How Many EVs & Australia Were Financed Under Novated Leasing​

Thinking about getting an electric car in Australia? You’ve probably heard about novated leasing, and it’s becoming a popular way for people to get into EVs. It’s basically a deal where your car costs are bundled into your salary package, making it easier and often cheaper. But how many Australians are actually using this method to finance their electric wheels? Let’s take a look at the numbers and see how novated leases are shaping the EV landscape down under.

Overview of EV Novated Leasing in Australia

Novated leasing has become a popular way for Australians to get into electric vehicles (EVs). It’s basically a finance deal where your employer helps you pay for your car using your salary before tax is taken out. This means you pay less income tax overall, and it bundles up all your car costs – like the lease payments, registration, insurance, and even servicing – into one regular payment. It makes buying a car, especially an EV, a lot more manageable, especially if you don’t have a huge amount of cash saved up for a down payment.

The big drawcard for EVs under this system is the Fringe Benefits Tax (FBT) exemption. Since July 1, 2022, eligible EVs purchased and used for personal reasons are exempt from FBT. This is a massive saving, as FBT on traditional cars can be quite high. To qualify, the EV needs to be a zero or low-emission vehicle, bought and used from mid-2022 onwards, driven by you or your family, and priced under the luxury car tax threshold, which for low- and zero-emission vehicles is set at $91,387 for the 2024/25 financial year. This exemption, combined with more EV models becoming available and easing supply issues, has boosted interest.

It’s a smart move for many people looking to cut down on their transport expenses while also going a bit greener. The arrangement simplifies budgeting and can lead to significant savings compared to traditional car ownership methods. It’s no wonder so many people are looking into it as a way to manage the cost of driving an EV.

The way people are financing cars has changed, and novated leases are a big part of that shift, especially for electric and hybrid vehicles. It’s making these newer, cleaner cars much more accessible for everyday Australians who want to save money on their running costs and reduce their tax.

Here’s a quick look at how it works

• Salary Sacrifice: A portion of your pre-tax salary goes towards the lease payments and running costs.
• Tax Benefits: Your taxable income is reduced, meaning you pay less income tax.
• All-Inclusive: Most running costs are bundled into one payment, making budgeting easier.

This financial arrangement is a key driver in the growing adoption of EVs across the country, making them a more realistic option for a wider range of Australians. You can find out more about how a novated lease works by looking at how a novated lease functions.

What Qualifies as an EV Under Novated Leasing Rules

When you’re looking at getting an electric vehicle (EV) through a novated lease in Australia, there are a few key things that make a car eligible. It’s not just any old car; it needs to fit specific criteria, especially around its environmental impact and cost.

First off, the vehicle must be classified as a low- or zero-emission vehicle. This generally means it runs on electricity or a plug-in hybrid system. So, if you’re eyeing up a fully electric car or a plug-in hybrid, you’re on the right track.

Then there’s the price tag. For the 2024/25 financial year, the luxury car tax (LCT) threshold for these types of vehicles is set at $91,387. This means the car’s purchase price, including any options and on-road costs, needs to be below this amount to get the full tax benefits associated with novated leases for EVs. It’s a bit of a sweet spot that makes EVs more accessible.

Here’s a quick rundown of what makes an EV eligible

• Vehicle Type: Must be a zero-emission (fully electric) or low-emission (plug-in hybrid) vehicle.
• Purchase Date: Acquired and used from July 1, 2022, onwards.
• Usage: Primarily used by you or your immediate family.
• Price Cap: Priced under the luxury car tax threshold, which is currently $91,387 for the 2024/25 financial year.

It’s worth noting that while the Fringe Benefits Tax (FBT) exemption is a big drawcard, you still need to report the benefit to the Australian Taxation Office. This reporting can sometimes affect other government benefits you might receive, like family tax benefits or childcare subsidies, so it’s a good idea to check how it might impact your personal financial situation.

The eligibility rules are straightforward, focusing on the car’s emissions and its price relative to the luxury car tax threshold. It’s designed to encourage the uptake of greener vehicles by making them more financially appealing through salary packaging.

