Begin the clock; I’d say we’re 18 months away from the primary flood of second-hand EVs hitting the market. A lot of the main focus in Australia has been on the sale of latest EVs — that is the place a lot of the authorities assist has been focused.
However there’s one coverage that will find yourself shaping the second-hand market: The federal authorities’s transfer to exempt fringe-benefits tax on EVs bought on a novated lease.
Susceptible to delving too deep into accountant jargon: This variation implies that should you drive a automobile on a novated lease, and it was bought (or first used) after July 2022, you shouldn’t have to pay a further tax on the non-public use of that car. This solely applies to EVs bought for beneath $84,916 — or the brink for the luxurious automobile tax.
To simplify: If you’re driving an organization automobile, it’s greater than probably on a novated lease association, the place you log your work-based driving hours and the price of the automobile comes out of your earnings.
This incentive hasn’t gone unnoticed. Whereas there’s no determine on the variety of EVs on the market on a novated lease, a latest survey from Novated Leases Australia indicated that just about half of Australians would take into account adopting an EV through a novated lease association with their employer.
So, why does this matter?
The widespread novated lease time period is three years. If EVs comply with the identical pattern as different novated lease automobiles, we’re prone to see many roll onto the second-hand market as drivers use the top of their contract as a chance to improve their automobile. And their previous car falls onto the second-hand market.
If, in a 12 months’s time, you might be available in the market for a second-hand EV, you could be in luck. So far, EVs have largely held their worth within the second hand market.
Vehicles sometimes lose round 50% of their worth throughout the first three years. Some Tesla fashions have misplaced solely 10% of their worth by comparability. We’ve solely this 12 months seen some second-hand Teslas — primarily 2019 fashions — dip beneath the $40,000 mark.
There’s a query nevertheless as as to whether the extra provide of second-hand EVs will merely meet demand that’s already available in the market — holding costs secure.
The price of proudly owning and working a automobile goes up. A $2 per litre petrol worth has turn into the brand new norm, with indications this might hover nearer in direction of $3 by the top of 2024. Servicing prices are additionally rising.
Both approach, this shake-up is poised to hit our market throughout the subsequent 12 months or so. If you’re hoping to promote your EV at a premium and improve you could wish to do it sooner somewhat than later.
However if you’re searching for a extra inexpensive second-hand EV, holding out just a bit bit longer could also be your greatest wager.
As I’ve argued previously, worth isn’t the one issue driving EV adoption. With the brand new automobile market, many automakers are utilizing the change to EV to redefine what premium means for his or her line of automobiles. And with the second-hand market, many Australians are taking a look at what charging amenities are of their space earlier than contemplating a change.
Additionally, Australians have a tendency to interchange their automobile as soon as each 5 to seven years, with the newest ABS information exhibiting the typical age of automobiles on our roads is round 10 years previous. Many are primed to attempt an EV as their subsequent automobile — and given how sometimes they take into account their automobiles, it’s a giant resolution.
However being conscious of this dynamic with novated leases will at the very least can help you make the most effective name to your private circumstance and hopefully come out forward of what are quickly altering market dynamics for EVs.
Des Dangle is the CEO and founding father of Carbar