Novated Lease Australia‘s latest study revealed that 84% of its Australian respondents consider the high cost of electric vehicles as a significant impediment to EV adoption. Interestingly, 46% of the respondents demonstrated their willingness to switch to EVs through a novated lease arrangement with their employer.
“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.”
Shaun McGowan, Novated Lease Australia’s Founder and Managing Director
Scope of the study and key finding
Notably, 1000 Australians from a range of age groups were surveyed by an impartial panel for the study. The expense of EVs at the moment discourages similar percentages of Australians in each group.
Apparently, electric vehicles are too expensive for 88% of Australian over 51 years old compared to 82% of people under 51.
How would a novated lease arrangement aid the issue?
The National Automotive Leasing and Salary Packaging Association claims that novated leases are employed in one of every ten new car sales yearly.
For context, an employee may lease a vehicle under a “salary sacrifice” set up under a novated leasing agreement. In this case, they use their pre-tax pay to cover the cost of the car. Their salary sacrifice can pay for the car’s loan payments and fuel, maintenance, insurance, and other operating expenses.
Furthermore, workers have two options at the end of the lease term: pay the remaining amount and purchase the vehicle entirely or upgrade.
Interestingly, 59% of Australians under 30 years old said they would shift to an EV through a novated lease arrangement, as opposed to 32% of people over the age of 51.
Apart from that, Australia’s state and federal governments implemented the Electric Vehicle Discount Bill in November 2022, which eliminates the fringe tax benefits for BEVs, FCEVs, and PHEVs priced below $84,916.
Furthermore, a $3,000 rebate is also being provided by the NSW government for new BEVs and FCEVs priced below $68,750.
“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.”
Shaun McGowan, Novated Lease Australia’s Founder and Managing Director
