Why time is running out for hybrid vehicle tax discount

Australian motorists have less than two years to claim a tax discount on hybrid vehicles before it is removed in a budget restriction expected to save the federal government $30 million.

The cost saving was revealed in budget documents on Tuesday and came after the Greens and independent senator David Pocock negotiated changes to Labor's Electric Car Discount bill last year.

Removing the fringe benefits tax discount from hybrid vehicles on March 31, 2025, is also expected to deliver an extra $5 million to state and territory governments in the 2026 financial year.

But the revelation was one of few surprises in the budget for a zero-emissions transport, with most announced earlier as part of the National Electric Vehicle Strategy.

Funding allocated to electric vehicles in the 2023 budget included $7.4m to deliver a fuel-efficiency standard that would set a pollution cap on vehicle fleets and could encourage automakers to bring more low and zero-emission vehicles into the country.

A draft of the much-anticipated law is expected by the end of the year after public consultation closes on May 31.

The budget also allocated $5.2m over four years to fund other parts of the strategy including a mapping tool to plot charging stations, electric vehicle training for emergency service workers, and to investigate the cost of recycling large batteries and retrofitting apartment buildings with vehicle chargers. 

Another $7.8m will go towards the development of the Transport and Infrastructure Net Zero Roadmap and Action Plan that will outline support for alternative fuels, vehicle emission cuts and transport infrastructure projects. 

Reaction to the budget measures was largely positive from groups including the Electric Vehicle Council and Australian Academy of Technological Sciences and Engineering, though some groups said the government could have been more ambitious.

Master Electricians Australia chief executive Malcolm Richards said the government missed an opportunity to invest in bi-directional charging, or allowing electric vehicle owners to use their car's battery to power their home. 

"Within the next decade most Australians homes are expected to have at least one electric vehicle," he said.

"Why not use that in-built battery as a power source for homes or offices? It not only saves money for consumers, but it cuts down on the need for expensive investment in the power grid."

Motor Traders Association NSW chief executive Stavros Yallouridis said the budget also failed to support parts of automotive industry that would need additional training.

Mr Yallouridis said automotive apprentices were already waiting up to 12 months to join a TAFE course and small businesses operating on thin margins would struggle to retool and retrain their workforces to support electric vehicles.

"Our industry is currently facing a shortfall of approximately 38,000 skilled professionals and this shortage is only going to be exacerbated with the rollout of EVs," he said.

"Without the government putting their hand in their pocket, our industry is going to be left severely underprepared to meet 2030 targets."