Electric Cars vs. Hybrid Cars: Which Is Best for Your Novated Lease?

As the automotive world approaches sustainability, the decision between electric and hybrid cars has become critical for many Australians. This choice is particularly relevant for those looking to finance their vehicle through a novated lease. 

In this blog, we'll delve into the key differences between these two types of vehicles, explore their pros and cons, and help you decide which option might be best for your novated lease.

Understanding Electric Cars

Electric cars, or Battery Electric Vehicles (BEVs), represent the forefront of automotive innovation. These vehicles are powered entirely by electricity, relying on a large battery pack to store energy and an electric motor to drive the wheels. Unlike traditional internal combustion engine (ICE) vehicles, electric cars produce no tailpipe emissions, making them a zero-emission option.

Types of Electric Vehicles

While fully electric cars (BEVs) are the most common, it's important to note that Plug-in Hybrid Electric Vehicles (PHEVs) also fall under the broader category of electric vehicles. PHEVs combine an internal combustion engine with an electric motor and battery, allowing them to operate in electric-only mode for short distances.

Benefits of Electric Cars

1. Environmental Impact:

• One of the most significant benefits of electric cars is their positive environmental impact. BEVs produce zero emissions, contributing to cleaner air and reducing greenhouse gas emissions.

2. Running Costs:

• Electric cars generally have lower running costs compared to petrol or diesel vehicles. Electricity is cheaper than fuel, and maintenance costs are typically lower since electric cars have fewer moving parts.

3. Government Incentives:

• In Australia, the government offers various incentives for purchasing electric vehicles, including rebates, tax credits, and exemptions from certain duties. These incentives can make electric cars more affordable and attractive for novated leases.

Drawbacks of Electric Cars

1. Higher Upfront Cost:

• Despite the long-term savings, electric cars often have a higher upfront cost than their hybrid counterparts. However, this cost can be offset through government incentives and savings on running costs over time.

2. Range Anxiety:

• Range anxiety, or the fear of running out of battery power before reaching a charging station, is a common concern for potential electric car buyers. While many new models offer ranges that exceed 300 km, this can still be a limiting factor for long-distance drivers.

3. Charging Infrastructure:

• Although Australia's charging infrastructure is rapidly improving, it still lags behind traditional fuel stations. This can make charging more challenging, especially in rural areas.

Understanding Hybrid Cars

Hybrid cars, or Hybrid Electric Vehicles (HEVs), bridge the gap between traditional internal combustion engines and fully electric vehicles. These cars combine a conventional engine with an electric motor and a small battery, allowing them to switch between or combine power sources depending on driving conditions.

Types of Hybrid Vehicles

There are two main types of hybrid vehicles: standard Hybrid Electric Vehicles (HEVs) and Plug-in Hybrid Electric Vehicles (PHEVs). HEVs primarily use the internal combustion engine but can switch to electric power at low speeds or during coasting. PHEVs, on the other hand, have a larger battery and can operate in electric-only mode for longer distances, similar to a BEV, but with the added security of an engine for extended range.

Benefits of Hybrid Cars

1. Fuel Efficiency:

• Hybrid cars are known for their excellent fuel efficiency. Using electric power for short trips and during stop-and-go traffic, hybrids consume less fuel than traditional vehicles, leading to lower running costs.

2. Lower Emissions:

• While not as eco-friendly as electric cars, hybrids still produce fewer emissions than standard petrol or diesel cars. This makes them a greener option for those not ready to fully commit to an electric vehicle.

3. No Range Anxiety:

• Unlike electric cars, hybrids don't suffer from range anxiety. The presence of an internal combustion engine means you can refuel at any petrol station, making them ideal for long-distance travel.

Drawbacks of Hybrid Cars

1. Complex Technology:

• The dual powertrain of hybrid cars means they have more components, which can lead to higher maintenance costs compared to electric cars.

2. Still Reliant on Fossil Fuels:

• While hybrids are more efficient, they still rely on fossil fuels. This means they don't offer the same environmental benefits as electric cars, particularly in terms of tailpipe emissions.

