If you want a plug-in hybrid, buy it soon: The FBT exemption on plug-in hybrid cars is ending, how will that affect demand for popular PHEV cars such as the 2025 BYD Shark 6 ute, Sealion 6, Mitsubishi Outlander and GWM Haval H6 GT?

Sales of plug-in hybrid (PHEV) vehicles are surging, but the federal government is set to wind back one of the biggest incentives driving their uptake. 

From April 1, PHEVs will no longer be considered a “low-emissions vehicle” under the Fringe Benefits Tax (FBT) exemption scheme, meaning buyers who acquire their vehicle through a novated lease will be required to pay a 47 per cent levy on the taxable rate of the car.

If you take a BYD Shark 6 ute, for example, which is currently priced at $57,900, before on-road costs, the same car delivered after April 1 will cost approximately $5500 extra in taxes when financed through a novated lease.

Rohan Martin, CEO of Australia’s National Automotive Leasing and Salary Packaging Association, argues removing the FBT exemption will cause a significant downturn in the PHEV market, which grew 100 per cent in sales, or from 11,562 sales to 23,163, in 2024 compared to the previous year.

"The decision to end the FBT exemption for PHEVs in April couldn't come at a worse time as momentum for PHEVs increases rapidly, and a range of new and exciting lower emissions PHEV utes and larger cars enter the Australian market," he said.

"PHEV sales in Australia are growing rapidly — we estimate that the FBT exemption via novated leasing contributes to be well in excess of 50 per cent of total PHEV sales nationwide today.

“As such, we wouldn't be surprised if demand for plug-in hybrids falls once the exemption expires.”

Functionally, PHEVs work in the same manner as conventional hybrid vehicles, albeit with larger battery packs, more powerful electric motors and a smaller petrol motor.

The configuration delivers greater fully-electric driving range along with lower carbon emissions than standard hybrids, which is why many in the automotive industry view them as an important stepping stone in the zero-emissions transition as EV technology progresses. 

CarsGuide contacted the office of Chris Bowen, Minister for Climate Change and Energy of Australia, asking whether the federal government was considering extending the scheme beyond April 1.

Minister Bowen’s office did not comment, instead adding that the government’s New Vehicles Efficiency Standard (NVES) would encourage more efficient vehicle choices for Australians.

“Plug-in hybrids are an excellent option for many families and the New Vehicle Efficiency Standard means more choice in cheaper to run cars,” he said.

“We look forward to more PHEV choices getting prioritised for Australia now that we are no longer next to Russia as one of the only developed countries without standards.”

His response hasn’t quashed criticism from industry bodies and car brands alike, who are arguing more incentives should be made available for Australians considering plug-in hybrid vehicles, not less.

In a statement, a spokesperson for the EV Council of Australia said, "Incentives that make electric vehicles more affordable for more Australians are essential to boost EV adoption across the country.

“The FBT exemption for EVs has been highly effective in driving EV uptake, so it's a shame that it will soon no longer apply to plug-in hybrid electric vehicles.”

BYD, one of Australia’s fastest growing brands, has been one of the biggest investors in PHEV technology. Its plug-in hybrid Sealion 6 SUV – the top-selling PHEV in the country in 2024 – is capable of driving up to 81km in full electric mode or more than 1000km of hybrid drving.

Its next addition, the Shark 6 PHEV ute, is poised to be even more popular, but its close to 6000 outstanding orders are currently plagued by supply delays linked to industrial action at Australia’s ports.

That means hundreds, if not thousands, of customers have had their order times pushed back months, and in some cases, beyond the April threshold, meaning they will no longer be able to take advantage of the FBT exemption that was available at the time of order.

Whether that translates to a mass cancellation of orders, BYD couldn’t confirm, but its local boss David Smitherman maintained confidence that it was the value of BYD’s products spurring demand, not the FBT exemption.

“While we’ve said before that the FBT exemption for PHEVs has been positive for us, we still believe BYD vehicles offer compelling value.”

“Clearly, we would prefer that the policy remains to assist in Australia’s shift to a more sustainable world, however, we understand that policy shifts are out of our control, so we will continue to focus on innovation that aligns with our sustainability and technological ambitions.”

Mitsubishi is another well-established player in the PHEV game with its Outlander PHEV, which also delivers a similar hybrid and electric range to the Sealion 6. Along with its smaller Eclipse Cross PHEV, the brand currently accounts for the vast majority of PHEV sales in Australia, in addition to BYD.

While currently unaffected by supply shortages, the brand’s Government Relations Manager, Yarik Turianskyi, said it was doing its best to lobby the federal government to introduce other incentives.

"We're also trying to propose some alternative mechanisms. It could be an upfront rebate, it could be the removal of GST. Because we believe that just as the sales are going up, you don't want to shock the market, remove these incentives, and then all of a sudden the market will go down,” he said

“PHEV sales will be able to produce emissions reduction right here and right now ... so let's keep supporting it."

Other players will soon offer their own plug-in hybrid vehicles in Australia, including GWM and Ford. Both didn’t comment directly on questions put forward to them by CarsGuide, though a GWM spokesperson said: “GWM is always supportive of any initiatives or programs that promote consumer adoption of eco-friendlier vehicle choices.”

For now it remains difficult to say how the PHEV market will perform post April 1, but with an increasing availability of affordable standard petrol-hybrid and zero-emissions battery-electric vehicles (the latter of which will still qualify for FBT exemptions), Australians will still have alternative options.