Tesla and BYD top rankings as FBT exemption triggers demand for EV leases

Electric vehicles are making up a sizeable portion of new novated leases, according to a business update from one of the major players in the industry,

Vehicle leasing company FleetPartners says that almost half their Novated leases in June were electric vehicles (EVs) or plug in hybrids.

EVs also made up more than a third of the $65 million leases written in the second three months of 2023, with an average EV lease valuation of $69,000. That translates into a total of 339 EV leases over the quarter.

FleetPartners CEO Damien Berrell told TheDriven that the big jump in interest in EVs is due to the fringe benefits tax exemption the Federal government passed last year.

“With the government incentives it makes the Novated lease for electric vehicles really compelling. In fact, when you look to purchase an electric vehicle in Australia below the luxury tax threshold, by far the most efficient way to do it is through a Novated lease,” he said.

“Hence the reason why we’re seeing that little uptick in demand for EVs in Novated.”

The FleetPartners report noted that 45% of ‘new business writings’ in June related to either plug in hybrids or battery electric vehicles. In April, May and June of this year 36% of their new business writings were EVs. This compares to an overall market share of EVs of just over 7 per cent in new car sales in Australia in 2023.

The Tesla Model Y, Tesla Model 3 and BYD Atto 3 were the most popular EV models for the company.

FleetParners main portfolio though – corporate fleets – are seeing lower numbers of EVs. Berrell told TheDriven that many companies are looking to transition, but only 10% of ‘new business writings’ were for EVs or plug in hybrids. Corporate fleet makes up 80 percent of FleetPartners portfolio.

The reason EVs are lower on this corporate fleet level is due to lack of utility EVs like utes in Australia, and concerns around where their employees could charge.

Business have “moved on from whole life costs, they’ve moved on from range anxiety, now it’s around how they’re going to charge the vehicle,” says Berrell.

“If [employees are] renting or in an apartment, it’s a lot more challenging and they’ll probably have to rely more on the public charging network.”

The other issue is about getting the right vehicles into Australia.

“Half of our portfolio on the corporate side is what we call commercial vehicles, which are your Toyota Hilux is or your Ford Rangers,” he said.

“At the moment there is no equivalent EV that could replace the ICE versions of those.”

Back in 2015, the Clean Energy Finance Corporation provided a $50 million funding package for Eclipx, of which FleetPartners is one brand. The funding package provides an extra 0.5% interest rate discount for EVs and other low emission vehicles. This is on top of the fringe benefit tax exception.

A novated lease is where a lease is paid for by an individual’s pre-tax salary, and organised by their employer.

Earlier this year, a survey commissioned by Novated Lease Australia found that 46% would consider switching to an EV in an arrangement with their employer.

EVs have recently become more popular under novated leases across the board, with the government passing the EV fringe benefit tax exemption called the Electric Vehicle Discount Act in December 2022 on certain EVs. Depending on the car, this can save buyers almost $30,000.