Novated lease electric car: everything you need to know before you switch

Are you being drawn to the cool, tax-friendly hum of an electric vehicle (EV) novated lease?

You’re in good company! A whopping 87,430 EVs were sold in 2023, that’s a 161% increase from the year before. One in three Aussies are planning to buy an EV within the next 5 years, and nearly half of Aussie drivers are actively considering the switch. It’s no wonder given the big tax breaks up for grabs with the EV Discount (in case you haven’t heard the scoop… you can now pay for an eligible electric car under $91,387 (from July 1, 2024) and its running costs from 100% pre-tax salary with a novated lease!).

With 34 new models landing in Oz in 2024 (that’s on top of the 30+ already here), read on to learn which is the right type of EV for you, why EVs are outshining petrol cars, and how you can snag some sweet tax perks with a novated lease.

4:20 minute read

Published on March 20, 2024

The benefits of a novated lease for small to medium business

Key takeaways

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An EV could cut your annual running costs (like service costs, oil and fuel) by thousands compared to a petrol or diesel car.

With a novated lease, you can pay for an eligible EV and running costs from 100% before-tax salary, which could save you thousands in tax.

Some EVs may be pricier, but a novated lease could slash your weekly payments to match those of a petrol car worth $20k less.

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Electric car vs. petrol car: what’s better?

The bottom line is, when it comes to energy efficiency, running costs, and helping the planet, EVs are winning the race.

Here’s why.

RUNNING COSTS:

For starters, EVs don't have an engine, transmission, head gasket, or spark plugs (wallet-whackingly expensive parts to maintain and replace). Then of course there’s savings in oil and fuel, and reduced wear and tear on brake pads. All up, you can save between $1,320 and $3,070 every year compared to a petrol or diesel car:

$465 less in service costs for EVs over the first three years
Between $820 and $2,570 in fuel savings if you use solar power only to recharge your EV

And while electric cars tend to be more pricey than regular petrol cars, under a novated lease it’s possible to pay a similar price per week. For instance, say your salary is $90,000 and you lease a Tesla 3, driving it 15,000 kms every year for five years. Even though the Tesla is over $20,000 more expensive than a regular petrol car like the Mazda CX-5, you could pay a similar weekly amount with an EV novated lease – bargain!

ENERGY EFFICIENCY:

EVs win here too. An electric car turns over 77% of electricity into pure driving power. While petrol cars convert only 12% to 30% of fuel energy into wheel power.

ENVIRONMENTAL IMPACT:

Electric cars are less noisy and let off zero emissions, meaning fresher air, cleaner streets, peaceful neighbourhoods, and healthier lungs for all. An EV can save about 1.5 million grams of CO2 in a year (that’s like not driving two return trips from Melbourne to Brisbane in a petrol car)!

What are the different types of electric cars?

EVs generally come in three main types: battery electric vehicles (BEVs), plug-in hybrid vehicles (PHEVs) and hybrid electric vehicles (HEVs).

But if it’s savings you’re after – they don’t all qualify for the EV Discount.

BEVs: EV Discount eligible

EVs power your journey purely with batteries - no gas, just zap! They're a breeze to maintain and lighter on your wallet, thanks to their simpler build. Plus, they’re kinder to the planet because they don't put out harmful gases when driven.

PHEVs: EV Discount eligible

PHEVs are super flexible, using both electric and petrol power. They typically start with electric and the petrol kicks in when the battery runs low, so no pit stops needed. Ideal for quick trips and long drives.

Just keep in mind, they no longer qualify for the EV Discount after 1 April 2025.

HEVs: Not eligible for EV Discount

HEVs have a small battery that gets recharged every time you brake, so they have longer range and there’s no need to plug-in to recharge.

How far will a single battery charge get you?

If you’re like the average Aussie driving roughly 38 kms daily, an EV battery can have you covered for a whole week on a single zap – in fact, many of the EVs sold in Aus will take you over 400kms without having to recharge.

You can easily charge up from home before you head out. And with EV charging stations up 72% in the last year and apps like PlugShare, it’s easy to map out on-the-go charging for longer rides.

How you can save even more on an EV with Oly

Oly is on the scene to bring the nifty tax incentives of novated leasing to all, no matter what you do or who you work for. With an Oly novated lease, you can pay for an eligible EV and all its running costs 100% pre-tax.

Plus, Oly wraps all your car expenses (fuel, rego, servicing… everything) into one neat regular payment making things super easy.

Oly is backed by one of Australia’s largest and most trusted novated leasing providers, McMillan Shakespeare Group (MMS). So, you could benefit from bigger buying power and over 35 years of experience to get a good deal on your electric car.

Keen to put the pedal down and rev up your savings on an EV?

Get your quote with Oly now

Disclaimer

^ Estimated costs have been determined based on the following assumptions: 1) The example assumes that the car is an eligible zero or low emissions vehicle, 2) The lease is a Oly fully maintained lease, 3) A 5-year lease term, 4) A residual value of 28.13% of the vehicle purchase price payable at the end of term, 5) Gross annual salary of $90,000, 6) An annual distance travelled of 15,000kms, 7) The value of the car at the first retail sale was below the luxury car tax threshold of $91,387 for fuel efficient vehicles, 8) The car is first held and used on or after 1 July 2022, and 9) The vehicle is purchased in NSW.

Additionally, the estimated annual operating costs includes estimates of fuel/electricity, maintenance, four replacement tyres, registration, CTP and comprehensive insurance, roadside assistance, and fleet management fee have been calculated on a GST exclusive basis, on the assumption that your employer will be entitled to GST input tax credits and that they will pass on the benefit to you. GST is payable on your ECM contributions. State Stamp Duty rates apply. PAYG tax rates effective 1 July 2024 have been used. The indicative price quoted for the novated lease is based on vehicle quotations received on 1 June 2024 and does not include any optional extras. Any optional extras that you choose will affect the cost of the novated lease and residual value. The novated lease offer is based on the assumption outlined above and is an indicative cost approximation of the selected vehicle and model stated and the amounts may change at the time the novated lease quotation is completed and finalised. Your individual circumstances have not been taken into account as this will affect the overall weekly cost amount and the benefits of a novated lease. Savings shown are indicative and reflect estimated tax savings over the full-term of the lease. The total amount saved is a comparison between a novated lease based on the assumption outlined above and the purchase of a vehicle and payment of running and maintenance costs using post-tax earnings. Actual savings will depend on your personal circumstances and may vary depending on the vehicle model and price. Oly recommends you seek independent financial and taxation advice.

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