A proposed national road user charge for electric vehicles (EVs) appears to be on ice after comments from the federal Transport Minister suggesting it could hinder a recent surge in sales.
As fuel prices reached record levels across Australia in March 2026, the proportion of EVs sold also surged by 88.9 per cent to a new high of 14.6 per cent market share.
The best-selling EV, the Tesla Model Y, was the third most popular vehicle overall behind the Ford Ranger and Toyota HiLux utes.
Yet as EV sales climbed, the expected announcement of a road user charge neared. It was previously set to be outlined in the federal budget this May, ahead of its implementation in 2028.
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Transport Minister Catherine King has now all but ruled out the announcement of a road user charge in next month’s federal budget.
“It’s obviously going to have to be legislated through the parliament, and I’m not clear that there’s a pathway for it through the parliament at this stage. We’ll wait and see,” she told ABC Insiders yesterday.
“At the moment we’re trying to encourage as much electric vehicle uptake as we possibly can, we don’t want to disincentivise that at all, so there is a balance to be struck here.
“We want to try and not disincentivise electric vehicle uptake, particularly right at the moment when we are seeing such a surge in that, so it may not be the time for it right now.”
The proposed road user charge had previously been raised by federal Treasurer Jim Chalmers in 2025, who said the government was “accelerating work” on how it would be implemented.
Charged per kilometre travelled, it could see motorists report annual mileage, or use in-car GPS tracking to calculate distance driven.
A key motivation for the EV road user charge is to recoup lost revenue from drivers not paying fuel excise, which was also halved for three months from April 1, 2026 to reduce petrol and diesel costs.
This pause may provide the government an opportunity to reconsider its approach as EV numbers continue to rise on Australian roads.
Victoria was the first Australian state to implement such a road user charge, back in 2021, and the New South Wales, South Australia and Western Australia state governments all proposed similar charges.
Before the charge was removed, Victorian EV owners had to pay 2.8 cents per kilometre travelled, with plug-in hybrid (PHEV) owners charged 2.3 cents per kilometre.
The High Court of Australia ruled the scheme unconstitutional in 2023, forcing the state to abandon the policy and refund revenue collected under it, thereby paving the way for a federal scheme.
Polestar Australia boss Scott Maynard told CarExpert the road user charge presents a broader opportunity than simply adding costs to EV ownership.
“There’s a degree of inevitability to this, and I don’t dispute the government’s need to top up the fuel excise with the road user charge, but it would be a crying shame to see it slammed on electric vehicles and imposed as a thinly veiled tax,” Mr Maynard said.
“The road user charge is a fantastic opportunity for the government to reconcile all of the various fees, taxes, charges and duties that are imposed on the Australian motorist who wants to buy a car, register it, get a licence, and drive it,” he added.
“Instead, it’s just been slapped on top – if the current rhetoric were to see its way through – so this is potentially an opportunity lost, and I hope that’s not what happens.”
It’s unclear whether the Australian Government will follow New Zealand’s example when it eventually introduces a road user charge.
In August 2025, the New Zealand government announced plans to remove its fuel excise and instead apply its road user charge (RUC), based on distance travelled and vehicle weight, across all vehicle types by 2027. Petrol-powered vehicles will join a system that already applies to diesel vehicles, EVs and PHEVs.
MORE: Australian Government weighs EV road user charge this year amid fuel excise criticism
