The Australasian Fleet Management Association (AFMA) and the NSW Department of Planning, Industry and Environment conducted a survey of 177 private and public organisations that use almost 70,000 fleet vehicles.
Supported by ACA Research and renewable energy company AGL, the AFMA Electric Vehicles in Business Fleets Report said given the barriers, converting Australian fleets to EVs will be “challenging”.
It found that companies were prepared to set targets to become carbon neutral but hampered by costs and choices. Transport emissions represent 18 per cent of Australia’s total emissions.
AFMA executive director Mace Hartley said the report found that many private and public sector organisations were choosing to “go green” by reducing vehicle emissions although their underlying motivations varied significantly.
He said ASX-listed corporations were driven by corporate social responsibility, including the influence of large investors such as superannuation funds while local governments were influenced by demands and expectations of the ratepayers.
State governments, the report said, were driven by the need to provide leadership “although this can take multiple forms – establishing policy frameworks to facilitate the uptake of zero-emission vehicles, setting their own zero-emissions targets, and leading the transition.”
The federal government “can in theory be motivated by each of these.”
“Its approach to date has been to advocate for a market-led solution, with limited active involvement and no policy announcements to drive a transition to zero-emission vehicles,” Mr Hartley said.
AGL said that it believes “Australia’s energy future will be affordable and smart – delivered from renewable sources that are backed by flexible energy storage technologies which come together to power our homes, businesses and vehicles.”
“We’re also leading research, policy and practice into the electrification of transport in Australia with the launch of our electric vehicle subscription service and by working with fleet customers to overcome the many challenges of transitioning to electric vehicles,” AGL said.
The findings of the report included:
- Larger fleets are most likely to have reached a higher level of EV maturity; either a tactical phase (collecting initial usage data), expansion phase (setting up targets, policies, contracts and infrastructure) or evaluation phase (assessing data to refine targets)
- Larger and more mature organisations are also more likely to have implemented EV charging infrastructure; we can however see that across our entire audience, around one in three do currently have some level of charging infrastructure in place.
- However, less than a third of our respondents are currently operating electric vehicles; this suggests most are still reviewing the suitability of these vehicles for their fleets.
The report said that because of these factors, while many fleets are trialling EVs they currently make up a negligible proportion of the fleet vehicles showing there is “substantial room for growth ahead”.
“In real terms, we can see that while our more mature organisations do have the largest number of EVs, the actual number of vehicles remains limited,” the report said.
“This reflects the continuing issues around the availability of fit-for-purpose battery EVs in the Australian market.
“Specifically, whilst there are limited options when it comes to fit-for-purpose passenger cars and SUVs, there are no OEM light-commercial options currently available in market.
“Growth in the short term will therefore be limited by the lack of viable EV alternatives, with light-commercial vehicles making up a larger share of vehicles for our more mature fleets.”
It said that about half of all vehicles are operating in metropolitan areas “indicating vehicle range should not be a major barrier”.
“Fleets will however need evidence to demonstrate that their typical usage can be accommodated by any vehicles they are considering,” it said.
“Many vehicles are however home garaged, therefore either needing home charging infrastructure, or alternate processes for the reimbursement of personal electricity charges. Home garaging also has FBT implications that must be considered.”
The report said that the future showed that half of the organisations surveyed intended to add EVs to their fleet within the next 24 months.
“This highlights the scale of the opportunity for OEMs who can bring suitable products to market in that timeframe,” it said.
“In most cases, vehicle replacement cycles are however either tied to predefined age limits, or the end of finance contracts. While fleets may have made the choice to introduce EVs, this will impact implementation timing.
“Passenger vehicle and SUV replacement cycles consistently sit between three and four years with tool-of-trade (LCVs) and heavy-commercial vehicles extending beyond this, typically reflecting the investment in service bodies fitted to these vehicles.”
The report said an added complexity of the EV fleet market was that it contained a mix of owned and leased assets “which suggests fleet management organisations will play an important role in EV adoption.”
It said the preferred approach to EV acquisition varies significantly by industry and that total cost of ownership calculations “will need to stack up for each alternative to drive EV adoption.”
Barriers to EV adoption aside from lack of government direction include EV purchase cost (listed by 60 per cent of respondents); the cost of setting up workplace infrastructure (45 per cent); and limited vehicle choice (34 per cent).
“These concerns (purchase cost, cost of charging infrastructure, and limited models on offer) remain consistent regardless of the size of the business,” the report said.
“More mature fleets are more focussed on overcoming challenges around vehicle cost and availability, having successfully addressed the complexity of the infrastructure required, and range anxiety.
“While cost is a major concern for all, state and federal governments are most concerned about cost and complexity of developing EV infrastructure, as well as range anxiety.
“Smaller fleets appear more concerned about the complexities of finding vehicles that can meet their requirements, and setting up the necessary infrastructure. This suggests a level of education is needed to support their EV journey.”
The report said fleet operators primarily think of government intervention in terms of subsidies and public charging facilities.
“There is surprisingly little focus on the removal of FBT and luxury-car tax, potentially indicating a lack of knowledge of the impact these have on the total cost of ownership,” it said.
“Smaller businesses are more likely to look to the government for education and support, helping build knowledge in areas they aren’t able to resource in-house.
“Subsidies and public charging infrastructure consistently emerge as the most popular areas of government intervention.
“We see similar results by industry, with subsidies and public charging infrastructure popular options; businesses in the services industry do however call out more specific initiatives (i.e. removal of luxury car tax).
“Large fleets that typically prefer leasing over outright purchases also stand out for their greater level of interest in more targeted government support (i.e. the removal of FBT or luxury car tax).”
By Neil Dowling
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