Tag Archives: electric vehicles

Navigating the road to sustainable fleet transition

In the global pursuit of a greener future, the transformation of vehicle fleets will play a pivotal role. At 100% Renewables, we have been seeing a sharp increase in requests from all kinds of organisations for advice on fleet transition issues, especially with regards to the abatement potential, economic feasibility, and optimal timing of low emissions vehicle technologies, especially electric vehicles (EVs).

Common questions we get asked include:

  • Are low-emission vehicles a cost-effective way to reduce our carbon footprint?
  • Should we transition straight to EVs, or are hybrids a better option in the short term?
  • When will there be a better variety of low-emission utility vehicles to choose from?
  • Will EVs provide the necessary range we need to deliver our services?
  • Is replacing heavy machinery with electric or hydrogen fuel cell vehicles a good idea?

In this post, we discuss the multifaceted challenge of fleet transition, covering a wide range of issues that ought to be considered before committing too strongly to any particular strategy or course of action. Your choice of fleet vehicles can affect your operating costs and emissions profile for many years to come so during this period of rapid technological and policy change, it is wise to avoid locking in decisions that may be sub-optimal for your specific circumstances.

Internal Combustion Engine (ICE) vehicle fuel efficiency

ICE vehicles have come a long way in terms of fuel efficiency over the decades, yet their potential for further enhancement is dwindling. The gap between current Australian fuel efficiency standards and the global pinnacle, Euro 6D, is a mere 13%. Beyond this margin, achieving heightened efficiency without resorting to hybrid technology is challenging. Consequently, several leading manufacturers have gradually reduced and, in some cases, ceased their research and development activities concerning ICE vehicles. Instead, they are channeling their resources towards the already tried and proven technologies of hybrids and EVs.

The Hybrid solution

Hybrid vehicles present a viable interim solution on the path to full electrification. Typically boasting superior fuel efficiency compared to conventional ICE vehicles, hybrids offer savings ranging from 30% to 40%. Nevertheless, the actual benefits depend on the specific hybrid system employed. Notably, Toyota’s hybrid system stands out as one of the most refined, with real-world fuel savings surpassing 40%.

In Australia, popular utility vehicles such as the Toyota Hilux and Ford Ranger plan to introduce hybrid versions in the near future. However, to avoid confusion, it is crucial to discern between “mild” hybrids, which may save only 15-20% of fuel usage, and fully developed hybrids like the Toyota Rav4, which can capture a large percentage of wasted energy and allow for almost exclusive use of battery power under light load conditions. Given the modest premium in upfront costs, hybrid vehicles can provide a pragmatic and cost-effective route to emission reduction, especially where the availability of full electric models is currently limited.

The Promise of Electric Vehicles (EVs)

Beyond 2027, the advantages of electric vehicles (EVs) over both conventional ICE vehicles and hybrids become increasingly evident. The promise of EVs as a cost-effective means to reduce emissions lies not only in the downward trajectory in retail prices against a backdrop of increasing incentives and infrastructure support provided by governments, but importantly the anticipated decarbonisation of the grid. Of course, organisations purchasing 100% renewable energy, for example, through a Power Purchase Agreement (PPA), need not rely on, or wait for, declining grid emissions at all in order to take advantage of the zero-emission technical potential offered by EVs.

However, several hurdles must still be surmounted before the promise of EVs will be fully realised:

  • Total Cost of Ownership (TCO): In the short term, EVs may still prove a little costlier, all things considered, than conventional and hybrid vehicles. Nonetheless, predictions suggest that from the mid-2020s, the total cost of ownership (TCO) of EVs will align with, and then fall below that of conventional ICE vehicles, driven mainly by decreasing battery costs. In cases where substantial government financial incentives can be accessed (for example through novated leasing arrangements), some EV models may already represent a cheaper option when evaluated over the typical vehicle life expectancy.
  • Model availability: Availability of EV models, especially utility vehicles (utes), remains limited. However, this is poised to change dramatically after 2027.

Utility vehicles

For many organisations, diesel-powered utility vehicles, commonly known as utes, have been the workhorses of their fleets for years, offering reliability and robustness for various tasks. However, the paradigm is shifting as the world moves towards greener transportation. While model availability for electric utes is not as advanced as for passenger vehicles, it’s important to acknowledge that utes serve a unique niche in the automotive market, making their electrification more complex. As organisations plan their fleet transitions, it’s likely that they will first encounter hybrid versions of these utility vehicles before witnessing a substantial increase in the variety of fully electric utes. This shift towards electrification of utes may gain significant momentum closer to 2030 as automakers respond to the growing demand for eco-friendly alternatives in this critical segment of fleets. Hybrid utes can serve as a pragmatic bridge, offering improved efficiency and reduced emissions while the industry works towards expanding the range of fully electric utility vehicles.

Heavy vehicle fleet

The electrification of trucks, including garbage trucks, construction vehicles, and delivery trucks, is on the horizon. The timeline for the transition to electric trucks varies depending on several factors, including technological advancements, infrastructure development, local grid capacity, and regulatory incentives.

