5 hours ago
5
April 19, 2026 — 5:01am
Since the war in Iran kicked off six weeks ago, petrol has been the number one thing on Australians’ minds.
From prices to reserves and trying to guess how long this uncertainty will last, to what effects this week’s fire at a refinery in Geelong will have, it’s a topic that is virtually inescapable right now as households brace for another financial gut punch.
It’s unsurprising, then, that our national appetite for electric vehicles is currently at a record high. But while the promise of saving money and being environmentally friendly in switching to an EV is certainly appealing to most of us, the reality of who is making the switch shows that the people reaping the financial benefits from making the switch aren’t those who actually need it the most.
In March, 15,839 new EVs were sold in Australia, making up 14.6 per cent of all car sales. That might not sound like all that much, but it’s a 42 per cent rise from their overall market share in February.
Even more significantly, it came at a time when overall new vehicle sales are falling 2.6 per cent year-on-year and while sales on the Ford Ranger ute, which uses diesel and is the country’s most popular car, fell 10 per cent.
According to sales data from Autograb, the number of sales for one MG model grew by 329.8 per cent (from 114 sales to 490). Sales among the MG S5 model, as well as the Kia EV5, had similar growth, followed by models from BMW, Polestar, BYD and Tesla.
Under this scheme as it currently stands, the people who need financial support the least are getting the most.
That so many people are making the switch is in large part thanks to Labor’s fringe benefit tax break, which applied to EVs purchased through novated leases (where an employer pays for the vehicle lease through pre-tax salary deductions) worth less than $91,387.
Introduced in 2022 as a way of incentivising the uptake of EVs, the policy that started out with humble intentions is estimated to now be costing as much as 15 times what the government thought it would.
To put that in real figure terms, where the Department of Treasury estimated the EV FBT would see an initial 4700 drivers make the switch, by March 2025, the true figure was 100,000.
In December, the government said that FBT would cost $1.35 billion in the 2025-26 financial year alone. Add in the current fuel crisis and an extra 12 months, and it’s safe to assume that number will be substantially higher.
Economist Chris Richardson, who has long been critical of the policy, called it “a very good way to make cars cheaper for rich people”, and he’s not wrong.
A report released last year showed that, according to one large novated leasing company, 48.2 per cent of people who had purchased EVs via the novated scheme earned an income of over $150,000. And yet, according to the Australian Bureau of Statistics, as of February 2026, the average annual income sits almost a third shy of that at $106,000.
When you look at how much a new EV costs, this being a perk that disproportionately benefits Australia’s high earners tracks. The cost of a new MG MG4, for which sales grew by 329.8 per cent between February and March, starts at $36,990. A BMW iX, which saw a boost in sales of 167 per cent, starts at $79,990, while a Polestar 2, which saw an increase in sales of 132.2 per cent, retails for $62,400.
In addition to the environmental impact, the most obvious benefit of switching to an EV is that moving forward, the costs associated will be substantially lower than if you were to buy a petrol or diesel car.
Before this most recent oil crisis, the Electric Vehicle Council estimated the running cost of a petrol or diesel car costs roughly 20¢ per kilometre. A battery-operated EV, on the other hand, costs just 4¢. Then there’s also the money you save on maintenance, and the FBT itself.
Don’t get me wrong, from a financial perspective alone, making the switch is extremely appealing. Under this scheme as it currently stands, the people who need financial support the least are getting the most.
Of course, everybody is feeling pain at the bowser right now no matter how much they’re taking home. But in addition to being better equipped to wear short-term economic hits like increased fuel prices, we know that higher-income earners are also more likely to live in areas where there is better access to public transport and are more likely to work in jobs that have greater freedom to work remotely, thereby cutting down on their fuel dependence, than lower income earners.
While Labor has promised to review the FBT ahead of the May budget, Transport Minister Catherine King has defended the policy, saying that one of the benefits of the EV FBT is that when novated vehicles come off their leases they then hit the used car market.
“You’ve seen a really big increase in people buying those second-hand electric vehicles right at the moment. So it actually has done a good job in terms of that availability,” King said in a recent interview on ABC’s Insiders.
On this point, she’s absolutely right. Sales of second-hand EVs rose by 138 per cent between February and March. So hot is the demand that there is now less than a month’s supply of used EVs available on the market (28.6 days), compared to February when it was 77 days.
But even second-hand, people are still required to shell out a huge sum of money – I would argue that this is money that most low-income earners simply do not have.
Those who need the most economic support in our community right now have been among the hardest hit by the many sustained cost-of-living pressures recently. And while halving the fuel excise no doubt helps, it by no means makes the playing field equal.
Let’s say the best-case scenario happens – the Strait of Hormuz opens and stays that way, and petrol returns to pre-conflict prices. Lower-earning Australians will still be left driving cars that are five times more expensive to run, and which they likely were unable to enjoy a tax break on when they bought them.
A thriving economy, where everyone has an equal opportunity to succeed, is something politicians love to talk about. It’s the “fair go” spirit Australians are proud of.
But how is making low-income earners help pay for cars being driven by the highest earners – cars that will leave them financially better off every time they drive – a fair go for anybody?
Victoria Devine is an award-winning retired financial adviser, a bestselling author and host of Australia’s No.1 finance podcast, She’s on the Money. She is also founder and director of Zella Money.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their personal circumstances before making any financial decisions.
Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.
