Over the past two years, finance has played a decisive role in accelerating the uptake of electric and hybrid vehicles in Australia. New data released by the Australian Finance Industry Association (AFIA) reveals a powerful trend: vehicle financing is not just supporting the transition to low-emission transport—it is driving it.
For Fleet Managers, Sustainability Managers and Finance Managers alike, understanding this shift is critical to navigating future procurement strategies and achieving organisational emissions target
Finance Volumes Soar: $250 Million to $6.17 Billion in Two Years
AFIA’s September 2023 report first hinted at the groundswell of interest in low-emission vehicles, with $250 million in EV finance recorded between January and June 2023. By the end of 2023, this figure had ballooned to $2.5 billion, according to AFIA’s March 2024 update.
Fast forward to the latest June 2025 EV & Hybrid Finance Report, and the numbers are even more staggering: $6.17 billion in finance delivered in 2024, supporting 104,835 new electric and hybrid vehicles. That’s a 50% year-on-year increase in financing volume and more than double the number of vehicles financed compared to 2023.
This upward trajectory shows no signs of slowing—at least, not without major policy shifts.
Novated Leasing: The Main Engine of Growth
One constant throughout this period is the dominance of novated leasing as the primary finance product for EVs. In June 2023, novated leases accounted for 92% of all EV finance, with 4,000 EVs financed that month alone, worth $260 million.
By 2024, novated leasing remained responsible for nearly 70% of all transactions. The appeal is obvious: for employees, novated leasing makes EVs more affordable through tax benefits and payroll deductions. For employers, it’s a cost-effective tool for reducing fleet emissions and attracting environmentally conscious talent.
AFIA CEO Diane Tate credits this financial model with lowering the barriers to EV ownership.
“Finance is critical to turning good intentions into real outcomes. It removes upfront cost barriers and gives more Australians access to vehicles that are cleaner, cheaper to run, and increasingly affordable”.
Commercial Leasing Fuels Broader Fleet Adoption
While novated leasing dominates individual consumer uptake, commercial finance is driving broader business fleet transitions. In 2024 alone, 82,617 commercial low-emissions vehicles were financed—up 62% from 2023.
This reflects a maturing understanding among fleet operators: financing options like operating leases not only smooth cash flow and reduce capital outlay but also offer flexibility to pivot as vehicle technologies evolve.
Hybrid vs BEV: Range Confidence Still Key
Despite the growing confidence in battery electric vehicles (BEVs), hybrid vehicles continue to lead in terms of financed volume. In 2024:
- 60,083 hybrids were financed
- 44,752 fully electric vehicles were financed
Tate says this reflects a practical reality: many Australians still lack access to charging infrastructure or frequently travel longer distances where range anxiety persists.
“This choice is sensible for many Aussies, particularly while public and private charging infrastructure improves,” she said.
Price Trends: Average Costs Falling
The financial data reveals another promising trend: the cost of EVs is falling, helping to bring them within reach of more Australians.
- In 2024, the average financed cost of low-emission vehicles fell 7.4% to $58,892.
- BEVs averaged $70,100
- Hybrids averaged $50,600
- In 2023, the average was $64,300, down from $69,800 in early 2023
This decline is attributed to greater competition in the EV market and the arrival of more affordable models.
Policy Matters: FBT Exemption Drives – and Dents – Demand
Perhaps the most compelling evidence of how finance and policy intersect is found in the sharp drop in hybrid vehicle financing in early 2025, following the expiry of the Fringe Benefits Tax (FBT) exemption for plug-in hybrids (PHEVs).
- In April 2025:
- New business value for hybrids dropped by 47.2%
- Volume of financed hybrids fell 40% compared to March
The March surge—where consumers rushed to secure PHEVs before the policy change—only further confirms how sensitive uptake is to government incentives.
AFIA is calling for a reinstatement of the PHEV FBT exemption, alongside:
- Fast-tracked public and private charging infrastructure
- Upfront EV purchase subsidies
- Public education around vehicle energy usage and cost of ownership models
“The decrease in PHEVs being financed after losing the exemption shows that the policy is still required to drive lasting changes in consumer purchasing behaviour,” said Tate.
What It Means for Fleet and Finance Leaders
The trend lines are clear:
- Finance is the primary enabler of Australia’s low-emission vehicle transition.
- Novated leasing will remain the dominant channel for EVs in the workforce.
- Policy stability is essential to maintaining momentum.
Fleet Managers must plan for:
- The role finance will play in smoothing EV procurement during periods of budget uncertainty
- Employee demand for novated leasing of EVs—particularly if incentives return
- Long-term TCO advantages of EVs versus ICE vehicles, including maintenance and fuel
Finance Managers should consider:
- Locking in current rates and incentives while they remain
- Scenario planning for different policy environments
- Engaging with lenders who understand evolving EV risk and residual value dynamics
The electric vehicle finance story in Australia is one of rapid growth, dynamic shifts, and close alignment with government policy. From $250 million in early 2023 to $6.17 billion in 2024, the message is clear: financing is no longer a barrier—it’s the accelerator.
For organisations focused on decarbonisation, sustainability, and cost efficiency, the time to act is now. Whether via novated leasing or operating leases, finance will continue to be the most powerful tool for driving change on Australian roads.