3. Higher Purchase Price:

• Like electric cars, hybrids are more expensive upfront than conventional vehicles. However, the fuel savings over time can make them a cost-effective choice for many drivers.

Comparing Electric Cars and Hybrid Cars

Now that we've covered the basics of electric and hybrid cars let's compare the two across several key factors.

Environmental Impact

Electric vehicles lead to environmental impact in the battle of Electric Cars vs. Hybrid Cars. With zero tailpipe emissions, BEVs offer a cleaner alternative to hybrids and traditional cars. Hybrids, while better than standard vehicles, still contribute to pollution and are less eco-friendly than their fully electric counterparts.

Cost Comparison

When considering cost, electric cars often have a higher initial purchase price than hybrids. However, they also offer lower running costs due to cheaper electricity and reduced maintenance needs. On the other hand, hybrids are less expensive to buy and provide fuel savings without needing a significant lifestyle change, such as installing a home charging station.

Driving Experience

Electric cars offer a unique driving experience characterised by instant torque, quiet operation, and smooth acceleration. Hybrids, while also providing a quiet and efficient drive, may not deliver the same level of performance as electric cars. However, hybrids excel in long-distance driving scenarios where refuelling is more convenient than recharging.

Availability and Variety

Both electric and hybrid cars are becoming increasingly popular in Australia, with a growing number of models available on the market. Hybrids have been around longer, so a wider variety of options, including more affordable models. Electric cars, while newer, are catching up quickly, with manufacturers releasing more models each year, including luxury and performance options.

Novated Leases: Which Is Best?

When it comes to choosing between Electric and Hybrid Cars for a novated lease, several factors must be considered.

Financial Considerations

Electric cars can be more expensive upfront, but the savings on fuel and maintenance, combined with government incentives, can make them a cost-effective choice over the life of the lease. Hybrids, while cheaper to purchase, may not offer the same long-term savings, but they provide the convenience of traditional fueling.

Employer and Employee Benefits

Both electric and hybrid cars offer significant benefits under a novated lease. For employees, the fuel savings and potential tax benefits can make either option appealing. Employers also benefit from supporting environmentally friendly options, which can enhance their corporate social responsibility (CSR) profile.

Wrapping Up

The decision between Electric Cars vs. Hybrid Cars ultimately depends on your driving habits, budget, and environmental priorities. Electric cars offer the cleanest, most efficient option, with lower long-term costs and government incentives sweetening the deal. However, if you're not ready to fully transition to electric, a hybrid offers a balanced approach, combining the best of both worlds.

Both options can provide significant financial benefits for those considering a novated lease. It's important to assess your needs and consult with your novated lease provider to determine which vehicle best fits you. Whether you choose an electric car's cutting-edge technology or a hybrid's proven efficiency, both options represent a step towards a more sustainable future.

Ready to drive your dream car while saving on taxes? Whether you're leaning towards an electric car or a hybrid, Novated Finance Australia can help you choose. Contact us today to explore your options and secure the best novated lease deal tailored to your needs!

Frequently Asked Question

• Are electric cars cheaper to run than hybrid cars?

  Yes, electric cars are generally cheaper to run than hybrid cars due to lower fuel and maintenance costs. Electricity is cheaper than petrol, and electric cars have fewer moving parts, reducing maintenance expenses.

• Which car is better for long-distance driving, an electric car or a hybrid car?

  A hybrid car may be more convenient for long-distance driving because it can refuel at any petrol station, eliminating concerns about charging infrastructure or range anxiety.

• What are the tax benefits of choosing an electric car for a novated lease?

  Electric cars often come with tax incentives, including rebates and exemptions from certain duties, making them more cost-effective in a novated lease arrangement.

• Do hybrids qualify for the same government incentives as electric cars in Australia?

  Hybrids generally do not qualify for the same level of government incentives as fully electric vehicles, but depending on the model and location, they may still be eligible for certain rebates or exemptions.