Electric and hybrid vehicles racing ahead in the 'burbs

Drivers in outer city suburbs are increasingly ditching petrol for electric and plug-in hybrid cars and taking advantage of tax breaks to make the switch.

An analysis by the National Automotive Leasing and Salary Packaging Association released on Monday revealed the trend, and estimated 40 per cent of new electric and plug-in hybrid vehicles were being bought with fringe benefits tax breaks.

The findings come more than a year after the federal government introduced tax discounts on some low-emission vehicles, and after data from the Electric Vehicle Council showed battery-powered cars were becoming a popular option in outer suburban and regional areas.

The latest figures identified hotspots for new electric and plug-in hybrid cars purchased using novated leases.

The association found the low-emission vehicle leases were most popular in Victorian suburbs including Point Cook and Werribee, and in Rouse Hill, Kellyville and Beaumont Hills in NSW.

Popular Queensland electric and plug-in hybrid hotspots included Camp Hill and Carindale on Brisbane's southside, while Dickson and Watson were well represented in the ACT.

National Automotive Leasing and Salary Packaging Association chief executive Rohan Martin said the findings reflected sensible financial decisions as buyers living longer distances from the nearest city or their workplace stood to save the most money.

"The further you are from the city centre, the more reliant you are on your car," he said.

"It makes sense that so many outer suburban motorists are now switching to electric - be that EV or PHEV - (because) they're saving thousands on running costs by doing away with rising petrol prices and the car price itself through the EV discount."

Mr Martin said the fringe benefits tax discount meant someone buying a $67,000 Tesla Model 3 was making payments equivalent to owning a $40,000 petrol vehicle.

Plug-in hybrid vehicles, which also qualified for the tax benefit until March 2025, were becoming increasingly popular in regional areas, he said, and among households looking to test new vehicle technology.

"We are seeing (plug-in hybrid electric vehicles) emerging as the stepping stone for many motorists who are not quite ready to make the leap to full electric but still want to cut their costs and emissions," Mr Martin said.

The findings come almost a year and a half after the Labor government passed a law to remove fringe benefits tax from electric, hydrogen and plug-in hybrid vehicles priced under $84,916.

Since the tax change, electric car sales in Australia have risen from 3.1 per cent of new vehicles to 9.5 per cent, according to the Federal Chamber of Automotive Industries.

An analysis by the Electric Vehicle Council this year also found most electric cars were bought for drivers living in outer metropolitan suburbs, and almost 18 per cent of sales were in regional and rural areas.