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It used to be a novelty to see an electric car cruising down the highway, but this isn’t the case anymore. Sales of electric vehicles (EVs) have tripled three years in a row. There are now more than 180,000 EVs in Australia, according to the Electric Vehicle Council.1
With the average price of regular unleaded petrol costing about $2.23 a litre in Sydney right now – making your next car an EV or a hybrid model, seems tempting.2
The other aspect making EVs particularly appealing right now is the Fringe Benefits Tax (FBT) exemption the Federal Government offers fully electric vehicles. Basically, this exemption allows salaried employees to take out a novated lease on an EV and pay for it from their pre-tax income without having to pay the usual FBT.
Under this exemption, any electric car ‘first held and used’ on/or after 1 July 2022 (that falls under the luxury car tax threshold of $89,332) could potentially offer significant savings and allow you to get a better car for similar out-of-pocket costs.3 You can read about the electric cars tax exemption here.
Having said this, there has been significant media attention on the pain points associated with owning an EV, including long charging times and the lack of charging stations available. So are electric cars worth considering or are they just a passing fad?
The future of electric cars in Australia appears promising. The NSW government and TfNSW have set a target to reach zero emissions by 2050, and have claimed that making investments into electric vehicles and services will help achieve that goal.
The government’s ‘Electric and Hybrid Vehicle Plan’4 identifies three key priority areas for the next 5 years:
• Vehicle availability – Support the promotion, availability and quantity of electric vehicles within the NSW road network
• Charging points – Enable the development of additional charging infrastructure across metropolitan and regional NSW
• Customer information – Create clear and informative sources that help customers make improved purchasing and usage decisions.
Being a relatively new car in the market, there are some frustrating obstacles for current EV owners to navigate.
The good news for EV owners (and prospective EV owners) is that there are many innovations in the works to address some of the current challenges presented to owners of these types of cars. These include the development of easier charging payments, the availability of more slow chargers and cheaper charging options. Car makers are also increasingly equipping their vehicles with better batteries and higher charge capacities, a move that should gradually bring charge times down.5
While the EV market certainly has some difficulties to overcome, it seems that electric and hybrid vehicles here to stay and becoming an increasingly enticing option for Australian drivers.
2 https://www.mynrma.com.au/cars-and-driving/fuel-resources/weekly-report#:~:text=Current%20fuel%20prices%20and%20prediction,per%20litre%20(Monday%20afternoon) (accessed 16 April)
4 https://www.future.transport.nsw.gov.au/future-transport-plans/nsw-electric-and-hybrid-vehicle-plan
Please note, the above information does not constitute financial advice and does not take into account your current circumstances or goals. Please speak with a Financial Adviser before acting on any information found here or throughout the 5 Financial website.