Reform the Electric Car Discount

by Alison Reeve, Matthew Bowes, Ben Jefferson

26.02.2026 Submission
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Submission to The Australian Centre for Evaluation and the Department of Climate Change, Energy, Environment, and Water

There is a case for subsidising uptake of new technology that reduces emissions while that technology is more expensive than the status quo.

But it’s clear that continuing the Electric Car Discount in its current form will impose growing costs to the budget. And at some point, owning an electric car will become the norm, and there will be no case for a subsidy.

An immediate end to the Electric Car Discount would be good for the budget but bad for drivers. It would slam the brakes on progress made towards an all-electric car fleet, by suddenly making electric car ownership much more expensive.

A better approach would be to phase it out, by gradually reducing the number of years that the Discount can be claimed. This should be calibrated with expected upfront cost reductions such that the total cost of ownership for an electric car remains lower than for a petrol car.

Download the submission

Alison Reeve
Energy and Climate Change Program Director
Alison Reeve is the Energy and Climate Change Program Director at Grattan Institute. She has two decades of experience in climate change, clean energy policy, and technology, in theprivate, public, academic, and not-for-profit sectors.

Matthew Bowes
Senior Associate
Matthew Bowes is a Senior Associate in Grattan’s Economic Prosperity and Democracy Program. He has previously worked at the Parliamentary Budget Office and Commonwealth Treasury in various roles analysing personal income tax, budgets, and social policy.

Ben Jefferson
Associate
Ben Jefferson is an Associate in Grattan Institute’s Energy and Climate Change Program. He previously worked at Boston Consulting Group in the Public Sector and Principal Investors and Private Equity practice areas. Prior to that he worked as a tax and welfare policy research assistant at the ANU and in workplace relations policy in Federal Government.

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