History of EV Novated Lease Incentives in Australia

The way Australians finance their cars has changed over the last few years, especially with electric vehicles (EVs) entering the scene. Before, if you wanted a new car, it was usually a big loan or buying outright. But then, novated leasing started to get more attention. It’s basically an agreement between you, your employer, and a finance company to pay for your car and running costs from your salary before tax is taken out. This means your taxable income goes down, and you can save a fair bit on tax.

The real game-changer for EVs and novated leases kicked off on July 1, 2022, when the federal government introduced a Fringe Benefits Tax (FBT) exemption for eligible zero or low-emission vehicles. This was a massive deal. Before this, if you used a car provided by your employer for personal use, you’d often pay a hefty FBT, sometimes as high as 47%. But with this exemption, if the EV met certain conditions – like being a zero or low-emission vehicle, bought after July 1, 2022, used by you or your family, and priced under the luxury car tax threshold – you could avoid that FBT entirely. This made EVs significantly more affordable for many people looking to buy a new car.

It’s not just about the FBT exemption, though. The availability of more EV models in Australia has also played a big part. Brands like BYD and MG have brought more budget-friendly options to the market, which has definitely boosted interest. Even though Tesla’s popularity saw a bit of a dip recently, the overall EV market has grown a lot.

We’ve seen some big jumps in novated lease numbers because of these changes. For instance, one report showed that novated leasing accounted for about 92% of all EV financing in a year, with an average of 2,416 EVs being financed each month. That’s a huge chunk! It shows how novated leases are helping more Australians get into EVs. It’s a smart way to manage car costs and take advantage of government incentives, making the switch to electric a lot more practical for everyday people. It’s interesting to see how these financial arrangements are shaping the uptake of new technologies, almost like a shortcut to owning a greener car. You can find out more about how these financial arrangements work by looking at gold investment options.

Growth in EV Novated Leases

It’s clear that more and more Aussies are getting into electric vehicles (EVs) lately, and a big reason for that seems to be novated leasing. This way of financing cars has taken off, especially for EVs. We’re seeing some significant jumps in how many people are using it to get behind the wheel of an electric car.

Think about it: the Australian Finance Industry Association (AFIA) reported that back in early 2023, only about $250 million was financed for EVs. Fast forward to the end of 2024, and that number had shot up to a massive $6.17 billion. That’s a huge increase, and novated leases are a major part of that story. They’ve been the main way people are financing these greener cars.

Here’s a look at how novated leases for EVs have been growing

• Dominant Financing Method: Novated leases consistently make up a large chunk of all EV finance. In mid-2023, they accounted for a whopping 92% of EV finance deals. Even by 2024, they were still responsible for nearly 70% of all transactions.
• Increased Affordability: The tax benefits that come with novated leasing make EVs much more accessible for everyday people. By taking payments from your pre-tax salary, it lower your taxable income, which can save you a fair bit of money.
• Growing Market Share: It’s not just about the total money being spent; it’s also about how many cars are being leased this way. The number of new EVs being financed through novated leases has more than doubled in just a couple of years.

The way people are financing cars, especially electric ones, has changed a lot recently. Novated leasing seems to be the key driver, making EVs a more realistic option for many Australians who want to save money and drive something better for the environment.

This trend is also reflected in the broader car market. While EVs are making up a bigger slice of total new car sales, their share within the novated leasing market is even higher. This suggests that for people using novated leases, EVs are a particularly attractive choice. It’s interesting to see how these financial arrangements are shaping the uptake of new technologies, and it looks like this is a trend that’s set to continue for a while, especially with more EV models becoming available and the Australian car rental and leasing market evolving.

Estimated Number of Australians Benefiting from EV Novated Leases

It’s a bit tricky to pin down an exact number for how many Australians are using novated leases specifically for electric vehicles (EVs). The data isn’t always broken down that precisely, and things change quickly.

However, we can get a good idea by looking at the trends. We know that novated leasing is a popular way for people to get into new cars, and EVs are becoming a bigger part of that picture. Think about it – you get to bundle all your car costs, like payments, insurance, and even charging, into one regular salary deduction. Plus, with the Fringe Benefits Tax (FBT) exemption for EVs, it makes they a lot more financially attractive than they used to be.

Some industry groups have reported that EVs are making up a significant chunk of new novated leases. We’re talking figures that suggest EVs could be anywhere from 35% to 40% of all new novated leases being signed. That’s a big jump when you consider where things were just a couple of years ago.

