Australians are purchasing electrified vehicles in record numbers, with final 2025 sales results for last year demonstrating a big upward surge in local demand for battery electric (BEV), plug-in hybrid (PHEV) and milder, plugless hybrid (HEV) cars.
Electrified cars of all types accounted for 30 percent of all new vehicle sales locally last year with 355,889 cars, SUVs and utes hitting the road with a traction battery and at least one electric motor aboard — a notable increase from 287,161 electrified sales the year before.
With three in every 10 new cars sold now electrified, sales of purely petrol-powered vehicles fell by almost the same amount in real terms while deliveries of diesels also dropped, albeit marginally.
Australia bucked global EV demand uncertainty thanks to continuing incentives
Lucrative tax subsidies helped demand for BEVs continue to grow in Australia. Sales of fully electric vehicles — which have no engine as backup — crossed six figures for the first time with 103,270 deliveries last year, led by the Tesla Model Y (22,339 units) and BYD Sealion 7 (13,410).
Globally, buyer demand for BEVs has generally increased but has often ebbed and flowed with the availability of government subsidies, which essentially reduce depreciation risks for electric car buyers.
In Australia, only BEVs are eligible for an advantageous waiver of federal fringe benefits tax (FBT) where a new car is leased as part of a salary-sacrificing arrangement.
So-called novated leases, which qualify for the incentive, are understood to have made up around half of BEV sales in Australia in 2025.
Effect of NVES laws saw more hybrids sold across 2025
But while the 100K-plus result represented 13 percent growth for BEV sales in Australia, it was hybrid-powered vehicles that tempted even more Aussies to test the waters of partial electrification.
Carmakers know they need to sell more hybrids to avoid penalties under the federal government’s demanding New Vehicle Efficiency Standard (NVES) regime, which penalises or rewards carmakers based on the average CO2 emissions of the cars they sell in a year.
Financial consequences under NVES kicked into action in July 2025, which led to a swathe of cheaper BEV, PHEV and HEV models being added to Aussie showrooms.
As a result, sales of ‘plugless’ hybrids — which use a small battery and electric motor(s) to reduce overall petrol fuel consumption — increased by 15 percent with 199,133 HEVs delivered last year.
The best-selling HEV on the market remained the Toyota RAV4 hybrid (51,947 sales) even as the current model enters a twilight period before it is replaced with a new generation in 2026.
Plug-in hybrid demand surges, led by BYD Shark 6 ute
The bigger story was surging Aussie interest in PHEVs, which use both a petrol engine for extended range driving and typically midsize batteries and electric motors to provide, on average, around 100km pure electric driving.
PHEV models can typically blend petrol and electric outputs for rapid acceleration, or charge in the battery can be harnessed to power external appliances or tools.
While milder HEV sales outnumbered PHEV deliveries nearly four-to-one last year, demand for PHEVs escalated by more than 230 percent to 53,484 cars.
The best-selling PHEV was the BYD Shark 6 ute (18,073 units), which became the fourth best-selling 4×4 pick-up in the country last year in its first year on sale.
That result was more impressive given the waiver of FBT for novated leases was withdrawn for PHEVs ended on 1 April 2025, while the measure continued top operate for BEVs.
While Chinese BEV- and PHEV-specialist BYD continued to thrive without the FBT waiver on plug-in hybrids, other manufacturers have complained of weakened PHEV demand without the presence incentive.
A review of the remaining FBT waiver for electric vehicles will occur in 2026. The removal of government subsidies for BEVs in other markets has typically dented demand for fully electric vehicles.
Later in 2026, the federal government will also conduct the first review of NVES laws, with initial calculations of indicative credits or penalties — based on carmaker compliance with last year’s looser CO2 limits — to be announced early this year.
Changes to subsidies for BEVs or overall NVES rules would be likely to alter product planning calculations for carmakers, making it tough to predict whether BEV, PHEV and HEV sales will continue to increase this year difficult.
