Polestar Criticises Federal Plans to Wind Down EV Tax Exemptions

Automotive brand Polestar has voiced strong criticism of the federal government's staged timeline to scale back fringe benefits tax concessions on electric cars, describing the policy transition as flawed and counterproductive.

Under changes previously detailed following the review into the Electric Car Discount, full fringe benefits tax (FBT) exemptions are slated to end for higher-priced electric vehicles from 1 April 2027. While pure electric models priced up to $75,000 will maintain their zero-rate FBT status until April 2029, models between $75,000 and the fuel-efficient luxury car tax threshold—currently set at $91,661 for 2026–27—will see their discount cut to 25 per cent. From April 2029, the full exemption is set to disappear across the board, leaving only a 25 per cent discount on all eligible zero-emission models.

Polestar Australia's managing director argued that targeting models between $75,000 and the luxury car tax cap creates an unnecessary barrier for drivers looking to switch to premium and longer-range electric cars. According to the brand, tapering the tax break too early overlooks the environmental and consumer benefits that incentives provide, especially while the national transition to cleaner transport is still maturing.

The comments reflect growing industry tension between government efforts to contain budget expenses—Treasury projects the phased changes will save roughly $1.7 billion over five years—and car manufacturers seeking sustained federal support to encourage new buyers.

What this means for your novated lease

For Australian employees weighing up salary packaging options, the renewed debate underlines why timing is critical when structuring a lease:

• Current terms remain protected: Existing leases and new agreements established prior to 1 April 2027 are grandfathered under the proposed rules, meaning drivers keep their full 100 per cent FBT exemption across the full term of that lease.
• The $75,000 price point matters: If you plan to lease after April 2027, vehicles costing more than $75,000 will lose three-quarters of their tax discount, significantly altering the weekly budget. Cars priced below $75,000 will retain maximum tax savings until 2029.
• Act earlier on mid-range and premium models: If your preferred model falls into the upper tier between $75,000 and the luxury car tax ceiling of $91,661, locking in a multi-year novated lease ahead of the 2027 transition secures the highest available pre-tax savings before the rules tighten.