Is an Electric Vehicle Worth Financing for Your Business?

Author: Danny Thai | 10 Jun 2026

Chattel mortgages are one of the most common ways Australian businesses finance vehicles. They offer ownership from day one, predictable repayments, and a range of tax benefits that standard car loans do not. For businesses already using this product, the question is increasingly becoming: does it make sense to finance an electric vehicle on a chattel mortgage?

The answer, for many businesses, is yes. And the reasons go beyond the environment.

What Is a Chattel Mortgage?

A chattel mortgage is a business loan used to purchase a vehicle or piece of equipment, where the asset itself secures the loan. The business takes ownership of the vehicle at the time of purchase, not at the end of the term. The lender registers an interest in the asset until the loan is repaid.

Key features:

Your business owns the vehicle from day one
The vehicle acts as security, which typically means lower interest rates than unsecured loans
Repayments can be fixed and structured to suit cash flow, including balloon payment options
The vehicle must be used at least 51% of the time for business purposes
Loan terms typically run from two to seven years

For GST-registered businesses, a chattel mortgage also allows you to claim the GST on the full purchase price upfront on your next BAS statement, rather than in smaller increments over time. Interest paid on the loan is tax-deductible proportional to business use, and the vehicle can be depreciated as an asset on your balance sheet.

EV Sales Are Rising Across Australia

Electric vehicle adoption in Australia has picked up significantly. In 2025, Australians bought more than 156,800 electrified vehicles (BEVs and PHEVs combined), a 38.7% increase on 2024. Battery electric vehicle (BEV) sales exceeded 100,000 for the first time, and plug-in hybrid (PHEV) sales nearly doubled. More recently, EV sales are hitting record highs, with almost 3 in 10 new car sales being electric in April 2026.

Electric car sales in Australia

Chart: zecar • Source: FCAI, EVC • Created with Datawrapper

Despite this growth, business uptake of EVs has lagged behind consumer uptake. Many businesses are still running petrol or diesel vehicles, which means there is both an opportunity and a cost saving on the table. In times of volatile fuel prices and tightening margins, businesses are increasingly looking to EVs as a way to reduce operating costs.

The Business Case for Going Electric

Lower Running Costs

The most obvious argument for EVs in a business context is lower running costs.

Charging an EV at home or at a business premises typically costs ~$5 per 100km compared to an equivalent petrol vehicle at $16 per 100km – that’s close to a 70% saving. Annual savings however will depend on distance travelled, charging costs and fuel prices paid. Fuel prices in Australia have been volatile so far in 2026, averaging between $1.85 and $2.20 per litre across capital cities.

With EVs, the savings become more significant the more you drive. Those that cover longer daily distances such as couriers and rideshare drivers will reap the biggest cost savings.

Charging type

Cost

Cost per 100km

Home/work charging

$0.35/kWh

$4.86

Public charging

$0.70/kWh

$9.21

Petrol

$2.0/L

$16.00

Diesel

$2.3/L

$18.40

Based on typical fuel consumption of a mid-sized SUV. Actual figures will vary.

Lower servicing costs are the other major reasons EVs have lower running costs. EVs have fewer moving parts: no engine oil, no timing belt, no exhaust system, no transmission fluid. Brake pads last longer due to regenerative braking. Over five years, businesses can expect to save thousands in servicing costs compared with an equivalent petrol vehicle

Note on PHEVs

These maintenance savings apply primarily to fully electric vehicles. Because Plug-in Hybrid Electric Vehicles (PHEVs) still have an internal combustion engine, they still require traditional servicing like oil changes and fluid checks, though they do benefit from reduced brake wear.

Price Parity Is Getting Closer

EVs have historically cost more upfront than petrol equivalents. That gap is narrowing every year. There are now EV models in every segment where an electric option exists that is a similar price or cheaper than a petrol or diesel equivalent.

For example in the mid-sized petrol SUV segment a mid range Toyota RAV4 Cruiser is $62,247 driveaway. There are now several electric SUVs priced lower: Geely EX5 Complete ($46,000 driveaway), BYD Sealion 7 Premium ($59,270 driveaway) and Tesla Model Y RWD ($64,000 driveaway).

Trade professionals have more electric and hybrid options than ever. The BYD Shark Premium plug-in hybrid ute starts at $62,660 drive-away, around $10,000 less than the Ford Ranger Wolftrak ($73,000 driveaway).

The expanding range of comparatively affordable EVs means price is increasingly less of a barrier for businesses looking to switch.

Total Cost of Ownership: Petrol vs Electric Example

Below is a comparison or ownership costs between two popular and similarly sized petrol and electric cars.

Toyota RAV4 Cruiser 2WD

BYD Sealion 7 Premium

Driveaway price

$62,247

$59,270

Registration, insurance, tax

$11,910

$11,281

Service, maintenance, tyres

$6,162

$3,119

Fuel (energy)

$10,880

$3,488

Total after tax cost 5 years

$91,199

$77,158

Estimated savings

$14,040

Figures are illustrative. Based on 15,000 km/year, $2.0/L petrol average, flat electricity tariff $0.30/kWh. Individual results will vary.

