Let’s start with the similarities
Both subscription and novated lease require your employer to accept salary packaging. Both options are also salary sacrifice arrangements that reduce your taxable income, meaning you may pay less tax on your income. With either of these programs, you could save thousands compared to taking a loan or buying an EV outright.
What is an EV subscription?
Subscriptions are a relatively new way to salary sacrifice. In fact, Origin was first to market with salary packaged subscription in Australia in early 2023. Following trials with our own people, we found that flexibility is highly valued and ideal for those who are curious about EVs and want to test them without making a long-term commitment.
The Origin 360 EV Subscription model is designed with flexibility in mind. With no lock-in contracts and only 30 days’ notice to cancel or swap EV models, you’ll have scope to test other EVs to decide what’s best for you. For example, you may start out with a Mini Electric subscription and decide that a Tesla Model 3 subscription suits your needs better.
What is a novated lease?
A novated lease is a three-way agreement between an employer, an employee, and a novated lease provider. Employees can finance a car as part of their pre-tax salary, also known as salary packaging or salary reduction.
Which is better, a novated lease or subscription?
Novated lease and subscription are both cost-effective ways to get behind the wheel of an EV. Perks include possible tax savings and offsetting the car’s running costs, as well as having the option to return, replace or buy the vehicle after a set time.
Deciding between a novated lease and a subscription depends on your individual circumstances and requirements. Let’s explore the pros and cons of both.
Benefits of a novated lease
The advantage of a novated lease is you can choose to novate your current vehicle, used car, petrol, diesel, or EV car, or select the latest model fresh from the dealer showroom. Most novated lease companies* allow you to add accessories (such as a bull bar). This is ideal if you have a particular vehicle in mind such as a traditional fuel or 4WD vehicle.
Considerations
Like a traditional loan, obtaining a novated lease requires a credit assessment and, in certain cases, a deposit. These leases typically have fixed-term contracts spanning several years.
This may be manageable if you plan to stay in the same job but if your employment circumstances change, and you’re unable to transfer the lease to a new employer, you might have to cancel it. Cancelling may incur exit fees, and you’ll be required to settle the residual value of the vehicle calculated as a percentage of the car’s total value. It’s important to check the details in the contract before signing.
Benefits of subscription
On the other hand, Origin 360 EV Subscription bears all financial risk, without lock-in commitments or exit fees. Allowing you the freedom to trial an electric car on a month-to-month basis, eliminating upfront financial commitments – an excellent way to try out an EV without getting locked in.
Our subscription package also allows subscribers to swap or upgrade to the latest EV model with 30 days’ notice**. On the flip side, if you’re enjoying your EV, keep it and every 12 months, you’ll receive a 15% discount# with the option to buy the vehicle after the third year^.
As we’re also energy experts, we can help you get the most out of your EV through our connected home offerings like solar panels and battery storage systems.
Considerations
If you have a petrol or diesel car in mind or want to add accessories such as a tow or bull bar to your car, then an EV subscription isn’t right for you. For most though, the reality is many EVs come with everything you’ll need for your daily commute and weekend adventures.
How do EV subscriptions and novated leases differ?
| Novated lease | Origin 360 EV Subscription |
| Benefits • Personalise your ride • Novated lease includes most new, used and EV cars. Plus, the option to add accessories. | Benefits • Get a taste of EV life without committing. • The subscription model is like a novated lease but offers flexibility. |
| What to expect • Long-term fixed contract • Finance application • Credit assessment • Set up fees • Range of cars • Cancellation fees • Pay out the residual value • No car swap option • Purchase option at end of lease* | What to expect • No lock-in contract • No loan liability • No credit assessment • No exit fees • Month-to-month plan • Range of EVs to choose from • Car swap, upgrade or purchase^ • 30 days’ notice return** • 15% discount every 12 months# |
Of course, it’s important to seek independent legal, financial and tax advice when making any financial decisions in respect of the appropriateness of salary packaging for your circumstances.
At Origin we’re dedicated to helping Australians make the switch to electric vehicles, from home charging solutions to business leasing, subscriptions, car sharing and much more. Find out how to get an Origin 360 EV subscription in your businesses.
Important information
Novated Lease companies terms, fees and charges differ, it is recommended to check their T&Cs.
# The discount will be applied on the anniversary of the delivery of the vehicle and the subscription fee will be adjusted. The fee discount will reset when switching to a different vehicle.
** At least 30 days’ notice required. Pending vehicle availability. Depending on the return date, there may be a credit or debit adjustment to pay deductions.
^ Customers can make an offer to purchase the vehicle after 3, 4 or 5 years. The 3 year period is counted from your subscription start date, or the date of latest car swap, whichever is more recent.
Disclaimer: All content provided is general and has not taken into account your objectives, financial situation or needs. Origin recommends that you seek your own independent legal, financial and tax advice when making any decisions in respect of the appropriateness of salary packaging for your circumstances.