This surge is largely thanks to those government incentives, like the FBT exemption, which kicked in around mid-2022. It opened the door for more people to consider EVs, especially when you combine it with the fact that more EV models are becoming available and, thankfully, car supply issues are easing up.

So, while we don’t have a single, definitive figure for the exact number of Australians benefiting from EV novated leases, the trend is clear: it’s growing, and it’s a major driver for EV adoption in the country. It seems like a lot of people are finding it a smart way to manage the costs of going electric.

Annual Government Cost of EV Novated Lease Incentives

It’s interesting how the government’s approach to electric vehicles (EVs) through novated leases has a direct financial impact, not just on individuals but also on the public purse. When you break it down, the Fringe Benefits Tax (FBT) exemption for eligible EVs, which kicked in from July 1, 2022, is a major factor. This exemption means that for qualifying zero or low-emission vehicles priced under the luxury car tax threshold, there’s no FBT payable. This is a big deal, especially when you compare it to traditional cars under salary sacrifice arrangements, which could attract FBT rates as high as 47%.

The financial incentives tied to novated leases, particularly the FBT exemption for EVs, are designed to make these vehicles more accessible. This policy aims to encourage a shift towards greener transport by reducing the overall cost of ownership for employees who choose EVs through this financing method.

While specific, up-to-the-minute figures on the exact annual government cost are a bit tricky to pin down without direct access to Treasury data, we can look at the trends. The surge in EV novated leases, with some reports suggesting EVs make up between 35% and 40% of new novated leases, indicates a significant uptake. This means a substantial portion of the novated lease market is now benefiting from the FBT exemption.

For instance, if we consider that the average financed amount for EVs and hybrids was around $64,300 in a recent period, and that novated leases accounted for a massive 92% of total monthly EV financing volume, it paints a picture. Each of those financed EVs, if eligible, represents a loss of potential FBT revenue for the government.

Here’s a simplified way to think about the cost

• Lost FBT Revenue: The primary cost is the FBT that would have been collected if EVs were taxed like conventional vehicles under a novated lease. This amount varies based on the vehicle’s value and the FBT rate that would have applied.
• Impact on Income Tax: While not a direct government cost, the reduction in taxable income for individuals leasing EVs through novated leases also means less income tax collected by the government.
• Broader Economic Stimulus: On the flip side, proponents argue that the increased uptake of EVs, facilitated by these incentives, stimulates the automotive industry, creates jobs, and contributes to environmental goals, which can have indirect economic benefits.

It’s a balancing act. The government is essentially forgoing immediate tax revenue to encourage the adoption of cleaner transport, with the expectation of long-term environmental and potentially economic gains. As more Australians opt for EVs via novated leases, the cumulative effect on government revenue from these incentives will continue to be a significant consideration.

Market Share of EVs in New Car Sales & Novated Leases

It’s interesting to see how electric vehicles (EVs) are stacking up against traditional cars when it comes to novated leases in Australia. While the overall new car market is seeing EVs take a bigger slice, the novated lease scene is showing an even stronger trend.

Figures suggest that EVs are making up a significant chunk of new novated leases, often landing between 35% and 40%. This is quite a bit higher than their share in the general new car sales, which recently hit a record high of around 9.6% in February. It highlights how attractive these salary packaging arrangements are for people looking to get into an EV.

Several factors are pushing this.

• The federal government’s Fringe Benefits Tax (FBT) exemption for zero and low-emission vehicles makes a big difference, lowering the overall cost.
• More EV models are becoming available, giving people more choice.
• Easing supply issues means people can actually get the cars they want.

This means that for many Australians, a novated lease is becoming a go-to way to manage the costs associated with owning an EV. It’s a way to bundle payments and take advantage of tax benefits, making that family car purchase a bit more manageable.

The financial incentives tied to novated leases are clearly making EVs more accessible for a wider range of Australians, influencing purchasing decisions significantly.

We’re also seeing a rise in plug-in hybrid vehicles (PHEVs) being leased, which are now accounting for about a quarter of all EV sales. This is a key driver behind the overall increase in electrified vehicle uptake. As more EV models arrive and supply chain issues continue to be resolved, we can expect this trend to continue. It’s a good time to be looking at EVs and novated leases if you’re considering a new car.

