There is no slowing down the popularity of plug-in hybrid vehicles (PHEVs) in Australia. Even as sales of fully electric cars have eased, more people are buying PHEVs.
Plug-in hybrid sales accounted for 15.6% of new car sales in the first 9 months of this year, compared to 7.6% for fully electric vehicles. Reviewers have even called PHEVs “the best of both worlds”.
So, are PHEVs worth it? And how does the equation change if you’re considering a PHEV on a novated lease?
Let’s explore the key considerations to help you decide if a hybrid hits the mark for you.
First things first: What is a PHEV?
A plug-in hybrid electric vehicle combines a petrol engine and an electric battery. Unlike traditional hybrids, PHEVs can be plugged in to recharge. They also boast a larger battery, with most newer models able to travel more than 50km (and some over 100km) on electricity alone.
The best of both worlds
PHEVs travel longer on electricity than traditional hybrids, generally cost less than high-end fully electric vehicles (EVs), and contribute less emissions than combustion engines.
What’s the catch? We can’t talk about buying a PHEV without mentioning the cost.
Breaking down the costs of buying a PHEV
On-road costs
PHEVs often have a higher sticker price compared to petrol or standard hybrid vehicles. The higher price reflects the advanced battery technology and dual fuel systems.
This begs the question: are PHEVs worth it? To answer that, we need to compare the ongoing costs, where the savings really add up.
How much could you save on a PHEV over the life of a 5-year novated lease? We’ve crunched the numbers on someone earning $85,000 annually, traveling 15,000kms a year living in Victoria, using the popular 2024 Mitsubishi Outlander to compare the costs.
| |
2024 Mitsubishi Outlander Aspire 2.5L Petrol |
2024 Mitsubishi Outlander PHEV Aspire |
| Driveaway from |
$45,800 |
$61,500 |
| Weekly cost with novated lease from |
$298 |
$258 |
| Life of lease savings from |
$21,430 |
$40,180 |
| Weekly fuel/charging |
$54.92 |
$12.98 |
Securing a PHEV on a novated lease could save you over $18,000, depending on your driving habits and personal details. Thanks to the Electric Car Discount and making the novated lease payments using 100% of your before-tax salary.
Weekly running costs
One big advantage of buying a PHEV is the lower running costs. By driving on electric power for most of your daily commutes, you could save thousands on fuel annually.
Here’s what your weekly fuel costs could look like, based on our data for the average person driving around 15,000km annually:
- Petrol car: $50-60 in fuel
- PHEV: $10-15 in fuel and electricity (when charged regularly)
Over a year, switching to a PHEV could save you over $2,000 annually without sacrificing the convenience of a petrol backup for long drives.
PHEVs also require less maintenance than petrol cars, which brings down running costs even further.
Government incentives for PHEVs
The Australian Government has introduced measures to make PHEVs more affordable, encouraging drivers to adopt low-emission vehicles. Key incentives include:
- Electric Car Discount: Applies to eligible low-emission vehicles acquired through a novated lease, including PHEVs. Simply put, you could make all your car’s payments using your before-tax income.
- State-based EV rebates and discounts: These vary by location but can include purchase rebates, reduced registration fees, and stamp duty discounts.
By combining these incentives with a novated lease, drivers could enjoy significant income tax savings, making PHEVs a great choice for many.
Eligible PHEVs and incentive expiry dates
The incentives offer an exciting opportunity, but it’s important to note a few key details to make the most of them.
Eligibility
PHEVs must meet a few criteria to qualify for the Electric Car Discount:
- First held and used after 1 July 2022
- The original price must be under the luxury car tax (LCT) threshold
The LCT threshold for low and zero-emissions vehicles is $91,387 in 2024-25.
If you’re considering a used PHEV on a novated lease, you can check historical
LCT thresholds here to make sure the original price was lower.
Expiry dates
From 1 April 2025*, PHEVs will no longer be eligible for the Electric Car Discount. You must have started your novated lease and taken delivery of the PHEV before this date for it to be considered “held and used”.
Acting soon is crucial to ensure we can source and supply your preferred PHEV in time for the April 2025 cut-off.
*There is a bill before the Senate that could extend the exemption, but no indication yet of whether it will pass.
Getting a PHEV on a novated lease
A novated lease bundles all your car's regular expenses – servicing, insurance, fuel or charging, registration, and more – into a single regular before-tax payment over the life of the lease. This could reduce your taxable income, resulting in more money in your pocket each pay.
At the end of the lease period, you can choose to pay out the vehicle’s residual value to own it outright, upgrade to a newer car, or keep the car and do a second novated lease.
Read more: Fleetcare’s Guide to the Electric Car Discount Bill.
Growing Availability
PHEV adoption in Australia is gaining momentum, with increasing stock arriving as demand grows and manufacturers broaden their ranges. Fleetcare’s strong relationships with dealerships mean they have access to a wide variety of options. Now is the perfect time to explore your choices before the Electric Car Discount ends on 1 April 2025.
The bottom line: Are PHEVs worth it?
The sticker price for PHEVs might be higher than the petrol-powered equivalent. But what if you don’t need to pay the upfront costs?
With a novated lease, you gain access to tax incentives that could make getting a PHEV more affordable. Plus, securing a PHEV that’s eligible for the Electric Car Discount before April 2025 means you could make those payments 100% before-tax.
When you add up these savings, a PHEV is absolutely worth it for the right driver.
Key considerations before leasing or buying a PHEV
For those who commute regularly in urban areas, the cost savings and environmental benefits of a PHEV make it a compelling choice. However, if you frequently drive long distances without charging access, a traditional hybrid or petrol vehicle might suit you better.
Before diving into a PHEV novated lease, take some time to assess your needs.
- Driving habits: Analyse your typical daily mileage and consider how often you take long trips.
- Charging access: Ensure you have access to charging at home or work to maximise electric usage.
- Novated lease benefits: Explore the financial advantages of novated leasing for PHEVs, especially with the current Electric Car Discount.
- Crunch the numbers: Conduct a cost-benefit analysis to see if a PHEV with a novated lease aligns with your budget.
Although the Electric Car Discount is due to end in April 2025, you still have time to weigh up your options.
Ready to explore your PHEV options?
Whether it’s reduced fuel costs, lower emissions, or the potential tax savings through a novated lease, PHEVs offer a balanced blend of benefits. If you decide that a PHEV is the right choice for you, then Fleetcare will help you secure your dream car for less on a novated lease.
Contact Fleetcare today to discuss your PHEV novated leasing options and take the first step towards a greener future.