How cheap could your next EV be?

How cheap could your next EV be?

Electric Vehicle price wars are back on! After 14 months off the top spot, MG has once again claimed the title of most affordable EV on the Australian market. Previously priced at $39,990 before on roads, MG has slashed pricing for August to $34,990 driveway. Depending on your state, this represents savings between $6,300 to $8,703.

MG has also set other records in August by announcing the longest factory warranty offered by a new car maker in Australia. This offer will provide coverage for 10 years, or up to 250,000 kms, whichever comes first. The warranty is the first of its kind to be so extensive and does not require customers to use the brand service network to ensure coverage. However, the warranty does not apply to vehicles deemed to be used for commercial purposes such as rideshares, taxis, food delivery services, and driving schools.

The MG ZS EV price drop highlights a broader trend in the market towards more affordable EVs, with many established brands planning to introduce lower-priced options, as well as an influx of price-focused Chinese brands with plans to enter the Aussie market. With EVs becoming more affordable than ever, we at Simplygreen Salary Packaging are wondering – how cheap could your next EV be?

Government incentives have created a massive surge in EV uptake, and for good reason. The Federal Electric Car Discount Bill has slashed the cost of new EVs substantially. The bill allows everyday Aussies to pay for their new EV and associated running costs entirely from their pre-tax salary, provided the vehicle is under the Luxury Car Threshold of $91,387 (2024-25 financial year). Paying for your vehicle out of your pre-tax salary lowers your taxable income, and allows you to save on the GST associated with your car and running costs (finance, charging, maintenance, tyres, insurance, and registration). As a result, our customers are regularly seeing over $4,000 in savings each year throughout their lease term.

EV drivers also benefit from reduced running costs with their new cars. By driving an EV, you can save up to 70% on fuel and 40% on maintenance expenses, translating to up to $1,200 worth of savings each year for the average driver. If drivers are able to recharge from home with solar panels, their charging expenses can be effectively reduced to zero. As EV rebates wind down across the country, more states are moving toward discounted registration for EVs for the foreseeable future. If you live in Queensland, Victoria, Australian Capital Territory, Northern Territory, or South Australia, you could receive a registration exemption or discount. With Simplygreen, you also receive a 30% discount on administration fees when you choose an EV over a petrol or diesel vehicle.

So with the EV Discount Bill and EV prices lower than ever, let’s break down how long you can go when paying for your EV.

Let’s compare the yearly running costs for the MG ZS EV and MG ZS

MG ZS EV RRP $34,990

MG ZS RRP $22,990

Considering the MG ZS EV costs $12,000 more at the dealership, the lower weekly out-of-pocket cost when you purchase through a novated lease is almost too good to be true. On a 5-year lease with Simplygreen Salary Packaging you’ll pay $145.24 weekly, compared to $168.27 for its petrol counterpart. The higher price tag for the MG ZS EV pushes the finance cost and total expenses to exceed the petrol twin, so where exactly do these savings come from?

With a petrol vehicle, Fringe Benefit Tax (FBT) is always payable. Typically, petrol novated lease drivers pay FBT by paying a portion of their novated lease with post-tax salary. This essentially nullifies part of your contributions from being of any tax benefit, as these post-tax contributions cannot assist in lowering your pre-tax income. To comply with FBT regulations, the petrol driver would need to contribute $82.15 of post-tax salary per week towards their vehicle, and $126.12 per week in pre-tax funds. The pre-tax contribution allows drivers to pay $40 per week less in income tax.

In contrast, the electric counterpart benefits from the Electric Vehicle Discount Bill, which eliminates the need for a post-tax contribution and allows you to pay for the vehicle and associated expenses entirely out of your pre-tax salary. By paying for your electric vehicle completely out of pre-tax income, you save $68 each week in income tax, compared with the $40 you save with a petrol vehicle.

By purchasing a vehicle through a novated lease, you save by unlocking your pre-tax income and reducing your pesky income tax. Opting for an EV over the petrol model furthers your saving potential significantly by circumventing FBT. In total, you have the potential to save an additional $10,000 over five years, as well as all of the environmental benefits that come from choosing an EV.

If the MG ZS EV doesn’t look like it’s going to be your next vehicle, not to worry. We’re seeing EV prices drop daily, and manufacturers have announced new vehicles are coming. Hyundai has confirmed the Inster will be hitting our shores in the near future and is expected to join the ZS EV and GWM Ora in the circa $40,000 price range. A wave of new Chinese brands is expected to enter the market in 2024 and 2025, likely driving EV prices even lower, especially with brands like Leapmotor, whose pricing starts at just $10,000 in its home market.

We’ve based the above on Victorian policy and driveaway pricing, but keep in mind this differs from state to state. Depending on your state, you may have extra rebates and discounts available to you. To find out more, check out our article on Government EV Incentives.