Increase in Novated Leasing of Specific EV Brands

Certain electric car brands are taking off when it comes to novated leases in Australia. We’re seeing a definite shift, with more people choosing these greener options through salary packaging.

Brands like Tesla have historically been very popular, but we’re now seeing a significant increase in interest and uptake for other manufacturers as well. This is partly because more EV models are becoming available, and some are priced more accessibly, making them a better fit for novated leasing.

For instance, brands such as BYD and MG are gaining traction. Their entry-level models, often priced below the luxury car tax threshold, are proving quite attractive for those looking to manage their car expenses through a novated lease. This trend suggests that the EV market is maturing, and consumers have more choices than ever before.

The growing availability of diverse EV models, coupled with the financial advantages offered by novated leasing, is making electric vehicles a more realistic and appealing option for a wider range of Australians. This is changing the landscape of car ownership and financing.

Here’s a look at how some brands are performing

• Tesla: Still a major player, but market share within novated leases might be seeing increased competition.
• BYD and MG: Experiencing strong growth, likely due to competitive pricing and appealing features.
• Other European and Asian Brands: Many are introducing new EV models that are also becoming popular choices for novated leases, broadening the appeal beyond just a few key manufacturers.

The overall increase in EV novated leases reflects a broader trend of Australians embracing electric transport, driven by both environmental awareness and the tangible financial benefits of salary packaging.

Impact of FBT Exemption Changes on EV Lease Numbers

The introduction of the Fringe Benefits Tax (FBT) exemption for electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) has shaken things up in the novated leasing market. Before this, the FBT on a regular car under a novated lease could be hefty, sometimes hitting 47% and often passed on to the employee. But with EVs purchased and used from July 1, 2022, and priced under the luxury car tax threshold, the FBT is gone. This tax break has made a massive difference, opening the door for more Australians to consider EVs.

We’ve seen a significant jump in novated lease referrals for EVs since these changes came into effect. Some reports show a 65% year-on-year increase in referrals, with brokers actively helping clients take advantage of the savings. It’s not just about the FBT exemption for EVs, though. The luxury car tax threshold for low- and zero-emission vehicles also increased for the 2024/25 financial year to $91,387, up from $80,567. This means even a $71,000 Tesla Model Y could end up costing less per year to lease than a much cheaper hybrid, once you factor in the tax savings.

However, it’s not all smooth sailing. The FBT exemption for PHEVs ended on April 1, 2025. This policy change had a noticeable impact, with new business value for hybrids dropping by 47.2% and the volume of financed hybrids falling by 40% in April 2025 compared to March. The rush to secure PHEVs before this deadline highlights how much consumer behaviour is influenced by government incentives.

Here’s a quick look at how the FBT changes affected PHEV financing

• April 2025 vs March 2025:
  • New business value for hybrids: -47.2%
  • Volume of financed hybrids: -40%

The sensitivity of uptake to government incentives is quite clear when you see these numbers. It shows that for lasting changes in how people buy cars, these policy supports are still needed.

For fleet and finance managers, this means keeping an eye on policy stability is key to maintaining the momentum in EV adoption. It’s also important to consider the long-term cost advantages of EVs, even with potential shifts in incentives.

Business & Fleet Adoption of EV Novated Leasing

It’s not just individuals getting in on the novated leasing action for electric vehicles; businesses and fleet managers are also seeing the benefits. This shift is a big deal for companies looking to green up their operations and manage costs effectively.

Novated leasing is proving to be a popular way for businesses to encourage their employees to adopt EVs, often making up a significant portion of their fleet’s transition to electric. For fleet managers, the appeal lies in simplifying the process of offering EVs to staff, often bundling running costs like charging, insurance, and maintenance into a single, predictable payment. This makes budgeting much easier and helps companies meet their sustainability targets without a massive upfront investment.

Here’s a look at how businesses are getting involved

• Increased Fleet Electrification: Many companies are using novated leases as a tool to electrify their company car fleets, offering employees a way to drive newer, more efficient vehicles. This can significantly reduce the company’s overall carbon footprint.
• Attracting and Retaining Talent: Offering novated leases for EVs can be a strong incentive for employees, especially those who are environmentally conscious or looking to save on running costs. It’s becoming a competitive perk in the job market.
• Simplified Administration: For businesses, novated leasing can streamline the process of providing vehicles. The leasing provider handles much of the administrative burden, from financing to managing the lease agreement, freeing up internal resources.

