Earlier this month the CEFC held an electric vehicle drive day for fleet managers at Sydney Motorsport Park. It was the second EV drive day by the organisation that is responsible for investing $10 billion in clean energy projects on behalf of the Australian Government.
The initiative was designed to get ‘bums on seats’ and the CEFC worked with AfMA to ensure invitations were sent to the key fleet influencers and decision makers in NSW. There were more than 105 drivers booked to test drive 16 vehicles from 11 manufacturers in morning and afternoon sessions.
CEFC CEO Ian Learmonth said that the two main objections for potential fleet buyers were 1) not having access to affordable models and, 2) range anxiety.
“Days like today are trying to address these concerns” confirmed Learmonth. “Fleets are important to start the transition to electric vehicles and affordability will get better with a second hand market which fleets help create by turning vehicles over every three years”.
When asked about government support or subsidies for EV adoption, Learmonth couldn’t comment on any policies or initiatives being developed by the government. Though when asked about the CEFC’s role in the financing of electric vehicles, he did mention the potential for it to take a risk on residual values to encourage a faster transition by fleets.
It seemed like a casual comment, so I pressed him for more details suggesting that eliminating the uncertainty around the value of used electric vehicles could be the catalyst to lower Whole of Life (WOL) costs and tip the scale in the favour of electric fleets. And Learmonth agreed. He saw this as something the CEFC could investigate and support using its financing brief.
The main barrier for EV adoption is purchase price. When combined with a negative view of their future value, the Total Cost of Ownership (TOC or WOL) comparison favours traditional petrol or diesel fleet models. If the purchase prices come down slightly, and the CEFC removes some of the financing risk by providing a guaranteed future value; the EV TOC story will look fantastic because of the lower depreciation.
At the 2019 AfMA Fleet Conference, Johan Verbois from 5S Consulting shared his experience on the adoption of EVs in Europe and highlighted the depreciation component of a lease as being the game changer to a rapid fleet changeover.
In a traditional TCO calculation, fuel and and depreciation are the two biggest costs for fleets. The cost to power an EV is less than a petrol vehicle which makes depreciation a larger percentage of the total costs. With the help of the CEFC, the depreciation component for an EV could be the same as a petrol model, giving EVs a cheaper cost to run and own.
Electric vehicle advocates have been calling on the newly elected Morrison government to encourage the sales of EVs with financial subsidies. Maybe they have been asking the wrong people for the wrong things. Maybe the CEFC can use a fleet centric approach to solve a fleet problem.
