Fuel Excise Cut Ends, As Age Of The EV Begins

The fuel excise cut introduced to soften the impact of rising petrol prices finished at midnight on 2 August. From this point, petrol and diesel are taxed at the full rate again, so prices at the pump are climbing higher once again. It comes as new data out this week shows that electric and hybrid vehicles made up nearly half of all cars Australians bought last quarter.

What Was The Fuel Excise Cut, And Why Did It End?

The fuel excise is a tax the government adds to every litre of petrol and diesel sold in Australia. Importers and sellers pay it first, but it gets passed on to you at the pump. The tax goes up automatically twice a year, even if nothing else changes.

In February, the conflict between the United States and Iran closed the Strait of Hormuz, which is a key route for much of the world’s oil. Petrol prices jumped, so the federal government reduced the excise to help ease the impact.

Here’s how the discount shrank before it disappeared entirely:

Take a look at the last row. The restored rate is actually a bit higher than where it started. This is because the rate is indexed twice a year, and the latest increase happened on the same day the cut ended, so the new rate is now just above the previous 52.6 cents.

Speaking in Brisbane, Treasurer Jim Chalmers confirmed the cut would end as planned, despite a fresh escalation in the Middle East.

“It has played a really important role in helping to take some of the sting out of the cost-of-living pressures,” he said. “It was never the government’s intention for that to be permanent.”

Not everyone thinks the cut was a good idea in the first place. University of NSW economics professor Scott French told the ABC that discounting fuel undercuts the very signal that’s supposed to make people drive less when prices rise.

“By lowering the price, they’re interfering with the signal of price increases, which is to tell consumers to use less,” he said.

The cut was expected to cost taxpayers $2.55 billion. So the question is, was it better to get relief now, or would a clearer price signal have been more helpful in the long run?

How Much More Will Australians Pay For Fuel?

The full cost of the changes won’t be felt right away. Additionally, fuel prices vary by state, by suburb, and by the day, so don’t take one figure as gospel. In New South Wales, for example, FuelCheck already showed unleaded prices climbing before the excise even changed hands. The difference is from $1.918 per litre the previous Wednesday to $2.017 per litre the following Tuesday.

The Electric Answer To The Fuel Crisis

With the situation in the Middle East showing no sign of abating, experts say that the case is only growing stronger for electric transport alternatives. Rohan Bowater, Accela Research’s Lead Oil and Gas Analyst, put it plainly in comments this week:

“High fuel prices will continue to plague households now that the excise tax relief has ended. Australia’s reliance on imported refined fuels and fossil fuels leaves the nation vulnerable when global markets tighten. According to the latest news reports, the conflict appears to be spreading to multiple fronts, creating risks for global supply choke points.

 

“We know the only way to mitigate cost and energy security risk is electrification and domestic alternatives to improve energy security. It’s interesting that the latest numbers show half of car sales in the last quarter to 30 June were EVs or hybrids, a trend indicative of a structural shift in demand away from fossil fuels.”

Record EV Sales As Petrol Gets Pricier

The excise cut began back in March, the same month petrol prices started pushing Australians toward electric vehicles. Five months later, the discount has ended, and that shift has only picked up speed.

The Australian Automobile Association’s latest EV Index shows that electric, plug-in hybrid, and hybrid vehicles accounted for 49.16% of new car sales in the June quarter. Just under half, and the largest quarterly jump in electric vehicle sales the index has ever recorded.

Battery-electric vehicles (BEVs) alone more than doubled quarter on quarter, from 34,435 sales to 69,414. Their market share jumped from 12.25% to 21.03%, a record, and for the first time since 2023, BEVs outsold hybrids outright.

Source: aaa.asn.au

Hybrids weren’t far behind, hitting a second-highest share with 57,919 sales and a 17.55% share. Plug-in hybrid electric vehicles (PHEVs) took 10.58%.

Internal combustion engine (ICE) cars fell to 50.84% of sales, their lowest share on record and the biggest single-quarter drop since the index began in 2022. Back then, ICE cars accounted for nearly 9 in 10 new cars sold. Now it’s about 5 in 10.

None of this came at the expense of a shrinking market, either. Total new light vehicle sales hit an all-time high of 330,111 for the quarter. Buyers didn’t stop buying cars. They changed what they bought.

Source: aaa.asn.au

Medium SUVs show this change most clearly. They are the most popular type of vehicle in Australia, and battery-electric vehicles have grown from less than 1% to 37.3% of medium SUV sales in just over four years.

The EV Buying Trend Is Worldwide

The International Energy Agency’s (IEA) latest report found the same pattern playing out well beyond our shores. Global car sales overall fell about 5% year on year in the first half of 2026, dragged down by weaker demand in China and the United States.

Electric car sales tell a different story. After a soft start to the year, global EV sales rebounded 35% in the second quarter compared with the first, hitting record levels in 50 countries.

Australian Vehicle Market Share by Fuel Type. Source: aaa.asn.au

Australia was named specifically, alongside Brazil, India, Korea, and Vietnam, as a market where EV sales roughly doubled in the April to June quarter compared with the same quarter in 2025. More than 90 countries recorded year-on-year growth in EV sales across the first half of the year.

The IEA now expects electric cars to account for 29% of global car sales in 2026, a percentage point higher than it projected in May. China is the one market bucking the trend, with EV sales expected to stall in 2026 even as EVs account for a record 60% share of the country’s new car market.

How To Research Electric Vehicles

Rising petrol prices don’t mean you have to buy a new car right away. But if you’ve been considering an electric vehicle, now is a good time to look at the numbers instead of just guessing. Charging up an EV has recently become potentially even cheaper with the introduction of retail plans offering free daytime electricity.

A great reference for EV shopping is our guide to electric vehicles, charging, and solar power.

If you are in the market for an EV, there’s a raft of advantages to getting a home EV charger. Our guide to EV chargers is a good place to do more homework on that.