The financial structures available through novated leasing are making it more practical for businesses to transition their fleets. This approach helps manage the upfront costs associated with EVs and provides a predictable expense model, which is attractive for corporate budgeting and long-term planning.

While novated leases are popular for individual employees, commercial finance options are also driving broader fleet adoption. In 2024, a substantial number of low-emission vehicles were financed through commercial channels, showing a clear trend towards businesses actively investing in greener transport solutions. This indicates a growing confidence among fleet operators in the viability and benefits of electric and hybrid vehicles for their operations. For those managing company fleets, understanding these financial avenues is key to making informed decisions about vehicle procurement and sustainability goals. It’s worth looking into how different financial advisors can help structure these deals, especially those with a Certified Financial Planner (CFP) designation.

Public Perception

It seems like a lot of Aussies are cottoning on to the idea of novated leases for electric vehicles (EVs), and it’s not hard to see why. When you’re trying to save a buck, especially with the cost of living doing its thing, finding ways to cut down on expenses is key. A novated lease bundles up your car payments, running costs like fuel and maintenance, and even registration into one regular payment taken straight from your salary before tax. This means your taxable income goes down, and so does the tax you pay. It’s a neat trick for making a new car, especially an EV, more affordable.

The big drawcard for EVs through novated leases is the Fringe Benefits Tax (FBT) exemption. For traditional cars, FBT can be a hefty cost, sometimes up to 47%, which usually gets passed on to the employee. But for eligible EVs purchased and used since mid-2022, and priced under the luxury car tax threshold, this tax is waived. This exemption can save people thousands of dollars each year, making the switch to electric a lot more appealing than it might otherwise be.

Here’s a quick look at how it works

• Salary Sacrifice: A portion of your salary is set aside before tax to cover lease costs.
• Bundled Expenses: This covers the car loan, insurance, registration, and even fuel and servicing.
• Tax Savings: By reducing your taxable income, you pay less income tax.

The financial benefits of novated leasing, particularly the FBT exemption for EVs, are making electric cars a more realistic option for many Australians who might have previously found them too expensive. It’s a way to manage the costs of a new car more predictably and often more cheaply.

It’s not just about the tax breaks, though. The convenience factor is huge. Instead of juggling multiple bills and payments for your car, it’s all managed in one go. This simplicity, combined with the potential for significant savings, is changing how people think about buying and running a car, especially when it comes to going electric.

Comparing Novated Lease Numbers to the Overall EV Market

When we look at how electric vehicles (EVs) are being taken up in Australia, it’s interesting to see how novated leases fit into the bigger picture. While the overall new car market is seeing a steady increase in EV sales, the numbers for EVs financed through novated leases are actually quite a bit higher. For instance, recent reports suggest that EVs are making up somewhere between 35% and 40% of all new novated leases being signed. Compare that to the broader market, where EVs accounted for about 9.6% of total new car sales in February, and you can see a clear difference. This suggests that the benefits of novated leasing, especially the tax advantages for EVs, are appealing to people who are looking to buy a new car.

It’s not just about the percentage, though. The actual number of people using novated leases for EVs is growing. This trend is likely driven by a few things. Firstly, the government’s Fringe Benefits Tax (FBT) exemption for eligible EVs, which started in mid-2022, has made a big difference. It means that if you lease an EV under a novated lease, you don’t pay that extra tax, which can be quite significant for regular cars. Plus, there are more EV models available now, and car supply issues are easing up, making it easier for people to get the EV they want through this financing method.

The financial incentives tied to novated leases, particularly the FBT exemption for electric vehicles, are clearly making them a more attractive option for Australian consumers compared to the general uptake of EVs in the broader new car market.

Here’s a quick look at how the numbers stack up

• EV Share in Novated Leases: Around 35-40% of new novated leases.
• EV Share in Overall New Car Sales: Approximately 9.6% (as of February).
• Key Driver: FBT exemption for eligible EVs, making them financially competitive.

