Electric Car Discount Bill will prompt businesses to acquire EVs in 2023

Alon Rajic, Founder and Managing Director of Small Business Loans Australia

In July the Albanese Government introduced the ‘Electric Car Discount Bill’ to parliament, intending to remove fringe benefits tax (FBT) from electric vehicles to give more Australians access to battery-operated, hydrogen fuelled and plug-in hybrid cars. New research has revealed the Bill’s popularity among businesses – mostly small and medium enterprises – with 40% indicating they would purchase an electric vehicle by the end of 2023 if the Bill passes.

The finding was derived from a survey of an independent panel of 210 SME owners, commissioned by Small Business Loans Australia, a website helping business owners find the best financing and loan options in Australia. The respondents comprised 44% of micro businesses (1-10 employees), 27% of SMBs (11-50 employees) and 18% of medium-sized businesses (51-200 employees) and 11% of businesses with over 200 employees.

What were the survey findings?

To meet its 2050 net-zero target, Australia will need a dramatic shift towards EV ownership. Ingrid Burfurd from the Grattan Institute specified that, as cars are on the road for an average of 15 years, Australians must purchase almost entirely electric vehicles by 2035.

Fortunately, the Small Business Loans Australia survey shows that most business owners and senior decision makers are happy to make the shift sooner. If the Electric Car Discount Bill passes, 66% of businesses would be incentivised to purchase an electric vehicle. While just 9% would be ready to purchase this year, the bulk of purchases – 31% – would be in 2023.

Eleven per cent would acquire an electric vehicle in 2024, and 15% from 2025 onwards. Only 34% of business owners would not invest in EVs, regardless of the Bill’s introduction.

Small Business Loans Australia analysed responses across the States. Victorian businesses are more likely to buy an electric vehicle at some point if the Bill passes, chosen by 71% of Victorian respondents. This is followed by 68% of NSW businesses and 67% in South Australia. Businesses in Western Australia and Queensland are least likely to invest in electric vehicles, with just 62% and 58%, respectively, choosing to switch if the Bill passes.

Across business sizes, Small Business Loans Australia found that small businesses are most likely to purchase an electric vehicle by the end of 2023: 57% of small businesses specified they would, followed by 45% of medium businesses and just 21% of micro businesses.

The survey sought to find out whether businesses would seek financing for these purchases in a climate of rising interest rates. The Electric Car Discount Bill offers significant price cuts; however it is applicable only to vehicles with an original sale price below the luxury car tax threshold ($84,916 for 2022-23). A model provided by an employer valued at $50,000, would save the employer up to $9000 a year through the fringe benefits tax exemption.

The survey found that despite the savings introduced by the bill, 63% of business owners would seeking financing. The larger the business, the more likely they are to finance an EV, with 69% of medium sized SMEs believing that is the best option in an environment of rising interest rates. This was closely followed by 65% of SMBs and 54% of micro businesses.

What were the executive’s thoughts on the survey?

Alon Rajic, Founder and Managing Director of Small Business Loans Australia, says: “The Federal Govt understands that the price of EVs has been a major barrier to their adoption.”

“Our research suggests that the removal of this barrier will have an enormous positive influence on business purchase decisions. It also indicates that Australian business owners support realistic Government efforts to achieving net-zero emissions – so much so, that they would get financing on their vehicles in a climate of fast-rising interest rates.”

“Businesses would be wise to research loans options – including through free comparison websites – to ensure they have secured the lowest-risk, low-rate and most suitable loan.”

The full survey results, including breakdowns across business sizes and States, are here.