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2. Early focus on commercial fleets

Infographic showing the objectives and actions of this priority initiative. Text description follows

Objectives:

  • Help businesses and consumers access the latest transport technologies that suit their requirements, including heavy and long distance vehicles.
  • Support businesses to have access to technologies that reduce operating costs, increase productivity and help them meet their customers’ needs.

Actions:

  • Support businesses to incorporate low emission vehicles into their fleets
  • Support technology trials to improve heavy road freight fleet productivity
  • CEFC investment focus
  • Monitor potential impediments to accelerated commercial fleet uptake
  • Assess barriers to scaling up the number of low emission vehicles in the Australian Government fleet

Opportunity

Fleet vehicles generally travel greater distances than private vehicles, resulting in higher fuel costs and more frequent servicing.[4] As noted in the discussion paper, the fuel and maintenance savings from low emission vehicles can help offset their higher upfront prices.[5] This will mean low emission vehicles used in fleets will reach price parity first, with hybrids already cost competitive with traditional vehicles (McKinsey 2019; BNEF 2020). This will not only see businesses save money, but will have a bigger impact on emissions reduction in the transport sector due to the bigger proportion of commercial fleets.

With 40% of light vehicles sold in Australia in 2020 being purchased by businesses (FCAI 2020), unlocking early opportunities for commercial fleets to invest in low emission vehicles will help drive uptake and stimulate the second-hand market. Fleet vehicles are also generally replaced more regularly than private vehicles, and new low and zero emission vehicles also include the latest safety features (ANCAP 2021).

'The fleets first approach is not without its merit – supporting fleet access to new vehicle technologies will flood the second-hand market.'

– Electric Vehicle Council

'In 2018 we began trialling larger electric vehicles for supermarket deliveries, testing their capabilities, shortfalls and needs as a long-term technology solution. We are also working to introduce electric vehicle online delivery trucks to our fleet this year.'

– Woolworths Group

The Department of Finance is already trialling battery electric vehicles in the government’s fleet of COMCAR vehicles. This is in addition to hybrid vehicles, which currently make up 28% of the COMCAR fleet. Outcomes from this trial will help to inform the government’s future fleet purchasing decisions.

By undertaking this trial and supporting businesses to explore the latest transport technologies through ARENA and the CEFC, the government is demonstrating the application of low emission vehicles in Australian conditions. These actions will encourage others to use low emission vehicles in their fleets. They will also encourage manufacturers to increase supply for Australian consumers.

CEFC finance options for low and zero emission vehicles

Since its inception, the CEFC has made available over $1.3 billion via its co-financing programs with major banks and non-bank lenders for low emission vehicle uptake and related projects. In addition, the CEFC has directly invested more than $450 million in projects and funds that will contribute to reducing emissions in the transport sector.[6]

The CEFC’s Clean Energy Innovation Fund has invested in several Australian companies:

  • Transgrid and Zenobe ($24.5 million) to back the nation’s largest fleet of electric buses through a new pilot program that will see 40 new vehicles deployed across Sydney.
  • Zoomo/Bolt Bikes ($9.2 million) is expanding its offer of smart utility e-bikes for the parcel, mail, food and grocery delivery sector.
  • SEA Electric ($5 million) is converting medium-duty trucks and commercial vans into electric vehicles.
  • 3ME Technology ($5 million) is supporting miners to replace diesel engines with cutting-edge battery electric systems, reducing their emissions and supporting safer, more-efficient mine operations. 
  • Jet Charge ($3.5 million), Australia’s largest electric vehicle charging infrastructure specialist, is deploying smart charging hardware. This will help drive down the cost of smart and connected electric vehicle charging stations and make them more user-friendly for drivers.
  • Relectrify ($3.25 million) is developing and commercialising control technology that unlocks extra performance in battery systems. It does this by boosting their second-life storage capability and lifespan once they are no longer effective as electric vehicle batteries.

The CEFC is also supporting the development of an Australian biofuels industry. This could reduce emissions in the transport sector, particularly in heavy freight, shipping and aviation.

Actions

This strategy takes a ‘fleets-first’ approach to help fast-track the number of low and zero emission vehicles on the road. This will make more affordable models available to more people.

The $250 million Future Fuels Fund will increase consumer choice by attracting a wider variety of vehicles to Australia. It will do this by focusing on fleets with high demand and turnover, helping generate a second-hand market. This market stimulation and co-investment with businesses to upgrade their infrastructure will help overcome barriers to incorporating low emission vehicles into their fleets (Action 2.1).

The fund will not only support fleets that utilise passenger or light commercial vehicles, but also long distance or heavy duty vehicle technologies. This could include trucking, buses or specialist vehicles used in the agricultural or mining sectors that incorporate larger batteries or hydrogen technologies. For example, the Australian Government recently supported a joint venture between Transgrid and Zenobe, with support from Transit Systems and Transport NSW, with $24.5 million from the CEFC and $5 million from ARENA. This project will back the nation’s largest fleet of electric buses through a new pilot program that will see 40 new vehicles deployed across Sydney.

To complement the fund, the government’s $24.5 million Freight Energy Productivity Program will increase the energy productivity of heavy road freight. It will give businesses the evidence they need to invest in more energy-efficient heavy-duty fleet vehicle technologies (Action 2.2). These programs build on the CEFC’s continued work across the economy to accelerate investment in measures to reduce transport-related emissions, and support innovative Australian businesses (Action 2.3).

The government is also monitoring potential taxation and procurement barriers to accelerate uptake in commercial and government fleets (Actions 2.4 and 2.5).

Action

Lead agency

Delivery

2.1

Support businesses to incorporate low emission vehicles into their fleets

The $250 million Future Fuels Fund will co-invest with light and heavy vehicle fleets to upgrade their infrastructure. These upgrades will help businesses to remove barriers to incorporate low emission vehicles and fuel options across the range of fleet vehicles used in Australia.

ARENA

2022 to 2025

Round 2 for fleet charging support will commence in early 2022

 

 

2.2

Support technology trials to improve heavy road freight fleet productivity

The $24.5 million Freight Energy Productivity Program will help businesses improve vehicle productivity through assessing and evaluating the benefits of new energy efficiency technologies for heavy road freight vehicles.

ARENA and DISER

2022 to 2025

 

2.3

CEFC investment focus

The CEFC will continue working across the economy to accelerate investment in measures to reduce transport-related emissions. This includes:

  • electrifying urban transport
  • charging infrastructure
  • finance available for electric vehicles.

CEFC

Ongoing

2.4

Monitor potential impediments to accelerated commercial fleet uptake

Treasury will monitor the adequacy of regulatory and/or taxation settings.

Treasury

Ongoing

2.5

Assess barriers to scaling up the number of low emission vehicles in the Australian Government fleet

Assess and adopt any appropriate lessons from the ongoing COMCAR trial to remove procurement barriers to expanding low emission vehicles across the government fleet. 

Department of Finance

Ongoing

Footnotes

  1. Based on ABS (2019) data, an average of 13,700 km is travelled per year for passenger, 17,100 km for light commercial and an estimated 51,300 km for fleet vehicles (3 × light commercial km per year).
  2. In 2019, electricity was $0.30 per kWh (AEMC 2019) and a litre of petrol was $1.43 (BITRE 2019). This equates to approximately $3.50 per 100 km for an EV compared to between $8 and $12 per 100 km for a small to large ICE vehicle, and a pre-paid service plan for a Hyundai Kona EV costs about 40% less than for a Kona with a conventional engine (Hyundai 2020).
  3. Figures as at 30 June 2021 (latest data published)