So, while EVs are gaining traction across the board, it seems that the structure of novated leasing is helping to accelerate their adoption among a specific group of car buyers in Australia.

Forecasts for EV Novated Leasing Uptake

Looking ahead, the trajectory for electric vehicle (EV) novated leases in Australia appears strong, largely influenced by ongoing government incentives and a broadening range of available EV models. Industry observers anticipate a continued surge in uptake, particularly as more affordable EV options become accessible to a wider demographic. The federal government’s Fringe Benefits Tax (FBT) exemption for zero-emission vehicles remains a significant driver, making EVs a more attractive proposition through salary packaging arrangements.

Several factors are expected to shape this growth

• Increased Model Availability: With over 40 new EV models slated for release by the end of 2025, consumers will have more choices, catering to diverse needs and preferences.
• Policy Stability: While the FBT exemption for plug-in hybrids (PHEVs) has seen adjustments, the continued exemption for pure EVs provides a stable foundation for future planning.
• Cost-of-Living Pressures: As Australians seek ways to manage household expenses, the tax advantages and potential running cost savings offered by novated leases for EVs are likely to become even more appealing.

The market is projected to see a sustained increase in novated lease agreements for EVs, reflecting a growing consumer confidence in electric vehicle technology and the financial benefits derived from these leasing structures.

The interplay between government policy, manufacturer offerings, and consumer financial behaviour will be key. As the market matures, we can expect further innovation in leasing products and a more integrated approach to EV financing.

While the exact numbers are still being refined, the trend indicates that novated leasing will continue to be a primary channel for Australians looking to acquire EVs, potentially outpacing the growth seen in the broader new car market. This growth is also supported by an increasing number of brokers referring novated leasing business, expanding the reach of these financial services. The Australian Finance Industry Association (AFIA) has noted the significant role finance plays in accelerating EV adoption, with novated leases consistently being the dominant product for EV finance.

Thinking about getting an electric car through your work? The number of people choosing this option is growing fast! It’s a smart way to drive a new EV without the big upfront cost. Want to learn more about how it works and if it’s right for you? Visit our website today to get all the details.

Frequently Asked Questions

What exactly is a novated lease for a car?

A novated lease is a deal between you, your boss, and a car leasing company. It lets you pay for your car and its running costs from your pay before tax is taken out. This can make your car cheaper overall and easier to manage, as all the costs are bundled into one payment from your salary.

What makes a vehicle an ‘electric vehicle’ for novated leasing rules?

Electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) are generally considered low or zero-emission vehicles. To be eligible for the tax benefits under a novated lease, the EV must have been bought and used from July 1, 2022, be driven by you or your family, and cost less than the luxury car tax limit for these types of vehicles.

Why have novated leases for EVs become so popular recently?

The main reason for the big jump in EV novated leases is the government’s tax break, known as the Fringe Benefits Tax (FBT) exemption for zero and low-emission vehicles. This means you don’t pay extra tax on the car if it’s an EV, making it much more affordable to lease through a novated lease compared to regular petrol cars.

About how many Aussies are using novated leases for EVs?

While exact numbers are tricky to pin down, reports suggest that electric and hybrid vehicles are making up a significant chunk of new novated leases, possibly between 35% and 40%. This shows that many Australians are choosing EVs when they use novated leasing.

Does the government offer any special deals for EV novated leases?

The government offers a tax break, the FBT exemption, for electric vehicles under novated leases. This incentive is a major reason why more people are choosing EVs through this method. However, the exact cost to the government can change depending on how many people use the scheme each year.

How do novated lease numbers for EVs compare to all EV sales?

Yes, the percentage of new car sales that are EVs is growing, but the percentage of EVs being chosen for novated leases is even higher. This suggests that novated leasing is a popular way for people to get into an EV, even more so than the general car market.

Are certain EV brands more popular for novated leases?

The popularity of specific EV brands is also increasing within the novated lease market. As more EV models become available and affordable, people are choosing a wider range of brands through novated leasing.

How do changes in tax rules affect EV novated lease numbers?

Changes to tax rules, especially the Fringe Benefits Tax (FBT) exemption for EVs, have a huge impact. When these benefits are available, more people are encouraged to lease EVs. If these benefits change or end, it could affect how many people choose EVs through novated leases.