The Coalition, Greens and some members of the crossbench are urging the Albanese government to change its plans to reduce the cost of low-emissions vehicles.
The "electric car discount" was a Labor election policy, intended to increase the uptake of EVs and plug-in hybrids.
Instead of rebates, it proposes removing Fringe Benefits Tax (FBT) from eligible vehicles and scrapping the current 5% customs duty.
The government estimates it could make popular models, like the Nissan Leaf, up to $9,000 cheaper for employers who run fleets, and $2,000 cheaper for some individuals.
But the plan faces some legislative hurdles.
Cost concerns
On Tuesday, the Coalition party room raised concerns about the cost of the policy over the next decade, and indicated it would oppose the bill unless amendments were made.
"The Coalition's opposition is not about low-emissions vehicles," Shadow Treasurer Angus Taylor said.
"The bill, if it's effective, will simply increase demand in an already tight market.
"The best thing the government can do with this money is invest it in practical measures to drive EV infrastructure investment."
If the opposition votes against the measure, the government would need the backing of the Greens and one crossbencher to get the legislation – the Treasury Laws Amendment (Electric Cars Discount) Bill 2022 — through the Senate.
But the Greens and key ACT Independent Senator David Pocock are concerned about the types of cars eligible.
The legislation includes zero and low-emissions vehicles, like electric cars, hydrogen fuel cell vehicles and plug-in electric hybrids — which can have their batteries charged via an "off-vehicle" power source.
No 'new fossil fuel subsidy'
The Greens don't believe cars with an internal combustion engine should qualify, and are concerned plug-in hybrids that are part of a business fleet will be mostly powered by fossil fuels.
"The government should not create a new fossil fuel subsidy," Greens Leader Adam Bandt said, referring to the inclusion of hybrids in the scheme.
"The Greens will raise our concerns with the bill directly with the government to ensure we get more electric vehicles on the road."
'Who could oppose a tax cut?'
In Question Time, Treasurer Jim Chalmers attacked the Coalition when asked about the risks facing the government's election policy.
"Who could possibly oppose a tax cut to make electric vehicles cheaper for businesses and workers?" Mr Chalmers said, referring to the opposition.
"The answer is obvious.
"They pretend they like lower taxes, until it interferes and collides with their outdated, obsolete, out-of-touch ideology."
The government believes plug-in hybrids are an important interim measure for Australians who live in regional areas, where concerns about a car's range are greater than in the cities.
It has indicated some of the ideas from the crossbench and Greens could be incorporated as part of a broader electric vehicle strategy, though negotiations are ongoing.
Electric vehicle lobby calls for swift passage of the bill
To qualify for the FBT exemption, cars need to be sold below the luxury tax threshold, which is $84, 916.
The government's bill will apply retrospectively to eligible cars bought and used on or after the first of July this year.
The Electric Vehicle Council has said it wants the legislation passed swiftly because low-emissions cars still make up a tiny part of the national vehicle fleet.
"The government's bill is a good incentive to help businesses get electric vehicles into their fleet," Behyad Jafari said.
"We don't want to create extra uncertainty for business."
Mr Jafari said increasing the number of electric cars on the road would bring down the price of vehicles and allow more people to buy them via the second-hand market.
"We know many businesses want to buy electric vehicles, so we should get this passed."
