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Prime Minister Anthony Albanese,centre,faces pushback on its EV policy from independent senator David Pocock,left,and the Greens,led by Adam Bandt.Credit:Alex Ellinghausen

With the Liberals and Nationals already unhappy that the policy could cost $4.5 billion over a decade,the new moves will force Labor to negotiate in the upper house over amendments that would limit the tax breaks to full EVs.

Greens leader Adam Bandt said the government should spend the $1 billion on charging stations in regional areas to encourage the shift to EVs rather than offering an incentive to buyers of plug-in hybrids.

“Public money should be driving the electric vehicle revolution,not giving handouts for petrol
cars,” he said.

“Building charging stations across the country will make EVs more available to regional and rural Australians,while also giving everyone the confidence to drive longer distances.”

Labor needs the Greens and independents to back the bill in the upper house because theCoalition warned against the policy after the Parliamentary Budget Office revealed the $4.5 billion cost after the election.

A key crossbencher in the upper house,ACT senator David Pocock,said he was concerned about estimates showing that half the kilometres travelled by plug-in hybrids used the petrol engine rather than the battery.

“My concern is that this legislation as drafted will slow the transition to EVs,” he said. “The second-hand EV market is the one we need to foster – not second-hand hybrids.”

The government has introduced the legislation and wants it back-dated to cover purchases made since July 1 but needs the Senate’s approval when parliament resumes next week.

The scheme would exempt eligible vehicles from import tariffs,cutting the retail price for all buyers,and would also spare them from fringe benefits tax,making them cheaper for employers when included in salary packages for staff.

To be eligible,the vehicle must cost less than the threshold for the luxury car tax,which is currently $71,849 for most cars but $84,916 for fuel-efficient and zero-emission vehicles.

This would include models such as the Tesla Model 3 (which has a base price of about $64,000),the Tesla Model Y (from about $72,000),the Nissan Leaf (from about $50,000) and the Volvo XC40 Recharge Pure Electric (from $73,000 before on-road costs).

The market for hybrid vehicles has been dominated by Toyota but newer plug-in hybrids allow motorists to charge the cars from a wall outlet or charging station.

The call from the Greens and Pocock would halt the benefits flowing to customers who bought plug-in hybrids such as versions of the BMW 3 Series and the MG HS Plus EV plug-in hybrid.

The Parliamentary Budget Office found Labor’s policy would cost $45.9 million in its first year and would double by 2025 and double again by 2027. It said the incentives would give up $4.5 billion in tax revenue over the decade to 2033.

Unveiling the plan on May 1,Labor pointed to estimates from the Electric Vehicle Council that a $50,000 model such as the Nissan Leaf would be at least $2000 cheaper if import tariffs were removed. It estimated the FBT exemption would save employers up to $9000 a year on vehicle costs.

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