Novating an electric vehicle

A plug-in hybrid electric vehicle (PHEV) can be worth considering if you’re not quite ready to go fully electric. It gives you the flexibility to complete shorter everyday trips using electric power, while a petrol engine provides added reassurance for longer journeys. For drivers who charge regularly, a PHEV may also help reduce fuel use and improve overall efficiency.

The value of a PHEV depends heavily on how you use it. Charging frequently and completing most local trips within the vehicle’s electric range can reduce fuel consumption. If the battery is rarely charged, however, a PHEV may use more petrol than expected because it carries both an electric battery and a combustion engine.

Tax treatment is another important consideration. PHEVs generally stopped qualifying for the Australian Government’s electric car FBT exemption from 1 April 2025. Limited transitional arrangements may continue for eligible vehicles covered by a financially binding commitment made before that date, provided the arrangement has not materially changed. For a new novated lease, it is worth comparing the total cost of a PHEV with both battery electric and petrol alternatives before deciding.

For many Australian drivers, an electric car can be worthwhile—particularly if you can charge at home, travel predictable distances and plan to keep the vehicle long enough to benefit from lower energy and maintenance costs.

Battery electric vehicles typically cost less to power than comparable petrol or diesel cars and have fewer mechanical components that require regular servicing. Through a novated lease, an eligible electric vehicle may also qualify for the Australian Government’s electric car FBT exemption, allowing the vehicle’s finance and eligible running costs to be deducted from pre-tax salary. Eligibility conditions apply, including requirements relating to when the vehicle was first held and used and its value when first sold.

The vehicle must also be below the applicable Luxury Car Tax (LCT) threshold, with no LCT payable on its sale or importation.

Whether an EV is right for you will also depend on its purchase price, real-world driving range, access to charging, insurance costs and your usual travel patterns. Comparing the estimated whole-of-life cost—not just the showroom price—can provide a clearer picture of whether going electric will leave you better off.