Treasurer Jim Chalmers open to extending EV tax breaks with China No.1 source of new cars for first time ever

Treasurer Jim Chalmers has signalled Labor is inclined to keep generous tax breaks for electric vehicles with China now the top source of new cars in Australia for the first time ever — ending Japan’s uninterrupted 27-year run at number one.

Battery electric vehicles had a record 11.8 per cent share of the overall car market last month with at least 76.8 per cent coming from China.

This has sparked a warning from a former intelligence analyst as the Middle East conflict pushes up petrol prices and makes EVs more appealing.

Dr Chalmers hinted he would be in favour of keeping the Electric Car Discount, now under review, that allows employers to provide EVs to staff on a salary sacrificing package, without having to pay fringe benefits tax on cars under the $91,387 luxury tax threshold.

“I personally see the big take-up in electric vehicles over the past few years as a very good thing — good for drivers, good for business and good for the climate as well,” he said on Wednesday.

“We think around 100,000 vehicles have been part of this policy already. We’ll continue to ensure we’ve got the right settings in place to encourage people to drive EVs.”

But Michael Shoebridge, a former deputy at the Australian Signals Directorate and the Defence Intelligence Organisation, said Chinese-made EVs were a security risk that couldn’t be ignored, considering the Chinese Government ultimately controlled the software in them.

“They’re a giant smartphone on wheels. They can use them as an enormous data and intelligence gathering tool,” he told The Nightly.

“They can also prioritise collecting say voice, sound from inside particular cars because they know who they’re interested in.

“The growing share of the Australian car market that Chinese companies are taking, that is being accelerated by the Government’s policy around electrification.

“That has been a growing, obvious, security issue that the Government seems to be closing its eyes to.”

Should Australia get into conflict with China over Taiwan, the Chinese Communist Party Government could potentially switch off EVs.

“You can put software glitches in to disable or disrupt the way those vehicles operate,” Mr Shoebridge said.

Tax breaks had fuelled the uptake of EVs, the National Automotive Leasing and Salary Packaging Association said.

“Many Australians tell our members that they wouldn’t have bought an EV without the discount,” chief executive Rohan Martin told The Nightly.

In February across all vehicle categories, 22,362 Chinese-made cars were ordered giving it a 24.7 per cent market share and ending Japan’s uninterrupted run going back to 1998 when it replaced Australia as the nation’s biggest source of new cars, new Federal Chamber of Automotive Industries data showed.

Chinese cars had four brands in the top 10, including in sixth place BYD — the world’s biggest manufacturer of EVs, followed by GWM in seventh spot, Chery in ninth place and MG in tenth.

The Chery Tiggo 4 Pro was Australia’s third most popular car last month with its 2315 sales last month more than double that of a year earlier.

The Haval Jolion, sold by GWM, was the ninth bestseller with 1804 sold, marking a 38.1 per cent improvement on February 2025.

Toyota was still the top-selling brand and was one of three Japanese marques in the top 10, alongside Mazda in second place and Mitsubishi in eighth spot.

Last month, 21,671 new cars from Japan were sold, giving it a 23.9 per cent market share.

Thailand was the third biggest source of new vehicles, with 19,493 sold for a 21.5 per cent market share, underpinning American blue oval badge Ford’s popularity in fourth place as the maker of the Ranger ute, Australia’s bestseller in February with 4325 ordered, ahead of the Toyota HiLux with 3625 sales.

Korea was fourth with 11,913 sold, giving it a 13.1 per cent market share and producing two brands in the top 10 — Hyundai in fifth place and Kia in third spot.

The number of Chinese cars sold in Australia has multiplied seven-fold since 2020, rising from 30,696 at the start of the decade to last year reach 221,699 sales.

In just six years, 863,716 cars from China have been ordered in Australia.

Separate data for February from the Electric Vehicle Council will show even more Chinese-made car sales, when it this week releases data from Tesla and Polestar.

Since July 2022, just weeks after Labor came to power, working Australians salary sacrificing to drive EVs on novated leases have been able to claim running costs and finance as tax deductions. The Federal government announced a review in December.