Nearly one in every two new vehicles sold in Australia between April and June was either electric or hybrid, as soaring fuel prices drove the nation's biggest-ever quarterly surge in clean transport adoption. The shift came as petrol costs spiked following the closure of the Strait of Hormuz 5 months ago and the outbreak of war in Iran 4 months ago.
Australian Automobile Association data reveals fully electric vehicles captured more than 21 per cent of the market by June 30, up from just 12.25 per cent six months earlier. It's the first time fully electric models outperformed hybrids, even as hybrids recorded their second-highest share on record. Traditional combustion engine vehicles fell to just 50.84 per cent of sales, down from 64.23 per cent.
Who Bears the Cost
The dramatic market shift exposed how vulnerable Australian households remain to global fuel shocks. When the Strait of Hormuz closed at the end of February, families with no alternative to petrol-powered vehicles faced immediate financial pressure at the pump. Those who could afford to switch did. Those who couldn't absorbed the cost.
Liberal deputy leader Jane Hume seized on the figures to argue against continued government support for EV buyers. "I think that's the market speaking with its feet, and probably why we don't necessarily need more subsidies on electric vehicles," she told Insiders. She added, "Unfortunately, the subsidy program that's been run by this government has run out of control, and it's costing Australians more and more."
The Policy Shift
Yet the government's already moving to scale back the very program Hume criticized. In May's federal budget 3 months ago, officials announced a slow winding down of tax discounts for EV buyers, a move projected to save $1.7 billion over four years. The discount, introduced 3 years ago at the start of 2023, made electric vehicles thousands of dollars cheaper through a fringe benefit tax exemption.
Adoption exceeded every forecast. The scheme was expected to cost $90 million this year. By May, it was on track to cost $1.35 billion.
From next year, the tax exemption will still apply to electric vehicles costing less than $75,000. Vehicles above that threshold will receive only a 25 per cent discount on the fringe benefits tax. From April in 3 years, all electric vehicles below the luxury car tax threshold will receive a 25 per cent tax discount.
Climate Change Minister Chris Bowen has previously said the government was scrapping the discount because it had done its job. The boom in EV uptake drove investment in charging stations and other infrastructure that now supports a growing clean transport network.
Consumer Protections Lag
With more Australians driving EVs, car dealers are now calling on the federal government to update Australian Consumer Law. They want better protections for Australians who purchase EVs from manufacturers overseas, a gap that leaves buyers vulnerable as the market expands.
Why This Matters:
The surge in electric and hybrid vehicle sales reveals both the success of targeted government intervention and the ongoing vulnerability of households to fossil fuel price shocks. Families who could afford to switch to EVs did so when petrol became unaffordable. Those without the means to buy new vehicles faced the full brunt of fuel costs driven by international conflict. The government's decision to wind back subsidies just as the market proves the program's effectiveness raises questions about whether public support should continue to help more Australians—particularly middle and lower-income families—access clean transport options that shield them from future fuel crises. The call for updated consumer protections highlights how policy infrastructure hasn't kept pace with market transformation, potentially leaving buyers exposed as they make one of the most significant household purchases in the transition to clean energy.