Explainer: Six ways to Drive Down the Up-Front Cost of Buying an EV

For most of us in Australia electric vehicles remain prohibitively expensive. Here are some options that may reduce that initial hefty outlay so you can join the clean transport revolution sooner.

Green vehicle finance

Some banks and lending institutions offer car loans for low emissions vehicles with a discount on their standard loan rate of anywhere up to 1%. Given there are lower fuel and maintenance costs with an EV, if you know you can meet the loan repayments, this might be the way to get your hands on your first EV.

Transport Mutual offers a green loan for purchasing hybrid and pure EVs, e-bikes, solar, and solar and battery systems with an interest rate is 4.74%p.a. (5.04% comparison rate), which is 0.25% lower than their standard new car loan rate.

Due in part to a partnership with the Government’s Clean Energy Finance Corporation, loans.com.au offers five year fixed rate loans for low emissions cars at 3.97% p.a.* (4.51% comparison rate).

We note, however, that there are cheaper rates advertised with standard car loans from other lenders and we recommend checking the fees and conditions of all loans carefully.

Advertised costs for a $44,000, 5 year fixed rate loan to purchase the 2021 MG ZS EV at $43,990 with on road costs:

• Transport Mutual Credit Union
• Comparison rate of 5.04%
• Monthly cost: $831
• Total interest payable $5,868
• Loans.com.au
• Comparison rate of 4.51%
• Monthly cost: $820

Subscription offers

An EV subscription allows you to get behind the wheel of an EV without forking out vast sums of money upfront, or getting into longer-term debt.

There are at least two electric vehicle subscription (leasing) options available in Australia – one from Sonnen and the other from AGL’s innovation arm, AGL Next.

AGL’s subscription deal offers customers in Brisbane, Sydney and Melbourne a fully registered, serviced and insured EV and fully installed home charging system, starting at $235 a week.

Customers can choose between six models, minimum subscriptions are for one month and you can cancel with one month’s notice and a fee of $150.

Battery maker Sonnen will shortly offer owners of their batteries sonnenDrive, a similar EV-subscription service delivered by Carbar, the same company behind AGL’s leasing service.

sonnenDrive will offer five fully electric cars and one plug-in hybrid, including the MG ZS, the Nissan Leaf, the Hyundai IONIQ Elite (both the plug-in hybrid and battery electric versions), the Hyundai Kona, and Tesla’s Model 3.

Businesses with turnover between $50 million and $5 billion may also be able to claim an immediate deduction for new EVs under the Temporary Full Expensing measure only.

Federal budget announcements made in May 2021 included the extension of the full expensing measure of the instant asset tax write-off until June 30, 2023 but this is currently a policy matter and not yet law.

If the car is used for both business and private use, then only the business portion can be claimed.

Interest free loans and grants

If you live in the ACT you’re probably aware of the Government’s interest-free loans of up to $15,000 for residents for the purchase of both new and second hand zero emission vehicles, as well as EV charging infrastructure, solar panels, batteries and energy efficient appliances.

In addition to this, owners of both new and second hand EVs also enjoy free registration of their vehicles for two years.

The Victorian government, after copping extensive criticism about its proposed EV road tax, is now offering residents and businesses a $3,000 subsidy to reduce the upfront cost of new zero emissions electric vehicles (ZEV).

$46 million has been committed to fund 20,000 subsidies, offered in three rounds until the rebates are fully committed, or for three years, whichever occurs sooner.

The subsidy is part of a $100 million plan with a target of 50 per cent of light vehicle sales to be ZEVs by 2030.

The Victorian Government says the $100 million package has been made possible by its controversial zero and low-emissions road user charge. That fee, which will come into effect from July 1 if it passes parliament, will cost 2.5c a kilometre for full electric vehicles.

Looking at other countries committed to moving to a cleaner transport sector, there’s no end of inspiration in the variety of grants and incentives our Government could offer to support and build the EV market here.

These include:

• Rebates/grants – Germany, France and Italy offer rebates between AU$14,000-$18,000, while Greece, Sweden and Spain offer rebates from AU$7,000-$11,000.
• Tax breaks on registration, company cars, import tariffs, GST equivalents, and for the purchase and installation of charging points
• Favourable charging tariffs
• Investment in public charging infrastructure
• Conversion bonus when you trade your old diesel for an EV (France)
• Subsidy on the cost of the EV if you live in a low emissions zone
• Bus lane use
• Discounted or exempted ferry, parking and road tolls (Norway)
• Grants for leasing an EV
• Increased taxes on petrol and diesel vehicles (Sweden)
• Exemption from London’s Congestion tax

Import a car from Japan

In 2020 a Canberra couple imported a second hand 62 kWh Nissan Leaf, a model not then available in Australia from the normal dealerships, from Japan as grey import. They wrote on social media:

“Imagine not having much money, and being able to purchase a 40kWh Leaf from Japan for between $34k-$37k. Instead of buying a new one [in Australia] for $54k.”

There isn’t a strong grey import market of EVs in Australia but for the intrepid buyer it’s an option to explore a wider variety of makes and models, usually from Japan.

Buy a second hand fleet EV, or convince your boss to buy a whole fleet

Fleets account for nearly half of all new vehicle sales in Australia and used fleet cars can often be good value buys for the individual if the car has been serviced to schedule and the kilometres are low. (This is partly because drivers don’t want to have to explain any damage or poor driving to their employer.)

There are two points here.

First: sharpen up your elevator pitch and apply pressure to your company’s purse holder for them to flip the fleet to EVs – and make your boss buy you the EV of your dreams.

Second: once all vehicle fleets in Australia are replaced with EVs, then in 3-4 years these cars will be available, more affordably, on the second hand market and your EV transition is underway.

Finally, and this is the most important one of all: Convince the federal government that having EVs is a good thing, it won’t ruin the weekend, it won’t deprive tradies of their utes, and it needs a plan. Even president Joe Biden gets it.

Source: thedriven