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The recent surge in petrol prices has been hard for many Australian households. With global tensions affecting supply chains, bowser prices have climbed sharply and there are concerns around future supply.
For anyone who relies on their car for work, school runs or day-to-day life, this is more than just a headline – it’s a direct hit to weekly budgets.
Why higher fuel costs shift the comparison
When petrol prices increase, the total cost of owning a traditional vehicle rises as well. Fuel is one of the largest ongoing expenses associated with car ownership, so sustained increases can materially change the long-term cost of running a vehicle.
By contrast, electric vehicles (EVs) are powered by electricity, which is generally cheaper and more stable in price than petrol. While EVs often come with a higher upfront purchase price, their running costs can be lower over time – particularly when fuel prices are elevated.
Let’s have a look at some numbers
To provide an example, if we assume petrol prices are 225 cents per litre and a medium-sized EV costs $20,000 more than a traditional vehicle in upfront purchase costs, and it is driven about 12,500 km each year, it could be around $3,000 cheaper per year to run an EV and the upfront costs would be recovered in about six years. This includes maintenance costs, but keep in mind there are many variables in the calculation and this is an illustration only.
The market is still moving and EV upfront prices are getting lower, so it would be worth running cost calculations for your own circumstances based on your preferred vehicle and driving needs. There are some calculators online that can give you an estimate.
This doesn’t automatically make EVs the right choice for everyone, but it does mean the financial comparison between petrol vehicles and EVs has shifted.
Government incentives are part of the picture
Another factor influencing the equation is the range of federal and state government incentives available to EV buyers.
Depending on the location and vehicle, these may include rebates, stamp duty concessions and registration discounts. Some employers are also offering novated lease arrangements with favourable tax treatment for eligible EVs.
These initiatives are designed to reduce the upfront cost barrier and make EV ownership more accessible, although eligibility criteria and availability can vary.
The financing perspective
From a lending point of view, vehicle choice can influence how a purchase is financed.
Whether you’re considering an EV or a traditional vehicle, there are multiple options available – including car loans, personal loans and novated leasing. Each approach has different implications for cash flow, tax and overall affordability.
With petrol prices currently elevated, more people are starting to reassess these decisions and look more closely at total cost of ownership rather than just the purchase price.
If you’re weighing up your options or looking to finance a purchase, I can help you understand how different choices may affect your cash flow and borrowing position.
