If you’re looking for evidence that electric vehicles are changing the market for new car buyers, take some time to understand the savings and benefits of novated leasing, or salary packaging, a motor vehicle.
What’ll you find is a range of Asian, European and American car manufacturers pitching an EV just under the magic number which is $89,332 (FY23-24) – the Luxury Car Tax Limit (LCT) for fuel efficient vehicles. And thanks to the FBT Exemption on EVs, the out of pocket expense for a novated lease on cars priced at this level will be similar to a $45,000 petrol/diesel model.
Traditionally European brands weren’t an option for novated lease buyers because anything over the Luxury Car Tax Limit changed the calculations and reduced the benefits of salary packaging. But now thanks to The Electric Car Discount Bill (introduced in 2022), electric and plug-in electric vehicles are exempt from FBT if priced under the LCT limit.
Which means in 2024 you’ll see BMW, Kia, Hyundai, Subaru, Tesla, Peugeot, Renault, and Ford offering electric models with pricing specifically targeted to make them eligible for the FBT Exemption.
With such a smorgasbord of options for novated lease buyers, will they consider a European brand for the first time? Or, will they stick to the traditional brand preferences of Australian buyers?
Of course there are electric cars on sale priced under $50,000, which are perfect for the novated lease buyer. But if you’re making a personal brand statement by going EV, why not park a BMW in your driveway for the first time if it’s the same out of pocket expense as a Japanese SUV?
When you’re paying $80,000 or more for a car it comes with a certain level of luxury. The Asian brands took the early lead with luxury electric vehicles, and for several years the ‘price gap’ to the European EVs continued. This changed in 2023 when BMW announced three models priced under the LCT limit to deliberately target novated lease buyers.
This announcement has shaken the novated lease market and created an opportunity for new car buyers to look at different brands and models. With limited supply of certain models, the car brand with the stock to deliver will gain the early wins in 2024 regardless of price.