Australia's EV Tax Break Slashes Transport Emissions

Australia's bet on electric vehicles is paying off in ways that are finally showing up in national emissions data.

Thanks to the federal Electric Car Discount, EVs and hybrids captured 13.1% of total car sales last year. That surge helped transport emissions fall 0.4% compared to 2024, even as diesel consumption jumped 11.4% and domestic aviation rose 8.4%.

The discount removes fringe benefit tax on EVs priced under $91,387, letting buyers using novated leases save thousands. Half of all new EVs sold in Australia today rely on this incentive.

"Many everyday working Australians living in the outer suburbs simply wouldn't be making the switch to electric cars without the discount," said Rohan Martin, CEO of the National Automotive Leasing and Salary Packaging Association.

The numbers tell a compelling story. Petrol car emissions have dropped 10.2% below pre-COVID levels, directly offsetting growth in other transport sectors.

Australia's electricity sector is also pulling its weight. Emissions fell 3.1% as large-scale renewables and rooftop solar systems increasingly replace coal power stations.

The Ripple Effect

The shift away from fossil fuels is reaching beyond roads and power grids. Stationary emissions from gas and diesel in homes and businesses dropped 1.7% as households in the ACT, Victoria, and New South Wales embrace state policies phasing out gas appliances.

Metals manufacturing is transitioning off coal too. These changes preserve gas supplies for industries that truly need them while cutting emissions across multiple sectors.

Australia still has ground to cover. While one in ten new cars sold domestically are electric, globally that number is one in four. The Climate Change Authority says half of all light vehicles sold over the next decade must be electric if Australia wants to meet its 2035 emissions target.

Energy Minister Chris Bowen confirmed the government's approach is working. "Our commonsense approach, which includes more cheaper, cleaner energy and more choice of cheaper to run cars, is working to drive down emissions across the economy," he said.

The progress proves that smart policy can drive real change without waiting for perfect conditions.