Record EV Sales Amidst Growing Consumer Interest
Australians are increasingly embracing electric and hybrid vehicles, with a significant portion considering these low-emission options for their next car purchase. Despite this growing interest, a crucial government tax incentive may influence future buying decisions, according to a new report.
The Australian Finance Industry Association’s (AFIA) annual report reveals that low-emission car loans saw a substantial acceleration of almost 20 per cent throughout 2025. This surge in interest coincides with a record number of new electric vehicles (EVs) sold in February, underscoring a positive shift in consumer preference.
Financing Trends Show Strong Growth for Low-Emission Vehicles
The AFIA’s EV and Hybrid Finance report highlights a significant financial commitment to cleaner transportation. Loans for electric and hybrid vehicles collectively climbed to $7.37 billion in 2025, supporting the purchase of over 129,800 vehicles.
While hybrid and plug-in hybrid vehicles accounted for a larger volume of sales by over 13,800 units, the report notes that the popularity of pure electric cars experienced the most dynamic growth, increasing by nearly 30 per cent. This indicates a strong and accelerating trend towards electrification.
Consumer Intentions: A Glimpse into the Future Market
Looking ahead, the adoption of electric and hybrid vehicles could gain further momentum in 2026. A survey of over 1000 Australians, commissioned for the AFIA report, found that 39 per cent are considering an electric or hybrid model for their next vehicle. This figure is closely followed by those intending to purchase traditional petrol and diesel cars, who represent 46 per cent of respondents.
Diane Tate, Chief Executive of AFIA, described the shift in consumer attitudes towards electric and hybrid vehicles as promising. However, she emphasized the need for more rapid progress to meet national transport emission reduction targets.
“It’s not fast enough if we want to make our targets,” Ms. Tate told AAP. “It’s definitely building… and we need to continue to see that happening.”
Potential Impact of Tax Policy Changes
Despite the positive growth trajectory, the AFIA report also sounds a note of caution regarding the potential impact of policy changes, specifically the federal government’s review of the fringe benefits tax (FBT) exemption for certain electric vehicles.
The survey data indicates a significant sensitivity among consumers to financial incentives. A substantial 37 per cent of Australians surveyed stated they would be less likely to purchase an electric vehicle if the FBT exemption were removed. Ms. Tate pointed to a sharp decline in plug-in hybrid car loans following their removal from a similar exemption scheme as evidence of this sensitivity.
“One of the striking outtakes not just from our industry data but the consumer research is how sensitive consumers and businesses are to policy signals,” she explained.
“It’s proven through the data that the FBT exemption for EVs is not only important but we should be bringing back the exemption for plug-in hybrids as well.”
Recommendations for Continued Growth
To sustain and accelerate the uptake of electric vehicles, Ms. Tate suggested that state governments should consider reinstating rebates for electric car purchases. Furthermore, she advocated for faster development of charging infrastructure through private-public partnerships to enhance buyer confidence.
Official figures from the Electric Vehicle Council and the Federal Chamber of Automotive Industries corroborate the growing market share of EVs. In February, electric cars constituted 11.8 per cent of all new car purchases, a new record and a significant increase from 5.9 per cent during the same month in 2025.
The interplay between consumer enthusiasm, industry financing, and government policy will be crucial in determining the pace at which Australia transitions to an electric vehicle future.