Electric vehicle prices in Australia remain high, starting at twice the cost of low-budget petrol cars and many priced at six figures. Now, results from a new survey have revealed that, while price is the major purchase barrier for 84 per cent of Australians, 46 per cent would consider switching to an EV in an arrangement with their employer.
The findings were derived from a survey of an independent panel of 1000 Australians commissioned by Novated Lease Australia, a novated leasing provider. The full survey results, including age and State breakdowns, can be found here: novatedleaseaustralia.com.au/electric-cars/ev-price-study
The survey found that similar proportions of Australians across different age groups are deterred by prices from purchasing an electric vehicle. Older Australians are slightly more cost conscious: 88 per cent of over-51s compared with 82 per cent of under-51s believed electric vehicles are too pricey for them.
The Novated Lease Australia survey results also found that nearly half (46 per cent) of respondents would switch to an electric vehicle if they were offered a novated lease through their employer, as such an arrangement would reduce the purchase price and running costs of the vehicle.
A novated lease agreement allows an employee to lease a car through a ‘salary sacrifice’ arrangement, whereby the cost of the car is paid through their pre-tax pay. Their salary sacrifice can not only cover repayments on the car itself but also fuel, servicing, insurance and other running costs. At the end of the lease term, employees can choose to pay the balance and own the car outright or upgrade the car. Novated lease agreements can save drivers more than $5000 over five years on car running costs. The National Automotive Leasing and Salary Packaging Association administers hundreds of thousands of novated leases to Australian employees each year and novated leases are estimated to be used in one in 10 new car sales annually.
Younger Australians are more likely to switch to an electric vehicle under a novated lease agreement to reduce costs: more than half (59 per cent) of under-30s indicated they would, compared with 32 per cent of over-51s.
State and Federal Governments have made recent efforts to reduce electric vehicle costs for motorists. On 28 November 2022, the national Electric Car Discount Bill passed parliament. The new law removes the fringe benefits tax on battery, hydrogen fuel cell or plug-in hybrid electric vehicles valued at under $84,916. The tax can be calculated based on two different methods – the statutory formula method, which applies a standard rate of 20 per cent on a vehicle’s base value, or the operating cost method, which applies a rate, based on the percentage the car is used for private purposes, on the costs of operating a car. The NSW Government is also offering a $3000 rebate for new battery electric and hydrogen fuel cell vehicles worth less than $68,750.
Shaun McGowan, Founder and Managing Director at Novated Lease Australia, says: “Our research highlights that novated leases are on the rise this year. Electric vehicle prices still have a long way to go to drop to a level that competes with petrol cars, yet an increasing proportion of the public and business sector are becoming more carbon conscious.”
“Conscious of this price barrier, State and Federal Governments are financially incentivising organisations and motorists to make the switch. Perhaps now is the time for organisations that are sustainability-minded to add novated lease agreements for electric vehicles into their decarbonisation strategies.
“At the same time, I do anticipate prices to come down as electric vehicle production increases and increased competition from Electric Vehicle manufacturers entering the Australia market. However, increased infrastructure for charging stations will also be key to driving Australians to make the switch.”
The full survey results, including age and State breakdowns, can be found here: novatedleaseaustralia.com.au/electric-cars/ev-price-study
