Electric vehicle incentives - you could qualify!

Due to new incentives on electric vehicles or plug-in hybrid electric vehicles costing less than $84,916, you may have access to these cars through the Electric Car Discount Bill passed in late November 2022. Is that something you would take advantage of if it was available to you?

There are many benefits and drawbacks to electric vehicle vs petrol vehicles and these incentives along with any future ones will likely change the uptake of EV’s.

Right now, this Electric Car Discount Bill change could unlock significant electric vehicle discounts to small business and their employees using the accounting software platform MYOB, that will ultimately automate car leases.

Electric vehicle benefits & drawbacks

Not everyone will have access to these incentives but between Electric vehicles (EVs) and petrol vehicles they each have their own set of benefits and drawbacks. Let’s compare them in terms of various aspects and then find out if you have access to the discounts:

1. Environmental Impact:

Electric Vehicles: EVs produce zero tailpipe emissions, significantly reducing air pollution and greenhouse gas emissions, especially if the electricity they use is generated from renewable sources. They contribute to lower overall carbon footprints.

Petrol Vehicles: Petrol vehicles emit harmful pollutants and contribute to air pollution and climate change due to their combustion engines.

2. Fuel Efficiency:

Electric Vehicles: EVs are more energy-efficient, converting a higher percentage of their stored energy into actual movement, resulting in lower energy costs per mile/kilometer traveled.

Petrol Vehicles: Petrol vehicles have lower energy efficiency due to the inherent inefficiencies in internal combustion engines and energy losses during idling.

3. Operating Costs:

Electric Vehicles: EVs have lower operating costs since electricity is generally cheaper than gasoline. Maintenance costs are often lower because they have fewer moving parts, no oil changes, and less wear on brakes due to regenerative braking.

Petrol Vehicles: Petrol vehicles have higher operating costs due to the fluctuating prices of gasoline and more frequent maintenance needs.

4. Performance:

Electric Vehicles: EVs offer instant torque, providing quick acceleration and smooth, quiet operation. They can deliver consistent performance even at low speeds.

Petrol Vehicles: Petrol vehicles have a wider range of engine types, leading to variations in performance, but they may experience lag in acceleration due to the mechanics of combustion engines.

5. Range:

Electric Vehicles: EVs have been improving their range over time, especially for long-distance travel and this gap is narrowing with advancements in battery technology.

Petrol Vehicles: Petrol vehicles have a longer driving range and a well-established refueling infrastructure, making them more suitable for long trips.

6. Infrastructure:

Electric Vehicles: EV charging infrastructure is expanding, but it is not as widespread as petrol refueling stations in many areas, which can limit the convenience of long trips.

Petrol Vehicles: Petrol refueling stations are widely available, making it easier to find fuel almost anywhere.

7. Initial Cost:

Electric Vehicles: EVs tend to have a higher upfront cost due to the expense of the battery technology. However, government incentives and decreasing battery costs are helping to offset this difference.

Petrol Vehicles: Petrol vehicles generally have a lower upfront cost.

8. Charging Time:

Electric Vehicles: EV charging times vary depending on the charger type. Fast chargers can provide a decent charge in a short time, but a full charge may still take longer than filling a petrol tank.

Petrol Vehicles: Refueling with gasoline is generally faster than charging an EV, especially for long trips.

Electric Vehicle offer

So, could you qualify for the Electric Car Discount Bill that was passed in late November 2022?

This Electric Car Discount Bill no longer requires employers to pay fringe benefits tax on the lease of electric or plug-in hybrid electric vehicles costing less than $84,916.

Electric vehicle leases

The tax cut triggered a rush on novated car leases, of more than 30 electric cars qualify for the discount, including models from Tesla, BYD, MG, Hyundai and Kia.

Novated leases allow employees to pay for cars using pre-tax dollars but are typically only offered by larger businesses due to the administration required. Yet the new MYOB feature would automate the process of offering a vehicle lease to an employee, including setting up ledgers and creating payroll deductions.

It is hoped that by automating the software, the ease of the process would let more small businesses offer car leases as an employee benefit, saving workers thousands of dollars. This incentive is estimating the average employee would save about $6000 a year by having a novated lease but for electric vehicles it’s even higher – but estimate about $10,000 under the new legislation.

Following the change in legislation a Tesla electric vehicle could save as much as $53,000 over the course of a six-year lease. The option for a novated leasing plan has really opened the door to a premium vehicle. Because of this, sales of battery-powered cars have risen significantly this year in Australia. Approximately 130,000 electric cars on our roads in July, with 180,000 expected by the end of the year. A report from the Electric Vehicle Council finding Australians bought 46,624 electric cars in the first six months of 2023, representing 8.3 per cent of all new cars sold.

In summary, electric vehicles are becoming increasingly popular due to their environmental benefits, efficiency, and lower operating costs. However, at this time they may not be suitable for all use cases, especially if long driving ranges are required or if charging infrastructure is lacking. Petrol vehicles remain slightly more practical, longer driving ranges, and faster refueling times, but they contribute to pollution and are less energy-efficient overall. Potential incentivised savings will no doubt continue to change the balance along with the increased opportunities to purchase an electric vehile as time goes on.

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Arthur Panagis
Author, Founder, Wealth Coach and Financial Strategist

B.Bus (Accountant)
Grad Dip (Financial Planning)
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Disclaimer: This article is factual information only. It is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. The information in the article is reliable at the time of distribution, but may not be complete or accurate in the future.