Electric vehicle finance for businesses switching to EVs

Key points

• Lower running costs are the main business case: fuel and servicing.
• Eligible battery electric cars for employees can be exempt from FBT.
• Plug-in hybrids are no longer treated as zero or low emissions vehicles for FBT from 1 April 2025.
• Chargers and electrical work can be funded with the vehicle.

How does the FBT exemption work?

The ATO sets out conditions that must all be met for the electric cars exemption:

From 1 April 2025, plug-in hybrids are no longer treated as zero or low emissions vehicles for FBT, so they generally don't qualify for new arrangements. Vans and utes designed to carry a tonne or more don't fall under the car exemption either, but may have their own FBT treatment. Your accountant should check the specific vehicle.

• The car is a battery electric or hydrogen fuel cell vehicle, designed to carry less than one tonne and fewer than nine passengers.
• It was first held and used on or after 1 July 2022.
• It's used by a current employee or their associates.
• Luxury car tax was never payable on it, and its value is below the LCT threshold for fuel-efficient vehicles.

How do you work out EV payback?

Divide the extra upfront cost by the monthly saving to see how many months it takes to break even. The purchase payback calculator does this sum if you enter the monthly saving as the benefit.

Illustrative example. A Canberra home-care provider runs eight cars for carers who drive about 25,000 kilometres a year each on short local trips. Replacing two ageing petrol cars with small battery electric cars below the fuel-efficient LCT threshold, plus two workplace chargers, costs about $104,000. Lower running costs and the FBT exemption on the carers' limited private use make the switch cheaper over five years than buying petrol cars, according to the provider's accountant.

• Kilometres per year for the vehicle.
• Fuel cost now for the petrol or diesel equivalent.
• Charging cost at your tariff, or lower if you have solar.
• Servicing difference.
• Price difference between the EV and the equivalent combustion vehicle, plus charger costs.

How should you plan depot charging?

Charging is what makes or breaks an EV fleet. Before buying vehicles, work out:

An electrician experienced in commercial charging can assess your site and quote any switchboard or supply upgrades. Those costs can be significant, so include them in the project budget and the loan from the start.

• How far each vehicle drives a day, and whether an overnight charge covers it with a comfortable margin.
• How many vehicles charge at once, and whether your switchboard and supply can handle it.
• Whether drivers take vehicles home, and how home charging is reimbursed.
• Your tariff, including any time-of-use pricing that rewards overnight charging.
• Solar on the roof, which can cut charging costs further for vehicles parked during the day.