Key Takeaway Table
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Electric Vehicles in Australia
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Australia’s electric vehicle (EV) market is on the rise and is expected to grow further in the next few years. The country is now catching up, with the government providing infrastructure, incentives, and other benefits to encourage people to transition to sustainable transport. For business owners, now is a good time to purchase or switch to EVs. Taking out an electric car loan can help you get the EV you need and enjoy advantages like lower operational costs and improved brand image.
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Advantages of Using Electric Vehicles for Your Business
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EV prices are steadily decreasing, making it easier for businesses to purchase them. Operational costs are also lower due to the lower price of electricity and fewer moving parts to maintain. EVs can improve your brand image and can attract more customers. They can also help improve working conditions for drivers and increase retention. Finally, electric vehicles can help you stay compliant with current and future environmental regulations.
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Incentives Electric Vehicles
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There are government incentives, rebates, and discounts available to encourage the country's transition to electric vehicles. Many states have put in place incentives for EV purchases, and the ATO also has tax exemptions available.
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Things to Consider Before Getting a Business Loan for an EV
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Before applying for a business vehicle loan, it's crucial to determine your business needs, like what kind of EV and how many units you need. It's also important to know when you need the loan. You should also check your business financials and credit standing. All these factors can help you in the process of choosing the right lender for your needs.
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Business Loans for Electric Vehicles
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Loans for electric vehicles fall under chattel mortgage, which means the vehicle itself is the security for the loan. Electric vehicle loans can be obtained from both bank and non-bank lenders with varying rates, fees, and terms. You can also check with lenders if they offer green auto loans, which work similarly to regular car loans except they offer interest rate discounts and more favourable terms.
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When electric vehicles were first introduced, many countries acted quickly, putting regulations in place to encourage people to make the switch. Australia may not have been one of the early adopters of electric transportation, but it’s on its way to catching up. The projected revenue for the EV market for this year is $5.1 billion, with a projected CAGR of 17.07% for 2024-2028. The market is growing and is expected to continue doing so in the next few years.
The government is taking steps to facilitate the transition to EVs, with state governments providing rebates and incentives to their constituents. Moreover, governments are installing charging stations to support the growth of the EV market.
For business owners, taking out a loan for an electric vehicle is highly beneficial. Whether you’re buying a dedicated company car or purchasing a large vehicle for road freight purposes, being an early adopter of EVs can help you save on costs and stand out from the competition.
Advantages of Using Electric Vehicles for Your Business
Steadily Decreasing Prices
Although electric vehicles are still slightly more expensive than their traditional counterparts, the prices have been steadily decreasing, making them more affordable than ever. This is due to a higher supply of EVs, creating more options for buyers all over the world.
Lower Operational Costs
Electric vehicles typically have lower operating costs than traditional gas or diesel vehicles. Electricity is generally cheaper than fuel, and since there are fewer moving parts on an EV, maintenance costs are also generally lower. Businesses, especially ones that depend on transport a lot, can save money in the long run if they use EVs.
Attracting More Customers
Using electric vehicles can enhance a business's brand image by demonstrating a commitment to environmental causes. This can appeal to increasingly eco-conscious consumers. Moreover, not many businesses have made the move towards low-emission vehicles. Thus, if you invest in EVs now, you can make your business stand out from its competitors.
Increasing Employee Satisfaction
For those in the trucking business, you can increase driver satisfaction and retention when you purchase electric trucks. Electric trucks produce significantly less noise and vibrations, improving the working conditions for drivers.
Regulation Compliance
The Australian government aims for the country to reach full net zero by 2050. To reach this goal, the government is moving towards stricter environmental regulations. Transitioning to electric vehicles can help your business stay compliant with regulations and avoid potential penalties.
Incentives for Electric Vehicles
You can enjoy several incentives and rebates if you decide to purchase an electric vehicle for your business. These benefits are a way for the Australian government to encourage the movement towards more sustainable vehicles.
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Eligible electric and low-emission vehicles purchased between May 2021 and June 2024 can receive 2 years of free registration.
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There is a 3-year motor registration fee exemption for new electric vehicles registered between October 2021 and June 2025.
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The Zero Emission Vehicle (ZEV) Rebate Scheme will provide a $3,500 rebate for eligible vehicles registered in WA until May 2025.
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The ZEV Rebate Scheme provides rebates of up to $6,000 on a purchase of an eligible electric car or vehicle.
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Victoria's ZEV subsidy scheme provides a subsidy of $3,000 on every purchase of an eligible electric vehicle.
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Until June 2027, all registration fees and stamp duties for eligible electric vehicles are waived.
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| Tax Exemptions | |
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Fringe Benefits Tax Exemption
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The ATO has issued afringe benefits tax (FBT) exemptionon electric vehicles. This means that electric cars under novated lease can be exempt from FBT as long as they fit the following criteria:
- Zero or low-emission vehicle - Does not reach the luxury car tax threshold of $84,916 - The vehicle has been held and used for the first time on or after July 1, 2022 |
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Removal of Customs Duty
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In 2022, the existing5% import tariff on electric vehicles has been removed. Any vehicle that fits the requirements and is valued less than the luxury car tax threshold will no longer have customs duty.
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Things to Consider Before Getting a Business Loan for an EV
Here are the steps you must take before applying for electric vehicle loans.
Determine your business needs
Your business needs are the first consideration when applying for a loan. Determine why you need a commercial vehicle. What will you use it for? Knowing the purpose of the vehicle will help you pinpoint the following:
- Type of electric vehicle (electric battery, plug-in hybrid, fuel cell, etc.)
- Size of electric vehicle (sedan, van, truck, etc.)
- Number of units needed
- Features needed or preferred
- The exact brand or model preferred
These factors will allow you to determine your loan amount and can help you find a lender that can provide it for you. Another important factor to consider is the urgency of your needs. Some lenders may process loans faster than others, so knowing how soon you need your vehicle is crucial.
Assess your financial and credit standing
Your financial situation will determine your eligibility to get a loan. Look at your business performance and capability to repay a loan. Be aware of your credit history and credit score as lenders use these as a way to determine your eligibility for their loans.
Business Loans for Electric Vehicles
Like ordinary car loans, electric vehicle loans fall under chattel mortgages, which are loans where the vehicle acts as security against the amount borrowed.
Several banks and lenders offer green auto loans, which are specific to electric or plug-in hybrid vehicles. These loans typically have interest rate discounts, extended terms, and more depending on the lender.
You can obtain a loan for EVs from banks and non-bank lenders. Choosing which lender is right for you will depend on your needs and eligibility.
Borrowing from a bank
Banks have higher eligibility criteria, requiring a clean credit history. However, they provide the lowest interest rates, longer terms, and higher loan amounts.
Best for: Businesses in good financial and credit standing.
Borrowing from a non-bank lender
Non-bank lenders can approve EV loans with low or no documentation requirements. They can also provide loans to businesses despite bad credit. Since they don’t always need to go over documents, they can provide loans quickly. Non-bank lenders will usually charge higher interest rates than those of a bank.
Best for: Businesses that have an immediate need for an EV, businesses that are looking for a no-doc solution, businesses with tax debt or bad credit.
Get Financing for an Electric Vehicle for Your Business
If you’re in need of a commercial vehicle, an EV is a great choice that can reduce operational costs and elevate your business. Darkhorsefinancial.com.au is ready to assist so you can find the right loans for your needs. We’re experts in vehicle and asset financing, and we can help you secure the electric vehicle you need. Talk to us to find out more.
