Drive Car of the Year 2026 – Best Electric Vehicle Under $40K finalists announced

At a time when everything from groceries, to homewares, to cars seem to be getting more expensive, BYD defies the trend in 2025 and repriced its Atto 3 medium SUV with its lowest entry price yet.

Starting from $39,990 plus on-road costs, the BYD Atto 3 Essential just makes under the threshold for this Drive Car of the Year category.

The Atto 3 Essential offers a 345km WLTP range and a 49.9kWh battery, driving a 150kW/310Nm single electric motor.

While it’s classed as a medium SUV, the Atto 3 fits at the smaller end of the segment, meaning it’s easy to manage in the tight confines of the city.

The Atto 3 Essential comes with a long list of standard equipment, like a 12.8-inch rotating infotainment display, 17-inch alloy wheels, synthetic leather seat upholstery, power-adjustable front seats, keyless entry, and push-button start.

BYD hasn't stripped major features from the equipment list, or downsized the battery to hit its new lower price point, ensuring the Atto 3 Essential can hold its own against a widening range of low-cost EVs.

The BYD Dolphin delivers the one-two punch of offering a high list of standard equipment in an electric hatchback that’s priced the same as hybrid and petrol small cars like the Toyota Corolla and Mazda 3.

The Dolphin Premium may be the more expensive of two Dolphins sold in Australia, but with punchier performance and a longer driving range, it’s the one to opt for.

Priced from $36,990 plus on-road costs, the BYD Dolphin Premium can cover 427km of WLTP range thanks to its 60.5kWh battery, and offers perky performance from its 150kW/310Nm motor.

The Dolphin’s approach is unabashedly urban, with a small hatchback form factor and an inoffensive design that cloaks a surprisingly comfortable and well-featured cabin on the inside.

Where new vehicles increasingly opt for cheap materials to mask their rising cost of development, the plush and padded Dolphin, with its cleverly integrated interior, feels upmarket.

While it might not offer the outright space of a larger SUV, it’s just right for singles or couples who live or work in urban areas and don't want to sacrifice creature comforts to get into a car that’s perfect for narrow streets and tight parking spaces.

Hyundai made a splash when it launched the Inster, delivering a compact EV with a design that stands out from the pack. But substance more than style matters for Drive Car of the Year.

The Inster Standard Range starts from $39,000 plus on-road costs, landing you a 42kWh battery and 327km WLTP driving range, and a 71kW/147Nm motor.

While it’s the smallest of the three finalists in its segment, the Inster makes a big impression with its chunky SUV styling.

More than just an aesthetic flourish, the boxy, upright stance of the Inster creates a roomy-feeling interior for four, with commanding views out of the interior and plenty of headroom for occupants of all sizes.

Hyundai’s approach to electric vehicles delivers a small car that feels familiar.

The interior and its interfaces are not the work of science fiction, but instead offers a wide range of physical controls, buttons, and dials – the ideal stepping stone for drivers who may be intimidated by the all-touchscreen interfaces of some rivals.

Add in the flexibility of an interior that can be configured a number of ways to mix and match passenger and cargo space, the Inster offers versatility that belies its compact size.

A new set of price bands for the electric vehicle segments shows the long-awaited growth of options for buyers looking to purchase a new electric vehicle, without blowing the budget.

While it’s been a slow rollout of truly affordable EVs in Australia, the competition is heating up, and this year’s finalists are the pioneers of a segment that’s about to grow at a phenomenal pace. As one of the lower-priced segments in the Drive Car of the Year awards, judges are looking for balance.

Range and performance matter, but they’re not crucial in cars that are pitched as urban transport, rather than cross-country tourers.

Comfort, ease of use, and value for money are key attributes. 

The technology included in the car needs to be easy to understand and reliable when you need it.

The space needs to work for singles, couples, and young families alike. Cars in this price bracket are equally likely to only cars or second cars and need to work in both situations.

Low prices shouldn’t mean an absence of equipment, but the balance is important. Value matters, so finding the right mix of features at a price people can afford is a critical factor.

Drive’s rules require that, for a car to be eligible, it must:

1. Be all-new (or significantly updated), or a winner of its category in the preceding awards year.
2. Be on sale with customer deliveries commenced by 1 December 2025.
3. Retail examples be made available for Drive to road test before that cut-off date.
4. Pricing cut-offs exclude discounts and limited-time offers.

Eligible to compete are electric vehicles with an RRP of less than $40,000 before on-road costs – even if the drive-away price pushes above this mark – but unlike other DCOTY categories, cars in this category do not need to be all-new or significantly updated due to the first-time appearance of the $40,000 price band for electric vehicles.

Some of the contenders in this category offer model variants that are priced above $40,000 before on-road costs. Only trim grades that fall below the price cap will be eligible.

The winner of the Drive Car of the Year 2026 – Best Electric Car Under $40K will be announced in February 2026.

An overall Drive Car of the Year award will be awarded in February 2026.

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Kez Casey migrated from behind spare parts counters to writing about cars over ten years ago. Raised by a family of automotive workers, Kez grew up in workshops and panel shops before making the switch to reviews and road tests for The Motor Report, Drive and CarAdvice.

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