Electric and hybrid vehicle finance for business

Is EV finance different from regular vehicle finance?

Structurally, no. Electric cars, vans and utes are financed through the same chattel mortgage, hire purchase and lease structures as any other business vehicle. The lender takes security over the vehicle, and a GST-registered business can usually claim the GST in a dealer price for business use, subject to the car limit for passenger cars.

The differences sit around the finance: tax treatment, resale value, charging and battery health. Those are what this page covers.

The FBT electric car exemption

For businesses that provide cars to employees, this is the headline. According to the ATO, you don’t pay FBT on private use of an electric car if:

Condition	ATO requirement
Vehicle type	Zero or low emissions — battery electric or hydrogen fuel cell, designed to carry less than one tonne and fewer than nine passengers
Timing	First held and used on or after 1 July 2022
Value	Below the LCT threshold for fuel-efficient vehicles at first retail sale and any later sale

Two catches. First, the exempt benefit is still reportable, so it can appear on the employee’s income statement. Second, the ATO says that from 1 April 2025, plug-in hybrids aren’t treated as zero or low emissions vehicles for the exemption.

The ATO also describes a 2026–27 Budget proposal to change the treatment of electric cars from 1 April 2027, with cheaper EVs keeping the full benefit and dearer ones getting a partial discount. The ATO marks it as not yet law. Don’t base a long-term decision on it until it’s legislated.

More on FBT and business vehicles and novated leases.

Luxury car tax and EVs

Luxury car tax applies when a car’s LCT value exceeds the threshold. Fuel-efficient vehicles have a higher threshold:

Year	Fuel-efficient threshold	Other vehicles
2025–26	$91,387	$80,567
2026–27	$91,661	$80,809

The ATO notes the definition of a fuel-efficient vehicle changed from 1 July 2025, so check which threshold applies to the specific model. See luxury car tax.

Practical questions before you buy

Range versus your real routes. Work from actual daily kilometres, not brochure figures, and allow for loads, towing, heat and air-conditioning.

Charging. Where will the vehicle charge — at home, at a depot or on public chargers? Depot charging needs an electrician’s assessment and sometimes a switchboard upgrade.

Battery health and warranty. On used EVs, ask for a battery health report and check how much battery warranty remains.

Towing. Towing can cut range sharply. If your work involves regular towing, be cautious.

Downtime. Ask about service networks and parts availability in your area, particularly outside capital cities.

Electric vans and utes

Electric vans suit city delivery routes with predictable kilometres and overnight depot charging. Electric and plug-in utes are newer to the Australian market; check payload and towing figures against your real work. Vehicles designed mainly to carry goods may not be subject to the car limit, as with diesel equivalents. See van finance and ute finance.

How lenders view EVs

Most lenders treat new EVs much like any other new vehicle. For used EVs, some lenders look harder at resale value and battery condition, and may set shorter terms or more conservative balloons. Mainstream models from established brands are generally easier to finance than niche ones.

Illustrative example: an architecture practice switches two cars

Illustrative only. A small architecture practice provides two cars to its senior staff. When the leases end, it replaces them with two battery electric cars priced below the fuel-efficient LCT threshold, financed through a finance lease. The practice’s accountant confirms the cars meet the ATO exemption conditions, sets up FBT reporting for the reportable benefit, and the practice installs a charger at the office car park.

Running-cost comparisons without the hype

The case for an EV usually rests on running costs, so compare them honestly:

Cost	What to check
Energy	Your actual electricity tariff and charging location versus fuel use
Servicing	Manufacturer service schedule and costs
Tyres	EVs are heavy; tyre wear can be higher
Insurance	Get real quotes — premiums vary by model
Registration and duty	Some states have had concessions; check yours
Resale	Used EV prices have moved around; be conservative

Put those beside the finance repayments and compare against a petrol, diesel or hybrid alternative over the same term. For some businesses the EV clearly wins; for others, a hybrid is the better middle ground.

Charging infrastructure

If you need a charger at your premises, get quotes early. An electrician may need to assess your switchboard and supply capacity, and installation can take weeks. Chargers supplied and invoiced with the vehicle are sometimes included in the finance; otherwise they’re usually paid separately or funded through other business finance.

Hybrids are still vehicles worth considering

Since plug-in hybrids no longer qualify for the FBT electric car exemption from 1 April 2025, their appeal for salary-packaged cars has changed. For business-owned vehicles not used privately by employees, hybrids can still make sense on fuel savings and range. Judge them on running costs and fit for the work rather than on FBT.

Thinking about going electric?

Our guide to switching a work vehicle to electric walks through the decision in more depth. When you’ve picked a vehicle, tell us about it — the enquiry takes about a minute.

There’s no credit check to enquire. We don’t spray your details across lenders; one specialist handles your enquiry and calls you. Let us know accurately which vehicle, who’ll drive it and whether staff will use it privately — it shapes the structure and the tax conversation. Start now.