Tax Benefits of Financing an EV Through a Chattel Mortgage

When your business finances an EV through a chattel mortgage, the same tax advantages apply as with any business vehicle:

GST credit: Claim the GST component of the purchase price upfront on your BAS (capped at $6,334 for passenger vehicles in 2025-26, based on the ATO car limit of $69,674)
Interest deductions: The interest paid on the chattel mortgage is tax-deductible proportional to business use
Depreciation: The vehicle can be depreciated as a business asset over its effective life

These benefits apply regardless of whether the vehicle is electric or petrol. The advantage of an EV is that lower running costs reduce other business expenses on top of the existing financing tax benefits.

Note

Tax outcomes depend on your business structure, GST registration, vehicle use percentage, and individual circumstances. Always seek advice from a qualified accountant before making finance decisions.

An Additional Advantage: The EV FBT Exemption

If you operate your business under a company structure, and provide an electric vehicle provided to an employee (including a director who is also an employee of the business), you may be able to take advantage of the federal government’s FBT exemption for electric cars.

Under this exemption, eligible battery electric vehicles provided to employees for private use are exempt from Fringe Benefits Tax (FBT). Without the exemption, FBT applies at 47% on the taxable value of the benefit, which can significantly increase the effective cost of providing a vehicle.

To qualify, the vehicle must:

Be a battery electric vehicle (BEV) or hydrogen fuel cell vehicle (PHEVs lost eligibility from 1 April 2025)
Have been first held and used on or after 1 July 2022
Be valued below the luxury car tax threshold for fuel-efficient vehicles ($91,387 in 2025-26).
Never have had luxury car tax payable on its importation or first retail sale

The FBT exemption remains in full until 31 March 2027. From April 2027, EVs priced between $75,000 and the LCT threshold will receive only a 25% FBT discount. From April 2029, the full exemption ends.

Worked Example: FBT Saving on a Business EV

A small business owner operates through a company structure and purchases a BYD Sealion 7 Premium BEV via a chattel mortgage, making it available to an employee for private use.

Toyota RAV4 Cruiser 2WD

BYD Sealion 7 Premium

Driveaway price

$62,247

$59,270

FBT applicable?

Yes

Statutory FBT rate

20% of value

FBT Taxable value

$12,305

Adjusted FBT Value
(40% personal use)

$4,922

FBT payable (at 47%)

$2,313

Annual FBT saving

$2,313

This is an illustrative example only. Actual FBT calculations depend on the vehicle’s cost, days available for private use, and any employee contributions. Seek professional tax advice for your specific situation.

The FBT exemption does not depend on the finance method: it applies whether the vehicle is purchased outright, via chattel mortgage, or through another business finance structure.

The key is that the vehicle must be provided to an employee (including company directors) and meet all ATO eligibility criteria.

What This Means for Your Business

Choosing an electric vehicle financed through a chattel mortgage can make financial sense for businesses that:

Run vehicles at higher kilometres where fuel and servicing savings compound quickly
Are GST-registered and can claim the upfront GST credit
Have predictable cash flow suited to fixed monthly repayments
Have employees who use company vehicles for private purposes (FBT exemption applies)

Not every business is the same. The right vehicle and finance structure depends on your business use, entity type, and tax position.

Ready to Explore EV Finance?

Flare Cars offers chattel mortgages for businesses looking to add electric vehicles to their operations. Our team can help you understand your options and structure a deal that works for your cash flow.

This article contains general information only and is not financial or tax advice. Tax outcomes depend on your individual circumstances. Always consult a qualified accountant or financial adviser before making vehicle finance decisions. FBT rules are based on ATO guidance current as at the date of publication and are subject to change.

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About Flare

Who we work with

Is an Electric Vehicle Worth Financing for Your Business?

What Is a Chattel Mortgage?

EV Sales Are Rising Across Australia

Electric car sales in Australia

The Business Case for Going Electric

Lower Running Costs

Note on PHEVs

Price Parity Is Getting Closer

Total Cost of Ownership: Petrol vs Electric Example

Tax Benefits of Financing an EV Through a Chattel Mortgage

Note

An Additional Advantage: The EV FBT Exemption

Worked Example: FBT Saving on a Business EV

What This Means for Your Business

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Novated leasing

Get started

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Support

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Featured customers

Industries

Guides

Other Content

Existing customers

Contact us

Guidessssss

Other Content

About Flare

Who we work with

Is an Electric Vehicle Worth Financing for Your Business?

What Is a Chattel Mortgage?

EV Sales Are Rising Across Australia

Electric car sales in Australia

The Business Case for Going Electric

Lower Running Costs

Note on PHEVs

Price Parity Is Getting Closer

Total Cost of Ownership: Petrol vs Electric Example

Tax Benefits of Financing an EV Through a Chattel Mortgage

Note

An Additional Advantage: The EV FBT Exemption

Worked Example: FBT Saving on a Business EV

What This Means for Your Business

Ready to Explore EV Finance?

For businesses

For employees

Resources

Company

Support and contact