Real-life example: Leasing an $81k Tesla via novated lease turned out roughly cost-neutral to keeping my $25k Mazda
The Surprising Realisation
In 2023, I traded in my four-year-old Mazda 6 (worth $25,000 at the time) for a Tesla Model 3 Long Range with an $81,400 driveaway price. Over five years, the total financial outcome would be roughly neutral, i.e. it was a free upgrade (while bearing the usual risks and caveats of novated leasing).
That's not a typo.
My Situation
I was driving a four-year-old Mazda 6 and considering whether to lease a Tesla Model 3 Long Range through my employer's novated lease scheme. My income put me in the top marginal tax bracket, and I had a home loan with an offset account — two conditions that tend to favour EV novated leasing.
Scenario:
- New car: Tesla Model 3 Long Range (FBT-exempt EV), driveaway $81,422.50, my estimated value $33,000 after 5 years (~40% of original)
- Current car: Mazda 6, 4 years old — sold for $25,000, expected to fall to ~$14,000 in five years
- Lease: 5 years at $597.47/fortnight (effective interest rate 9.13%)
- Annual mileage: 15,000 km
- Income: $300,000 (top marginal bracket: 45% + 2% Medicare levy)
- Home loan offset rate: 6.1%
- Employer super: calculated on pre-NL income
Annual running costs compared:
| Tesla NL (ex GST, before tax discount) | Mazda (inc GST) | |
|---|---|---|
| Fuel / electricity | $371.25 | $2,362.50 1 |
| Service / maintenance / tyres | $100 2 | $800 |
| Registration | $984.88 | $900 |
| Insurance | $1,300 | $1,000 |
| Management fees | $516.88 | — |
Fuel modelled at $1.75/L — petrol has since climbed to around $2.30/L in many parts of Australia following the 2026 oil crisis, which makes the EV comparison even more favourable today.
Run this scenario in the calculator — figures pre-filled
The calculation below is based on the following pre-filled scenario in the Novated Lease Calculator. All inputs are editable so you can adjust for your own situation.
Open this example in the Novated Lease Calculator (new tab) →
Adjust the fuel price, income, interest rate, or current car values to model your own scenario.
Don't need an $81k Tesla — used EVs can work too
The example above uses a new Tesla Model 3 Long Range at $81,400. That's not everyone's budget and it doesn't need to be.
A used EV can be significantly cheaper, available immediately (no waiting period), and still fully eligible for the FBT exemption, provided it meets two criteria:
- It was first held and used on or after 1 July 2022, and
- Luxury Car Tax was never payable on the vehicle (i.e. the original sale price was below the LCT threshold, or it was otherwise exempt)
A used BYD Atto 3 extended range from 2023, for example, might come in under $33,000 driveaway — which changes the monthly lease payment substantially and could make the "vs keeping your current car" comparison even more compelling.
The calculator supports used EVs. Set "Vehicle condition" to "Used" and fill in the relevant eligibility fields to model your scenario.
What the Numbers Actually Show
The calculator's "NL vs Keeping Current Car" comparison breaks down the five-year outcome into three components:
| Component | Effect on NL vs Keeping Current Car |
|---|---|
| Car asset value at end of 5 years | Tesla at $33,000 vs Mazda at $14,000 → NL is $19,000 better |
| Net cashflow (lease payments, running costs, sale of current car) | NL spends more in cashflow → $22,153 worse |
| Home loan interest | NL ties up less of your offset cash → $4,369 better |
| Net outcome | NL is $1,216 better |
To put this in plain terms: yes, the Tesla costs more to lease month-to-month than the Mazda costs to run. But the Mazda is simultaneously losing value (from $25,000 down to an estimated $14,000 in five years), and petrol adds up to over $2,300 per year at the modelled price — over $3,100 at today's pump price. Once you account for those factors, the overall financial position is essentially a wash.
Why the cashflow looks worse for NL: The NL cashflow figure includes the $25,000 you receive from selling the Mazda today, which reduces your net outflow. But even with this credit, the Tesla's lease payments, residual value and running costs exceed what you'd spend just to run the Mazda. The asset value difference at the end is what tips the balance.
Why Does This Work Out So Favourably?
Several factors align to make this scenario work:
1. FBT-exempt EV at the top tax bracket
At top tax bracket income, the marginal rate is 47% (including Medicare levy). The FBT exemption means the entire lease payment is made from pre-tax dollars — that "discount effect" is substantial. The same lease at $90,000 income would produce a smaller saving.
2. The Mazda's depreciation is a hidden cost
The Mazda losing $11,000 in value over five years is a real cost that's easy to ignore when you're just looking at monthly outgoings. The calculator makes this explicit. If your current car is nearly fully depreciated — say, a 15-year-old Corolla that's already near its floor value — this advantage shrinks considerably.
3. Fuel has become a significant expense while electricity is cheaper and more stable
At $1.75/L, petrol already costs over $2,300/year for 15,000 km at 9 L/100 km. At the current pump price of around $2.30/L — with no clear sign of a quick return to pre-crisis levels — that rises to over $3,100/year. Electricity for the Tesla costs around $371/year at a blended $0.15/kWh. In practice, my charging costs are likely lower still, given solar panels at home, free public chargers, and an off-peak tariff of $0.08/kWh when charging at midday.
4. EVs have very low maintenance costs
No oil changes, no transmission service, and regenerative braking extends brake life. The NL running cost estimate for service/maintenance/tyres is just $100 per year ex-GST, compared to $800 per year for the Mazda. (This figure is naturally variable — I personally found that after four or five years, servicing costs on a typical car do begin to creep up as more components require replacement.)
