Calls for more EV subsidies as electricity grid strains under load
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The Fringe Benefits Tax (FBT) exemption for electric vehicles (EVs) is proving to be both very costly to the federal budget and highly inequitable.
Taxpayers spent $1.35 billion on the subsidy in 2025-26, and the Treasury estimates that the entire cost of the FBT exemption for battery EVs will be $9.7 billion between 2026-27 and 2029-30 and potentially $20 billion over the next decade. If fuel shocks persist and EV adoption increases, costs will rise.
Battery EVs’ running costs are further reduced because they are free from road user charges levied under the 52.6 cents-per-litre fuel excise, which rises twice a year as part of the biannual CPI indexation.
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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