Smart report reveals how much EV drivers could save as petrol prices rise
EVs are becoming increasingly attractive for drivers looking for a petrol alternative.
The cost of living is back in the headlines, with a rapid spike in petrol prices putting Australian workers’ weekly budgets under renewed pressure.
However, electric vehicles (EVs) are emerging as an increasingly attractive alternative for drivers looking to shield themselves from the bowser price shock, while having greater certainty over their weekly running costs.
EV drivers could save more than $390 a month if petrol prices keep rising
New economic modelling commissioned by Smart has found the average Australian worker could save more than $390 a month if petrol prices reach $3.30 per litre, simply by switching to an EV on a novated lease.
Smart engaged Positive Economics Advisory to analyse the impact of rising petrol prices on the monthly cost of driving an entry-level petrol vehicle financed with a secured car loan, compared to the cost of driving an EV on a novated lease. The analysis examined a petrol Kia MY26 Picanto Sport Automatic and an electric BYD 2026 ATTO 1 Essential and modelled the savings for workers on an average annual salary of $110,000, driving 15,000 kilometres a year.
Positive Economics reported that if the current global situation escalated to the level of a 1979-style oil shock, petrol prices could climb to $3.30 per litre. If petrol prices reach that level, they concluded that the entry level BYD would save drivers more than $4,600 per year, compared to driving the similarly priced petrol Kia.
Read the Smart Petrol Price Report here
At current petrol prices, EV drivers are already saving thousands of dollars annually
Smart’s Group Executive Sustainability, Sophie MacIntosh, says an electric vehicle purchased through a novated lease is the best way for drivers to protect themselves from fluctuating fuel prices and benefit from additional tax advantages through the Australian Government’s successful Electric Car Discount, which exempts eligible vehicles from fringe benefits tax (FBT).
“Based on the analysis, the average Australian worker is already making significant savings - more than $200 every month - by driving a novated lease EV versus a petrol car financed with a car loan. This gap will only continue to widen as the price of petrol increases,” she says.
“The analysis shows that if prices keep rising at the bowser and reach the level of the 1979 oil crisis, the potential savings could jump to more than $4,600 per year.”
Ms MacIntosh added: “The benefit of owning an EV through a novated lease compared to ownership through traditional finance is you also save on tax. Those tax benefits coupled with fuel savings make a novated leased EV the most financially sustainable choice for most Australian workers right now."
You can learn more about a novated lease and how it works here.
Petrol prices forecast to continue rising
Petrol prices have climbed by an average of 50 cents per litre in five weeks in some cities and are forecast to continue climbing amid the conflict in the Middle East and subsequent disruption to global oil supplies.
“Australian workers who salary package an EV through a novated lease will be largely shielded from these rapid petrol price increases. EV drivers can have confidence that their monthly vehicle running costs are going to remain steady and that is good news for tight family budgets,” Ms MacIntosh says.
Important Information
This is general information only. Before entering into any salary packaging or novated leasing arrangement, you should consider your objectives, financial situation and needs, and obtain appropriate legal, tax, financial, or other professional advice based upon your own particular circumstances.
Research was commissioned by Smart and conducted by Positive Economics Advisory. The analysis is based on the following key assumptions and limitations:
a) The representative individual is assumed to earn the average annual full‑time Australian income of $110,542. Source: ABS.
b) Monthly energy and fuel costs are estimated based on 15,000 km travelled per year. Source: AAA.
c) Monthly repayments for EV and petrol vehicles financed with a secured car loan are derived using Savvy’s Car Loan Repayment Calculator, assuming 100% of the drive‑away price is borrowed at an average car‑loan interest rate of 7.73% p.a. over a 5‑year term.
d) A 1% increase in crude oil prices is assumed to raise retail unleaded petrol prices by 0.504% per Abbas Valadkhani et. al., 2021.
e) Retail electricity prices are assumed to remain unchanged in the short-term following oil price shocks. This reflects regulatory settings for retail power prices, including the annual nature on which contracts are generally repriced.
f) While the current supply disruption has pushed up gas prices, the analysis does not reflect any potential flow‑through to residential electricity tariffs.
g) The analysis does not incorporate any potential state government EV incentives or rebates. At present, only the Northern Territory offers an active scheme.