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Market Insight: ZLEVs get new lease of life

Fringe Benefits Tax exemption helps grow BEV and PHEV share of novated lease deals

18 Mar 2024

WITH the introduction of the Albanese government’s Fringe Benefits Tax (FBT) exemption for battery electric vehicles (BEV) and plug-in hybrids (PHEV) has come a spectacular rise in novated leasing orders for such models, according to figures supplied by the National Automotive Leasing and Salary Packaging Association (NALSPA). 
The industry representative for vehicle leasing providers said its members have reported strong ongoing total growth in novated vehicle leasing and that BEVs and PHEVs are approaching nearly half of all new novated lease orders. 
In June 2022, the month before the introduction of the FBT exemption, NALSPA estimates that novated leasing (all providers, not just NALSPA members) was responsible for between five and 5.5 per cent of all BEV/PHEV passenger and SUV sales in Australia. 
By December 2023, NALSPA estimates that novated leasing generated about 40 per cent of all BEV/PHEV passenger and SUV sales in Australia for that month – about a seven-to-eight-fold increase that has helped reverse stagnation in the PHEV market. 
While NALSPA membership does not include the whole industry, statistics from its members backed up its estimation. 
NALSPA members reported that in June 2022, BEV and PHEV orders represented two per cent of all new novated leases. In December 2023, they accounted for 39 per cent of all new novated leases. 
While BEV sales figures appeared to plateau towards the end of last year, more recent figures suggest a change of course. With the early February announcement of the federal government’s contentious 2025 National Vehicles Emissions Standard as the backdrop, BEV and hybrid sales have increased significantly. 
VFACTS figures published earlier this month revealed that in February 10,111 BEVs were sold in Australia, which is an increase of 70.4 per cent on February 2023. 
This recent total represented 9.6 per cent of all vehicles sold in Australia during the month, although it should be pointed out that delayed release of updated Tesla Model 3 models due to an Australian Design Rules hiccup relating to a child seat anchor being obscured by the parcel shelf likely contributed to the February BEV spike. 
Meanwhile, 22,592 hybrids were sold, representing 21.5 per cent of the vehicle market. 
NALSPA chief executive Rohan Martin said demand to buy new cars remains robust for a range of reasons including new discounts for motorists.  
“The continual easing of vehicle supply constraints and government discounts on new zero and low emissions vehicles are making it easier and more affordable for everyday Australians to purchase a new car,” Mr Martin said. 
Mr Martin added that in 2023, the most popular BEVs chosen for leasing were from Tesla, although increasing demand was flowing toward more affordable models such as BYD. 
“Both Tesla Model Y and Model 3 continue to be extremely popular with novated lease buyers, however more affordable EVs, such as the BYD Atto 3 are gaining significant momentum with leaseholders given their unrivalled value for money for those considering transitioning to an EV,” said Mr Martin. 
It is not just BEVs that are gaining traction; Mr Martin pointed out that PHEVs are a growing part of the picture, helped by new entrants from Mazda and Cupra along with longstanding PHEV-seller Mitsubishi. 
"Demand for PHEVs is seeing significant uplift, driven in part by the hugely popular Mitsubishi Outlander,” he said. 
“With the FBT EV exemption included, the PHEV Outlander is an outstanding cost-effective option for those needing a larger SUV for the family and who want to transition from a pure petrol or diesel drivetrain in a manner which suits their lifestyle needs. 
"Our members are seeing many more buyers, including fleets, consider a PHEV as their first foray into an electrified vehicle, given that a full battery electric is a step simply too far for them, or their business, today.”  
From 1 July 2022, the federal government introduced a law to remove FBT from eligible electric cars. 
Employers are not required to pay FBT on benefits provided for eligible electric cars and associated car expenses.  
The government said at the time that it would complete a review into this exemption by mid-2027 to consider electric car take-up. 
Most popular BEV lease orders in 2023*: 
  1. Tesla Model Y 
  1. Tesla Model 3 
  1. BYD Atto 3 
  1. Volvo C40 
  1. Volvo XC40 Recharge 
Most popular PHEV lease orders in 2023*: 
  1. Mitsubishi Outlander 
  1. MG HS 
  1. Mitsubishi Eclipse Cross 
  1. Mazda CX-60 
  1. Cupra Formentor 
Most popular ICE vehicle lease orders in 2023*: 
  1. Mazda CX-5 
  1. Ford Ranger 
  1. Toyota LandCruiser 
  1. Hyundai Tucson 
  1. Hyundai i30 

*Figures supplied by National Automotive Leasing and Salary Packaging Association

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