Australians with an eye to buy one of the country’s most popular electric vehicles (EVs) need to start talking to their boss, as novated leasing and tax deals make BYD’s highly sought after Atto 3 even more attractive.
A person on a $75,000 salary gets a better deal on the $47,000 Atto 3 compared to Honda’s $36,700 HR-V wagon — and an even better one if secondhand mark ups continue to price used models higher than new ones, according to a comparison by leasing company Inside Edge.
Using the government’s new EV fringe benefit tax exemption, the reduction in take-home pay on a novated lease Atto is $900 compared to $1000 for the HR-V, and over a three year lease the Atto 3 scores just over $20,000 in savings versus just under $10,000.
The government’s new fringe benefit tax exemption for battery electric (BEV), hybrid and plug-in hybrids (PHEVs) that cost less than $84,916 was designed to make EVs more affordable for businesses versus petrol and diesel cars.
A novated lease allows an employee to lease a new car for personal use but pay for the repayments with pre-tax salary, reducing taxable income, as opposed to using finance paid for with after-tax salary.
Although the practice does not cost the employer, it does count as a fringe benefit or an in-kind payment to an employee which incurs fringe benefit tax — but no longer for those eligible EVs.
“With regard to pricing of EVs, most manufacturers have observed the Luxury Car Threshold of $84,916, They have done a great job at keeping prices under this figure to ensure their customers can purchase their car and benefit from the legislation, some, at their peril have not, which will result in reduced sales opportunities,” Inside Edge director Andrew Kerr told The Driven.
The outcome will be a massive boost in the aftermarket for second hand EVs because novated lease cars are often sold after one or two years and replaced with a newer model, he says.
Used Atto 3s are attracting eye-watering markups, with TheDriven reporting in November the Extended Range models had an asking price of $58,720 — or $8,000 more than the price of a new one. The total cost of a three year novated lease on a Standard Range Atto 3 is $48,800.
The Atto 3 only became available in Australia in July but by September was one of the top three selling EVs in the country.
Get a Polestar 2 for the same price as an Outlander
The government’s fringe benefit tax exemption has the most outsized effect on higher priced wishlist cars however, the Tesla Model Y and Polestar 2.
The maximum benefit under the tax changes is $10,000 a year, Kerr says.
A $78,114 Tesla Model Y offers the maximum benefit with $29,810 savings over a three year lease and a reduction in take-home pay of just over $1,300.
And a novated lease will buy you a $70,000 Polestar 2 for the same cost as a petrol-engine $41,000 Mitsubishi Outlander ES 2, according to Inside Edgee data.
For a person on a salary of $95,000, the reduction in monthly take-home pay is the same — about $1,180 — with a novated lease on either car, because of the changes to fringe benefits taxes on EVs.
But leasing the 2022 Polestar 2 Standard range will reap just over $27,300 in savings over a three year lease, compared to $11,800 for a 2022 Mitsubishi Outlander ES 2 wagon.
Supply is here
Supply chain problems are also moderating as factors like factory closures, lack of supply of semi-conductors and electronic components, and port closures reduce, Kerr says.
Enthusiasts who put down deposits a long time in advance area also helping supply.
“We are also starting to see orders being cancelled by hasty customers who ordered cars during better times now walking away from deposits and contracts with inflated prices, this in turn provides re-sale opportunities,” he told The Driven.