The National Automotive Leasing and Salary Packaging Association has lodged a pre-budget submission identifying the FBT exemption for EVs as a key policy priority, and now the industry group is taking its case directly to voters. NALSPA's advertising campaign, launched ahead of May's federal budget, makes a straightforward pitch: keep the electric vehicle tax breaks that are working.
Since the Albanese government introduced the Electric Car Discount in December 2022,EV models available in Australia have grown from 56 to over 160, with new-car sales increasing from less than 2% to more than 12% by the end of 2025.The discount has been used by more than 114,000 Australians, significantly more than anticipated. The mechanics are straightforward: eligible electric vehicles priced below the luxury car tax threshold become exempt from fringe benefits tax when financed through novated leases, allowing workers to pay for them entirely with pre-tax salary.
From Perth, the picture looks rather different than it might from Sydney or Melbourne. Western Australia's transport sector and regional workforce rely heavily on salary packaging schemes that make vehicle ownership more affordable. Any change to the EV exemption carries real financial consequences for workers across government, healthcare, and not-for-profit sectors.
The timing of NALSPA's campaign matters.The government's formal review is taking place from 6 February 2026 and due to report by mid 2027, but a decision can be made on whether to alter, continue or cease at any time during this period. In other words, the May budget presents a window where the government could alter or withdraw the exemption before the full review is complete.
The case for continuity
NALSPA's submission is heavy on economics.The association argues the FBT exemption materially lowers weekly vehicle costs, accelerates EV uptake, supports emissions reduction targets, and delivers strong value for money of around $2 to $3 in benefits for every $1 of fiscal cost. The industry body also contendsthat EV demand is highly sensitive to policy changes, and abrupt or retrospective changes risk increasing household costs, undermining confidence, slowing second-hand EV market development, and delaying emissions reductions.
Canberra may not have noticed, but the scheme has already shifted behaviour. Budget-conscious workers who might have defaulted to a petrol car can now afford an EV through their salary package. The secondary market is starting to fill with used EVs that become accessible when first-generation buyers trade up. That virtuous cycle breaks if the policy gets withdrawn.
Where the government stands
The government has made no suggestion the discount will end but has also not committed to its renewal. Treasurer Jim Chalmers framed the review in pragmatic terms:the electric car discount has made EVs cheaper to support early adoption, and the next step is to review the policy to ensure the right settings are in place for the transport sector over the long term.
That language suggests genuine uncertainty about the policy's future, even as evidence of its success accumulates. The scheme has exceeded adoption expectations, supporting emissions targets and delivering cost-of-living relief in an environment where fuel prices remain volatile. Yet fiscal pressures and the need to demonstrate budgetary discipline will tempt any government to look at what it can wind back.
The political calculus shifts significantly when you factor in that working Australians across regional areas, including much of Western Australia, depend on salary packaging not as a luxury but as essential cost management. Teachers, nurses, police officers, and public servants in regional towns rely on these arrangements. Removing the EV exemption without replacement would fall hardest on lower and middle-income workers who use novated leases to manage transport costs.
A pragmatic middle ground
Reasonable people can disagree on whether the exemption should continue indefinitely. A case exists for reviewing whether the policy still achieves its purpose once EV adoption reaches a certain threshold. But if the government does decide to modify the scheme, it needs to do so transparently and with proper notice, protecting existing leases and avoiding the retrospective shock that would undermine confidence in salary packaging itself.
The genuine complexity here is balancing fiscal responsibility against genuine cost-of-living pressure.NALSPA argues the exemption delivers value for money at $2 to $3 per dollar of cost. If that's true, withdrawing it makes poor economic sense. If it's not, the government should release the data. What it cannot do is defer the decision until after the May budget when voters thought they had clarity.
NALSPA's advertising campaign is a legitimate attempt to inform that debate. The organisation represents a real industry with real workers depending on these arrangements. Whether the government listens will say much about whether it genuinely prioritises evidence-based policymaking or merely cost-cutting.