesday.
The electric vehicle fringe benefits tax exemption currently in place for all EVs purchased for less than $91,387 through a renewed lease will be phased out over three years, with a 25 percent reduction in tax for cars below that threshold.
In the first stage, the full 100 percent exemption will be valid until March next year. Then, starting in April 2027, vehicles with a luxury car threshold priced between $75,000 and $91,387 will receive a 25 percent reduction in fringe benefit tax.
Finally, from April 2029, all EVs below the luxury car tax threshold will only benefit from a 25 percent rebate.
Existing leases will not be affected and eligible vehicles will continue to be exempt from import tariffs.
The move is expected to save the government $1.7 billion over five years, while electric vehicle buyers will pay thousands more on renewed leases for the most expensive models.
The government said the rapid adoption of the incentive and the proliferation of more affordable models in recent years meant the rebate needed to be more targeted.
Accelerating the adoption of electric vehicles is vital to the Albanian government’s goal of reducing national greenhouse gas emissions by 62 to 70 percent from 2005 levels by 2035.
Last September, the Climate Change Agency said even the low end of the target could only be reached if half of light vehicles sold in the next decade were electric; Including rechargeable hybrids, excluding conventional non-rechargeable hybrids.
Francis Vierboom, chief executive of electrification advocacy group Rewiring Australia, said the decision showed the government recognized that EV incentives still played an important role.
“Even in a record-breaking month, during the national fuel crisis, when filling up an EV costs a fraction of the gasoline equivalent, six out of seven new car buyers still chose a gasoline car,” Vierboom said.
“The next two decades of oil dependency will sell out every new petrol car due to higher operating costs and emissions.”
Rohan Martin, chief executive of the National Automotive Leasing and Wage Packaging Association, said the government was balancing fiscal responsibility with “the only demand-side lever for electric vehicle procurement”.
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Paul Sakkal is the Chief Political Correspondent. He has previously covered Victorian politics and won the Walkley award as well as the 2025 Press Gallery Journalist of the Year award. Contact him securely on Signal @paulsakkal.14.Connect with: X or email.
Brittany Busch is the federal politics correspondent for The Age and the Sydney Morning Herald.Connect via email.
Caitlin Fitzsimmons is the environment and climate correspondent for The Sydney Morning Herald. He was previously a social affairs reporter and Money editor.Connect via email.