5. The home loan offset rate is meaningful
At 6.1%, keeping cash in the offset account matters. Counterintuitively, the NL pathway actually saves more home loan interest than the keep-current-car pathway in this scenario. The reason: selling the Mazda for $25,000 immediately boosts your offset balance, saving meaningful interest in the first two years. The ongoing lease payments gradually erode that advantage, but the early boost is large enough that the NL pathway comes out ahead on interest over the full five years.
6. Insurance is less favourable for EVs, but may not be as bad in the context of novated leasing
Insurance is often cited as a hidden cost of EV ownership, and for some there is an element of truth to this. However, with careful shopping and a willingness to accept a higher excess (knowing that excess can also be paid with pre-tax dollars, making it effectively cheaper), this effect can be mitigated.
This Is Not a Guarantee — Here's When It Might Not Work For You
The scenario above involved several favourable conditions that don't apply to everyone. Before drawing conclusions for your own situation (you should definitely run some numbers for your own car!), consider the following:
Your tax bracket matters enormously
The pre-tax benefit of an FBT-exempt EV is directly proportional to your marginal tax rate. At the top 47% bracket, roughly 47 cents in every dollar of lease cost is discounted due to the tax benefit. At 32% (income between $45k–$135k), the benefit is smaller — and the comparison with keeping your current car may be less favourable.
Your current car's depreciation profile matters
The scenario above is helped significantly by the Mazda continuing to depreciate. A well-depreciated older car approaching its floor value won't show the same ongoing depreciation. If your current car is a reliable, low-maintenance vehicle that has already absorbed most of its depreciation, the "keeping current car" option becomes much harder to beat. (The flip side: if you currently own a car still worth $45,000 with plenty of depreciation ahead, this calculation may favour EV novated leasing even more.)
A longer lease may not be appropriate for your situation
For EV novated leases, a longer term generally achieves a higher saving. However, it also comes with greater exposure to risks — including early termination risk and reduced borrowing capacity for those planning to take out a property loan. If your job security is uncertain, or if you plan to buy property in the near future, a shorter lease may be more appropriate, which limits the achievable benefit.
A high-interest-rate lease provider changes the equation
The effective interest rate on this lease is 9.13%, which is not the lowest possible but within a normal range. Some workplaces — especially those with exclusive provider arrangements — have quoted effective rates in the mid-teens. At those rates, the lease cost rises substantially and the comparison deteriorates. Always check the effective interest rate before proceeding; 8–12% represents the more typical competitive market range at the time of writing.
Impact on childcare subsidy, child support, and HECS repayments
Novated leasing reduces your taxable income. However, for FBT-exempt EV leases, the exempt amount is still reported as a Reportable Fringe Benefits Amount (RFBA), which is added back when calculating your Adjusted Taxable Income (ATI) for means-tested purposes. This means novated leasing may negatively affect your childcare subsidy entitlement, child support assessments, and HECS/HELP repayment amount. See the page on ATI / RFBA and childcare subsidy for a detailed explanation.
How your employer calculates super contributions
This scenario assumes super is calculated on your pre-NL income. However, some employers calculate super on your post-salary-sacrifice income — meaning a lower super guarantee contribution. This reduces the net benefit of salary sacrifice and affects your long-term superannuation balance. This is a payroll policy issue, not something determined by the NL provider. See Super guarantee and payroll risks for details on what to ask your employer before signing.
NSW Health and similar employer-specific traps
Employees of NSW Health face a specific issue: the "employer share" arrangement means "half" of the tax saving is to be shared with the employer, and this erodes your savings significantly. See NSW Health's "Employer Share" — a special novated lease trap for a full explanation. The novated lease calculator accounts for this effect.
The Broader Point
The purpose of sharing this example is not to suggest that everyone should go out and lease an expensive EV. It's to illustrate that the "NL vs keeping your current car" comparison is worth running, even when the EV's sticker price is more expensive than your current car.
If your current car is depreciating, burning petrol at high prices, and requiring more maintenance as it ages, those costs are real — even if they feel invisible because they're spread across the year rather than appearing as a single lump-sum payment.
The calculator lets you model your own situation with your own car, income, fuel cost, and loan rate. If the numbers come out close to neutral (or better), the decision shifts to the non-financial factors: whether you want an EV, how much you value the driving experience, and whether you're comfortable with the risks that novated leasing carries — particularly around early termination.
If the numbers come out substantially negative for NL, you have your answer too.
Key Takeaways
- Comparing NL vs keeping your current car — not just vs buying a new car with cash — is often the more relevant question.
- In this scenario — $300k income, top tax bracket, depreciating current car, elevated fuel costs — leasing an $81k Tesla turned out to be roughly cost-neutral to keeping the $25k Mazda over five years.
- This will not apply equally to everyone — tax bracket, lease interest rate, current car depreciation profile, employer super calculation method, and childcare subsidy impact all significantly affect the outcome.
- Always run the full scenario for your own situation before drawing conclusions.
- With fuel prices rising and EV prices falling, this comparison is increasingly worth running. Used EV makes the case of NL even stronger.
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This calculator and guide are built and continuously maintained as an independent project.
If it has helped you think more clearly, avoid a costly mistake, or saved you meaningful money, you're welcome to support its ongoing maintenance and improvements:
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9.0 L/100 km × 15,000 km × $1.75/L = $2,362.50. At the current ~$2.30/L pump price this rises to ~$3,105/year. ↩
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Neither figure includes a tyre replacement budget, which would affect both cars. The net impact is small, and tyre costs within an NL are paid with pre-tax dollars, so the EV's effective cost would remain lower. ↩