But another expert said electric vehicle drivers were already receiving too many financial benefits and should be forced to pay a road-user charge to compensate governments for their use of state infrastructure.
The calls came at the fourth hearing of the parliamentary inquiry in Melbourne, after previous hearings in Canberra and Sydney.
National Automotive Leasing and Salary Packaging Association chief executive Rohan Martin told the committee the government's cuts to fringe benefits tax on electric and plug-in hybrid vehicles had reinvigorated the market.
But he said the surge in plug-in hybrid car sales would drop if the tax cuts were revoked as planned next April.
"The most urgent measure that this committee can consider is the extension of the (tax) exemption on plug-in hybrid vehicles beyond its current planned cessation date," he said.
"Without such purchase incentive support for PHEVs, there's no doubt our efforts to decarbonise road transport emissions will be slowed considerably."
Hybrid car sales will drop if the tax cuts are revoked next April, an auto industry chief warns. (HANDOUT/BMW)
Mr Martin said the currently timing of the tax cut's expiry would be particularly poor as it was due around the same time Ford, BYD and Mitsubishi planned to launch their first plug-in hybrid electric utes.
An extension, he said, should be introduced until the technology had reached "price parity" with petrol and diesel vehicles, and would benefit drivers in regional Australia.
Motor Trades Association chief executive Matt Hobbs echoed the call to extend tax cuts for plug-in hybrids, saying the vehicle technology was growing in Australia as drivers tried to save money and reduce petrol consumption.
"Hybrids and plug-in hybrids are going to be key because of fuel efficiency and the cost to getting in, at this point in time, is less," he said.
The fringe benefit tax cuts for low-emission vehicles, which came into effect in July 2022, apply to electric, hydrogen and plug-in hybrid vehicles and is expected by reviewed in mid-2027.
Exemptions for plug-in hybrid cars are due to expire on April 1, and figures from the Federal Chamber of Automotive Industries show sales of the vehicles have more than doubled in 2024.
But Infrastructure Victoria chief executive officer Dr Jonathan Spear told the committee that drivers of low-emission vehicles should be asked to pay more tax in the form of road-user charges.
He said the health benefits of cutting transport pollution did not make up for the loss of government revenue through fuel excise charges, and electric and hybrid vehicle owners should face additional fees.
"We do think that there's a role for electric vehicles to reflect their contribution to road cost and use, congestion and accidents," he said.
"There are significant public health benefits from the absence of tail pipe emissions but there's also significant savings to the hip pockets of users through their operating costs as well."
Victoria's road-user levy on low emission vehicles was overturned by the High Court in late 2023 and has yet to be reinstated.
The inquiry will hold public hearings in Brisbane and Canberra next month.
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