Australia has slowly but surely been moving towards more eco-friendly vehicles for years. A record 103,270 new battery electric vehicles were sold in 2025, accounting for 8.3% of the total new car market. There have been plenty of state and federal government incentives on offer, but perhaps none have been quite as effective at enticing Aussie buyers as those available through novated leases.
With fuel prices reaching staggering levels in the first half of 2026, even more people are turning their attention to EV novated leases and reaping the rewards. So, what savings will be on offer to you?
How an EV novated lease works
Novated leasing works the same way for electric cars as it does for any other model: in simple terms, your employer deducts your lease payments from your salary before income tax is calculated, reducing your taxable income. However, there’s one key difference for EVs: they’re currently exempt from fringe benefits tax (FBT) up to $91,387.
For petrol and diesel vehicles, FBT is applied to the value of the benefit received by the employee, which offsets some of the tax savings generated by the pre-tax salary deductions. This means you’ll need to make post-tax contributions to cover your FBT liability in these cases.
Because EVs up to $91,387 (which is the luxury car tax threshold) attract no FBT, up to 100% of your lease payment and running costs can be deducted from your pre-tax salary. That makes the tax savings considerably greater than on a conventional vehicle.
Models priced above the threshold will require post-tax payments to cover your FBT liability, but the taxable value will be much lower than on a non-EV, meaning you can still enjoy major savings.
EV novated lease vs car loan cost comparison
Tesla Model Y RWD
$58,900
| Finance type | Purchase price | Running costs | Finance cost | Tax saved | Overall cost |
|---|---|---|---|---|---|
| Novated lease | $53,545 | $40,000 | $54,673 | $28,402 | $66,271 |
| Car loan | $58,900 | $40,000 | $68,535 | $0 | $108,535 |
| Cash | $58,900 | $40,000 | $0 | $0 | $98,900 |
|
Novated lease Car loan Cash |
|
$53,545 $58,900 $58,900 |
|
$40,000 $40,000 $40,000 |
|
$54,673 $68,535 $0 |
|
$28,402 $0 $0 |
|
$66,271 $108,535 $98,900 |
BYD Atto 3
$39,990
| Finance type | Purchase price | Running costs | Finance cost | Tax saved | Overall cost |
|---|---|---|---|---|---|
| Novated lease | $36,355 | $40,000 | $38,406 | $23,522 | $54,884 |
| Car loan | $39,990 | $40,000 | $46,532 | $0 | $86,532 |
| Cash | $39,990 | $40,000 | $0 | $0 | $79,990 |
|
Novated lease Car loan Cash |
|
$36,355 $39,990 $39,990 |
|
$40,000 $40,000 $40,000 |
|
$38,406 $46,532 $0 |
|
$23,522 $0 $0 |
|
$54,884 $86,532 $79,990 |
BMW iX3 M Sport
$91,000
| Finance type | Purchase price | Running costs | Finance cost | Tax saved | Overall cost |
|---|---|---|---|---|---|
| Novated lease | $84,666 | $40,000 | $84,619 | $37,386 | $87,233 |
| Car loan | $91,000 | $40,000 | $105,886 | $0 | $145,886 |
| Cash | $91,000 | $40,000 | $0 | $0 | $131,000 |
|
Novated lease Car loan Cash |
|
$84,666 $91,000 $91,000 |
|
$40,000 $40,000 $40,000 |
|
$84,619 $105,886 $0 |
|
$37,386 $0 $0 |
|
$87,233 $145,886 $131,000 |
Figures are for illustrative purposes only, based on annual gross salary of $90,000 and travelling 10,000km per year over a five-year term. Vehicle prices correct as of 2026 model year and obtained via CarsGuide (exclusive of GST for novated lease), charging price of $0.35/kWh.
Novated lease electric car benefits
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Up to 100% of lease payments are made pre-tax
Unlike on a novated lease for a petrol car, you can have your full lease payment and running costs packaged and paid out of your pre-tax income. This drives your taxable income down even further.
-
GST-free car purchase and running costs
Your lease provider can claim the GST on the purchase price of the car as a tax deduction, saving you a few thousand dollars extra. Your car’s running costs can also be made GST-free.
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Access to fleet discounts
On top of claiming a GST deduction, leasing companies can also often receive discounts on the purchase price of the car, saving you even more money in the process.
Disadvantages of novated leasing for an electric car
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Only available through employers who offer it
A drawback of novated leasing is that unlike car loans, which are available regardless of where you work, you can only take out a novated lease if your employer offers it. If they don’t, that door will be closed off at least until you change jobs.
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Tied to your job
Changing jobs is made slightly more complex by the fact that you’ll have to account for your novated lease. You may be tied to your current position longer than you would otherwise if your other preferred jobs don’t offer leasing.
EVs exempt from FBT
All models and prices are sourced from CarsGuide and correct as of April 2026.
How to arrange a novated lease with Savvy
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Fill out our online form
Tell us a bit about yourself, your finances and the car you’re after.
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Lock in your EV
We can help you find and secure your new car if you haven’t already.
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Set your budget
You’ll work with your novated leasing specialist to set a budget for your payments.
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Have your payroll deductions set up
Once confirmed with your employer, you’ll see pre-tax and post-tax deductions.
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Enjoy your new car
From there, you can enjoy your fresh set of wheels and have your on-road costs bundled into your payments.
Is the FBT exemption for EVs at risk of being scrapped?
The Australian Government announced at the end of 2025 that the FBT exemption for EVs would be reviewed. This came after it was revealed that the exemption was set to cost the Government around $1.26 billion more than what was originally budgeted for 2025-26.
However, recent reports suggest that the Government intends to keep the exemption in place as is or with modifications, rather than canning it entirely. Either way, a novated lease taken out before any potential removal of the exemption would likely retain its FBT-exempt status for the duration of your term.
What has happened in 2026 is the Government’s investment of $60 million into Hyundai Capital Australia and $100 million into Volkswagen Financial Services Australia. These investments are designed to offer discounts of 0.50% p.a. to 1.00% p.a. on dealer finance for eligible electric models and are seen as a much cheaper incentive for Aussies to go electric.
