The Australian Government's incentives for electric vehicles (EVs) should be extended to include light commercial vehicles, both battery electric (BEV) and plug-in hybrid (PHEV), according to the Federal Chamber of Automotive Industries (FCAI).

The Federal Government is scheduled to review its current EV incentives, first introduced in July 2022, with public submissions opening on 6th February 2026 ahead of any potential changes in 2027.

In response, a 16-page report titled 'FCAI submission in response to: Review of the Electric Car Discount' was published on 10th February 2026. The report calls for the continuation of existing incentives in advance of the Government's review, with certain amendments.

The primary proposed amendment is the inclusion of light commercial vehicles in tariff exemptions for electric vehicles imported from countries with which Australia does not have a Free Trade Agreement (FTA), such as the European Union (EU) and South Africa.

Currently, light commercial vehicles from non-FTA countries are not eligible for the Federal Government's tariff exemption.

"The tariff exemption for passenger vehicles should be expanded to include light commercial vehicles with BEV or PHEV powertrains, given the increasing supply from markets without an active free trade agreement," the FCAI submission states.

The proposal would extend incentives to vehicles such as the Ford Ranger PHEV, launched in Australia in 2025 and manufactured in South Africa, which is therefore subject to a five% import tariff.

For the Ranger PHEV, priced at AUD 79,990 (US$ 56,700) before on-road costs, 5% equates to approximately AUD 4,000.

The remainder of the Ranger line-up sold in Australia is manufactured in Thailand, which has an FTA with Australia. China also has an FTA with Australia and produces the BYD Shark 6 PHEV and GWM Cannon Alpha PHEV utes (pick-up trucks).

The proposal would have no impact on the upcoming Toyota HiLux EV, which will also be sourced from Thailand.

The Federal Government faced criticism for ending the Fringe Benefits Tax (FBT) exemption for PHEVs in April 2025. The decision appeared to contradict the Climate Change Authority's '2035 Targets Advice', released in September, which indicated that more than 20 times the current number of EVs on Australian roads would be required to meet emissions reduction targets.

Electric vehicles accounted for 8.3% of Australia's new-vehicle sales in 2025, up from 7.4% in the previous year, while PHEVs rose to approximately 4.3%. Hybrid vehicles represented around 16% of total sales.

The FCAI submission also recommends the continuation of existing incentives, including the FBT exemption for EVs priced below the AUD 91,387 Luxury Car Tax threshold for 'fuel-efficient vehicles'.

FCAI Chief Executive Tony Weber stated that the FBT exemption has operated alongside the New Vehicle Efficiency Standard (NVES), introduced on 1st January 2025 and also scheduled for review in 2026.

The NVES sets limits on the average carbon dioxide emissions permitted across each brand's model range, with financial penalties applied to those exceeding the targets. Manufacturers are permitted to purchase credits from other brands operating below the prescribed limits.

The emissions thresholds under the NVES will tighten annually until 2029. Mr Weber has previously stated that the policy has done little to stimulate consumer demand for EVs.

"Manufacturers have responded to the NVES by expanding the range of BEVs available, with more than 100 models now on sale," Mr Weber said in a statement.

"If the FBT exemption is removed, then the Federal Government must consider other forms of demand-side incentives that can support the targets of the NVES by encouraging more Australians into battery electric and other low-emissions vehicles."

"As NVES targets tighten over the coming years, any changes to demand-side incentives must be designed to improve accessibility and avoid undermining consumer confidence," Mr Weber added.

The report reflects statements previously made by Toyota Australia. Its Vice President of Sales and Marketing, Sean Hanley, told media last year that hybrid models should be included within the NVES framework as a means of reducing new-vehicle emissions.

"NVES is subject to a further review at the end of '26. We would ask the Government to consider an NVES approach that includes ZLEVs [Zero and Low Emissions Vehicles]," Mr Hanley said.

"That means zero- to low-emission vehicles - plug-in hybrids, BEVs, fuel-cell electrics. We would suggest that hybrids should continue to play a role in any future NVES development, but we will have to wait and see whether that eventuates."

The Electric Vehicle Council (EVC) has also called for the continuation of incentives, stating that premature withdrawal could affect EV sales.

"The discount has also resulted in a supply of off-lease EVs that are now entering the second-hand market," the lobby group stated.

"However, Australia's EV adoption must increase towards the target of five million EVs by 2035, and international experience shows that removing demand-side incentives too soon can have a significant impact on EV uptake."