When comparing an electric vehicle and a petrol vehicle under a novated lease, the monthly deduction alone does not tell the full story.
The real difference appears when you analyse tax structure, Fringe Benefits Tax treatment, and bundled running costs together.
To compare fairly, you should run your numbers using the same vehicle price, lease term and annual kilometres.
Where the Cost Differences Come From
An EV vs petrol cost breakdown under a novated lease usually comes down to four main areas.
1. Fringe Benefits Tax
For most petrol vehicles, Fringe Benefits Tax applies. This typically requires part of the lease to be structured using post-tax contributions.
Eligible electric vehicles may qualify for FBT exemption. When that applies, more of the lease remains pre-tax, improving overall tax efficiency.
This is often the single biggest factor influencing EV novated lease savings.
2. Pre-Tax Salary Packaging
Both EV and petrol vehicles can be structured through salary packaging.
However, because FBT may not apply to eligible EVs, the pre-tax component can often be higher for electric vehicles. This reduces taxable income more effectively.
To see how your income level affects the outcome, you can calculate your savings using realistic inputs.
3. Running Costs
Running costs also influence the total package value.
EV typical cost factors:
- Charging instead of fuel
- Fewer moving engine parts
- Potentially lower servicing requirements
Petrol vehicle cost factors:
- Fuel price volatility
- Regular engine servicing
- Higher long-term fuel spend
Because novated leases bundle these costs, lower operating expenses can materially reduce the total packaged amount.
4. After-Tax Position
The most important metric is not the monthly deduction. It is the total after-tax position over the lease term.
When you combine:
- Reduced income tax
- FBT treatment
- Bundled running costs
The outcome can differ significantly between EV and petrol vehicles.
A structured novated lease savings calculator allows you to compare both options using identical assumptions.
EV vs Petrol Novated Lease Comparison Table (2026)
| Cost Component | EV Novated Lease | Petrol Novated Lease | Why It Matters |
|---|---|---|---|
| Fringe Benefits Tax | Often exempt (if eligible) | Applies | Major structural cost difference |
| Pre-Tax Deduction Level | Higher potential | Lower due to FBT balancing | Impacts income tax reduction |
| Post-Tax Contributions | Reduced or none | Often required | Reduces tax efficiency |
| Fuel or Charging | Charging typically lower | Fuel typically higher | Affects running cost budget |
| Servicing | Generally lower | Traditional engine servicing | Impacts long-term operating cost |
| After-Tax Outcome | Often stronger | Typically lower tax efficiency | Depends on salary and usage |
When Petrol May Still Be Competitive
An EV is not automatically cheaper in every situation. A petrol vehicle may still be competitive if:
- You are in a lower marginal tax bracket
- The EV purchase price is significantly higher
- You drive minimal annual kilometres
- FBT exemption eligibility does not apply
This is why consistent inputs are essential when comparing options. Using accurate salary, vehicle price and usage assumptions ensures the comparison reflects your real after-tax position.
If you are considering electric vehicle salary packaging, Fingo structures novated leases in line with current Australian tax rules, including EV FBT exemption settings, to help ensure the comparison is based on compliant and realistic figures.
Frequently Asked Questions
Why does FBT matter so much?
Because FBT changes how much of the lease must be structured post-tax.
Do EV running costs make a big difference?
They can, particularly over a three to five year term.
Should I compare monthly deductions only?
No. Always compare total after-tax cost across the lease term.
Does income level affect the comparison?
Yes. Higher marginal tax rates increase the value of pre-tax deductions.
What is the best way to compare accurately?
The most reliable approach is to run your numbers using consistent assumptions.