Could fleet sales be the catalyst for turning the tide on electric cars?

It’s taken a long time, but it’s safe to say Australians now embrace the hybrid.

Hybrid versions Toyota RAV4 and Subaru Forester have proved so popular at the launch of the current models, both attracted lengthy waiting lists. Indeed, the widespread acceptance of hybrid cars has helped the Toyota Camry dominate what is left of the ever-shrinking mid-size sedan segment.

The same clearly cannot be said for electric cars which, across all categories, totalled just 1526 sales in the first half of 2020. So, the question is: When will the tide turn?

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Public attitude to electric cars shifting

Australia is behind on the uptake of electric vehicles when it comes to comparable first-world markets in Europe for example. There are some reasonable and obvious justifications for this: The long distances between our capital cities, lack of emissions regulations and lack of incentives at a federal government level are chief among them.

Another, more obvious issue, is upfront cost. Electric vehicles are expensive. With entry-level EVs like Nissan’s Leaf costing $49,990 before on-road costs, it is an understandably tough ask for consumers to justify buying one, especially when the jump from petrol to hybrid in popular mainstream models is now just a few thousand dollars.

Electric vehicles are expensive, with entry-level EVs like Nissan’s Leaf costing ,990 before on-road costs.

A solution to the issue of private uptake could be found in the availability of ex-fleet vehicles on the second-hand market. This strategy has worked in countries like Germany, where overall fleet emissions regulations imposed by the EU has flooded the used market with early-generation electric vehicles or plug-in hybrids from fleets.

A main selling point for Volkswagen’s Passat GTE PHEV in Europe for example is its minimal contribution to fleet emissions. However, Volkswagen has gone on the record to say it has no interest in bringing PHEV models to Australia as the lack of incentives do not make the business case add up.

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Volkswagen will be skipping plug-in hybrids altogether in Australia

While the federal government in Australia made it an election point not to incentivise EVs, the New South Wales government is keen to usher in the introduction of EVs by mandating 30 per cent of its fleet will be electric or hybrid by 2023, with at least 10 per cent being fully electric.

The NSW government has also co-invested to the tune of $3 million in fast charging infrastructure on major regional corridors, and provided another $2 million for new charging points in commuter car parks as part of its strategy to get to zero net emissions by 2050.

The goal is for the NSW government to “have one of the largest fleets of electric and hybrid vehicles in Australia” to “provide greater access to a wider choice of affordable electric vehicles in the future for motorists”. The ACT government and South Australian government, along with several smaller government agencies, also have electric fleet strategies.

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Australian government pledges $15 million to EV charging network

It's worth noting that while the federal government has not introduced strict regulations or major incentives for EVs, it has recently contributed $15 million to an EV charging network primarily focused on the eastern seaboard.

A report by the EV Council of Australia as far back as 2018 recognised the need to better educate fleet buyers in order to stimulate a healthier and more affordable EV market in Australia. In 2019, the EV Council launched the Charge Together Fleets initiative with the OEM-backed software as a service and consultancy company EVenergi to specifically encourage fleet managers to purchase electric vehicles using data to help back the benefits of doing so. Over 90 fleets have signed up to the program, and “nearly half” of Australian fleet managers are said to have at least considered using EVs as part of their model mix.

It will take time for these developments to mature (along with vehicle leases) and filter down to the used market, however, and while the terms are longer for such buyers, the pressure is on OEMs to sustain the availability of slow-selling EVs in our market. Renault, for example, which initially sold its Zoe EV to fleet buyers alone, was forced to withdraw the model partially due to COVID-related market issues, and a brand re-focus on consumer SUVs.

What can we take from this? The widespread acceptance of EVs amongst Australia’s populace will require help from fleet buyers, but it’s safe to say the tide turning as it has for hybrids appears to be well over five years away unless other factors like government regulations change as well.

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