Australia's Electric and Hybrid Vehicle Financing Soars in 2024

This substantial growth is largely attributed to the popularity of novated leasing, which accounted for nearly 70% of all electric vehicle (EV) financing transactions. Novated leases offer tax benefits and payroll deductions, making EVs more affordable for employees and providing employers with a cost-effective means to reduce fleet emissions.

AFIA CEO Diane Tate highlighted the critical role of financing in facilitating the transition to low-emission vehicles. By removing upfront cost barriers, financing options like novated leasing enable more Australians to access cleaner and increasingly affordable transportation solutions.

In addition to the rise in financing volumes, the average cost of low-emission vehicles has been declining. In 2024, the average financed cost fell by 7.4% to $58,892, with battery electric vehicles averaging $70,100 and hybrids at $50,600. This trend is attributed to increased competition in the EV market and the introduction of more affordable models.

However, policy changes have also influenced the market dynamics. The expiration of the Fringe Benefits Tax (FBT) exemption for plug-in hybrids in early 2025 led to a sharp decline in hybrid vehicle financing, with new business value dropping by 47.2% in April 2025 compared to the previous month. This underscores the sensitivity of EV adoption rates to government incentives and the importance of stable policy support to sustain growth in the sector.

Overall, the surge in EV financing reflects a growing consumer inclination towards sustainable and practical transportation options, supported by favorable financing mechanisms and competitive market offerings.