EV vs Petrol Novated Lease
Australian novated lease guide and comparison.
Last verified: 2025-07-01 | 2025-26 tax rates
EV vs Petrol: Bottom Line
On an $85K salary with a $45K car over 3 years, an EV saves you $25,050.47 more than a petrol car on a novated lease, thanks to the FBT exemption.
| EV | Petrol | |
|---|---|---|
| FBT per year | $0 | $8,799.25 |
| GST saving | $4,990.91 | $5,509.09 |
| Tax saving (3yr) | $7,985.45 | $8,814.55 |
| Fuel/charging per yr | $600.00 | $2,100.00 |
| Servicing per yr | $400.00 | $800.00 |
| Total saving | $12,976.36 | -$12,074.10 |
Why EVs win on novated lease
The FBT exemption is the single biggest factor. Petrol cars attract Fringe Benefits Tax calculated at the statutory rate of 20% of the car's value, grossed up and taxed at 47%. On a $45,000 car, that's $8,799.25 per year in FBT -- wiping out much of the tax saving.
EVs under $91,387 pay $0 FBT until March 2027, so you keep all the GST and income tax savings. Add lower running costs (charging vs fuel, less servicing), and EVs are clearly the better novated lease choice.
Running cost advantage
EVs cost approximately $0.04/km to charge at home, compared to $0.14/km for petrol. Over 15,000 km per year, that's $600 vs $2,100 -- a $1,500 annual saving. Servicing is also cheaper because EVs have fewer moving parts (no oil changes, no timing belts, regenerative braking reduces pad wear).
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Frequently Asked Questions
Is an EV cheaper than petrol on a novated lease?
Yes, significantly. EVs are FBT exempt (saving thousands per year), have lower fuel costs ($600/yr vs $2,100/yr), and cheaper servicing. On an $85K salary with a $45K car, an EV saves approximately $5,000-$10,000 more than petrol over 3 years.
Do I pay FBT on a petrol car novated lease?
Yes, petrol and diesel cars attract Fringe Benefits Tax. On a $45,000 car, FBT is approximately $8,800 per year using the statutory method, which significantly reduces the overall savings compared to an FBT-exempt EV.
Are EVs more expensive to insure?
EV insurance premiums are typically similar to comparable ICE vehicles, though some models (like Tesla) can be slightly higher due to repair costs. The difference is usually $100-$300 per year.
How much does it cost to charge an EV vs filling with petrol?
Charging an EV at home costs approximately $0.04/km compared to $0.14/km for petrol. Over 15,000 km/year, that is $600 for an EV vs $2,100 for petrol -- a $1,500 annual saving.
Will the EV FBT exemption be extended past 2027?
The current FBT exemption is legislated until 31 March 2027. The government has not announced an extension. If you are considering a novated lease on an EV, it is advisable to act before this date.
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