{"id":102831,"date":"2026-11-10T05:26:24","date_gmt":"2026-11-09T19:56:24","guid":{"rendered":"https:\/\/www.solarquotes.com.au\/blog\/?p=102831"},"modified":"2026-11-09T16:37:33","modified_gmt":"2026-11-09T07:07:33","slug":"battery-ev-incentives-inflation","status":"publish","type":"post","link":"https:\/\/www.solarquotes.com.au\/blog\/battery-ev-incentives-inflation\/","title":{"rendered":"Do Battery & EV Incentives Fight Inflation Or Feed It?"},"content":{"rendered":"

\"Proposed<\/p>\n

The federal Treasury is preparing savings measures as pressure grows to cut the federal battery rebate and EV subsidy in the face of inflation, but clean energy advocates warn such a move would be counterproductive given the measures are putting downward pressure on electricity and fuel prices.<\/p>\n

Why Are Battery & EV Incentives Under Pressure?<\/h2>\n

Inflation reached 4.3% in the year to September<\/span><\/a> – prompting the Reserve Bank to hike interest rates for the fifth time this year.<\/p>\n

Some economists think the government should reduce federal battery and EV incentives to help curb inflation.<\/p>\n

The Opposition wants to go further. In October, it released a plan to axe both programs completely<\/span>, should it win the next federal election in 2028.<\/p>\n

In the meantime, shadow energy minister Dan Tehan is keeping up the pressure<\/span>.<\/p>\n

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\u201cIf Treasurer Chalmers wants to seriously tackle inflation, he should start by stopping [Energy Minister Chris Bowen]\u2019s batteries blowout – and then continue with Labor\u2019s Net Zero agenda,\u201d Tehan said.<\/p>\n<\/blockquote>\n

Treasury Looking At Battery Rebate Cuts<\/h2>\n

The Australian Financial Review<\/a> reports that Treasury is preparing options to scale back the $7.2 billion Cheaper Home Batteries Program, including further reductions to the upfront subsidy available to households. The move could put Treasurer Jim Chalmers’ cost-cutting drive at odds with Bowen, who has continued to publicly defend the scheme.<\/p>\n

More than 600,000 battery systems have been subsidised since the scheme launched in July 2025, a milestone Bowen celebrated on social media on Friday. And demand shows little sign of slowing, with take-up happening far quicker than originally anticipated.<\/p>\n

Despite changes introduced in May to reduce subsidies and rein in government spending, around 35,000 home batteries are still being installed every month.<\/a><\/p>\n

The government first set aside $2.3 billion for the program. In December 2025, it raised that to $7.2 billion<\/span><\/a>.<\/p>\n

Treasury’s options reportedly include lowering the subsidy available on the upfront cost of a home battery or requiring participation in a virtual power plant.<\/a><\/p>\n

With Chalmers now searching for savings ahead of December’s Mid-Year Economic and Fiscal Outlook (MYEFO), the battery subsidy has attracted renewed attention.<\/p>\n

Ministers Defend The Scheme<\/h2>\n

Environment Minister Murray Watt confirmed on Saturday that ministers had been asked to identify savings across their portfolios, but praised the battery program as “phenomenally successful”.<\/p>\n

Speaking in Brisbane, Watt said potential savings were still being considered through the government’s Expenditure Review Committee.<\/p>\n

Meanwhile, Bowen has continued to promote the benefits of the battery program, arguing that widespread household storage is helping reduce electricity costs, including for people who don’t own batteries.<\/p>\n

What About The EV Incentive?<\/h2>\n
\"Green

Calls are growing to cut a tax break for EV owners. Image source: Summit and Shore Energy<\/p><\/div>\n

There is also growing pressure to slash a tax break for novated leases, which allows the cost of a car lease to be taken directly from an employee’s salary, before taxes are taken out. With a petrol car, a separate tax called Fringe Benefits Tax shrinks the savings, but EVs are exempt.<\/p>\n

The EV tax break has cost far more than planned. When the tax break was introduced in 2022<\/span><\/a>, it was expected to cost $205 million over four years. Instead, it cost $2 billion in its first three years, the government\u2019s own review of the scheme<\/a> found.<\/p>\n

Critics say it mostly helps people on high incomes. That’s because the higher your tax rate, the more the tax break is worth. The government\u2019s review cites an industry-commissioned report that found that about 48% of EV buyers earn over $150,000. Only 35% of Australian drivers<\/span><\/a> earn that much.<\/p>\n

Prime Minister Anthony Albanese over the weekend declined to rule out means-testing subsidies for both home batteries and electric vehicles.<\/p>\n

Would Cutting Either Program Backfire?<\/h2>\n

Supporters of the two schemes argue that both incentives are curbing inflation, not fuelling it.<\/p>\n

Petrol is one of the biggest drivers of fuel prices, which jumped almost 15% in August and another 9% in September – the surge of Australians flocking to EVs is reducing pressure on fuel stocks curtailed by conflict overseas.<\/p>\n

Gas price rises are also a contributing factor to inflation, while the battery rebate has helped drive wholesale electricity prices down.<\/a><\/p>\n

Clean energy advocacy group Rewiring Australia is pushing back against the prospect of cuts.<\/p>\n

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“The inflation spike of the last few years was powered by fossil fuel prices. Every household still running on petrol and gas is exposed to the next price shock, but a home that electrifies is protected from it,” Rewiring Australia founder Saul Griffith said.<\/p>\n<\/blockquote>\n

Here’s how his main arguments stack up:<\/p>\n