In the case of garbage trucks, some cities have already started adopting hybrid and electric refuse vehicles to reduce emissions and noise pollution in urban areas. Garbage trucks often have shorter, predictable routes, with frequent stopping, making them well-suited for waste braking energy capture (referred to as regeneration) and at least partial electrification. It’s expected that more cities will follow suit in the coming years, gradually phasing out diesel-powered garbage trucks.

Construction vehicles, particularly heavy-duty equipment like bulldozers, are also showing promise in terms of electrification. Many manufacturers are developing electric versions of construction machinery, and their adoption will depend on the construction industry’s willingness to invest in these cleaner alternatives. However, due to the demanding nature of construction work, and the resulting need for very high-performance batteries, the transition may take a bit longer, likely extending into the late 2020s and early 2030s.

As for delivery trucks, there’s already a growing market for electric delivery vans and medium-duty trucks. Major players in the logistics and e-commerce industries are actively adding electric vehicles to their fleets to reduce operating costs and meet sustainability goals. The transition in this sector is expected to accelerate in the next decade, with more electric options becoming available and affordable.

For long-haul freight operators carrying heavy loads on articulated trucks, electric and hydrogen fuel cell alternatives are still under development. In the meantime, operators may wish to consider the use of biodiesel or renewable diesel. Biodiesel in Australia is made from plant and animal fatty acids and blended with conventional diesel at 5% (B5) or 20% (B20). Few manufacturers of vehicles sold in Australia currently accept the use of more than B5, so owners should check the recommendations of the vehicle’s manufacturer before using stronger blends. Renewable diesel is a “second generation” biofuel that is chemically almost identical to conventional diesel and can therefore be used as a direct replacement without the need for blending, however, the cost premium remains substantial.

For both regional delivery as well as long haul freight trucks, significant fuel efficiency gains are also possible by using low rolling resistance tyres and improving aerodynamics.

Electric machinery and outdoor equipment

Outdoor equipment, such as chainsaws, tractors, excavators, forklifts, mowers, blowers, and harvesters, are also a significant source of emissions for many organisations. Evaluating the necessity of such equipment and exploring electric alternatives is imperative. Electric alternatives from renowned brands like John Deere, Komatsu, and Wacker Neuson are expected to be available for all main equipment types by 2026. This transition towards electric outdoor equipment has strong parallels and synergies with broader fleet transition trends. Electric outdoor equipment shares several similarities with EVs, for example, in the use of specific battery technologies, potential total cost of ownership savings, and the requirement for similar (type 2) charging infrastructure.

The potential for ICE vehicle sales bans

Around the globe, countries are taking concrete steps towards phasing out ICE vehicles. Nations like China, Japan, the UK, and various U.S. states, including those following California’s Zero-Emission Vehicle Program, have already declared their intent to ban ICE vehicle sales by 2035. In Australia, the Australian Capital Territory has set a precedent by announcing a ban on new petrol vehicle sales by 2035. These decisive actions serve as a possible signal that other Australian regions may soon follow suit, though the limited political appetite for announcing widespread bans means that considerable uncertainty about future regulation is likely to remain for the short term. Hence, it becomes imperative for organisations to monitor policy developments in this space and to ultimately strategise for an all-electric fleet transition.

Novated leasing

For organisations wishing to reduce emissions from leased vehicles, or looking for ways to tackle emissions from employee commute, the financial benefits of novated leasing arrangements for EVs should be closely examined. Due to an Australian Government policy change (November 2022), employers providing electric vehicles for staff have been exempt from fringe benefits tax (FBT) from 1 July 2022.  The changes have resulted in a substantial reduction to the annualised cost of electrified vehicles purchased by employers on behalf of their staff, while potentially slashing tax costs on electric cars operated by fleets and company-car drivers.

Organisations looking to take advantage of the new policy settings may wish to consider the case for switching to EVs in their novated lease arrangements. Providing employees with the option to upgrade to an EV could assist organisations to attract and retain staff, while providing a practical pathway towards reducing emissions.

Rationalisation and optimisation

Whether you opt for traditional or advanced vehicle technology for your fleet, certain timeless principles remain crucial to boost efficiency and curtail emissions. One effective strategy to maximise the efficiency of your vehicle fleet, regardless of its composition, involves tailoring the size of the vehicles to match specific service needs. It can also be a good idea to contemplate the potential for route optimisation and assess the necessity of driving in the first place.

Telematics technology can help enable fleet managers to optimise vehicle sizing and route planning, enhancing operational efficiency and curbing unnecessary emissions. Additionally, by monitoring and providing feedback on driver behaviour, telematics systems encourage fuel-efficient driving practices, leading to significant reductions in fuel consumption and overall emissions. Research suggests a significant 30% variance in fuel efficiency between the most and least efficient drivers, regardless of the vehicle make and model.

Decarbonisation e-learning program for freight companies

We recently developed an online e-learning program sponsored by Bridgestone for NatRoad members, which could be the world’s first decarbonisation training program for the trucking industry!

The training begins with emission reduction drivers for big retailers and large freight companies, such as stakeholder pressure and the impacts of the upcoming IFRS S2 implementation. As a result of those industry drivers, retailers and freight companies are increasingly adopting emission reduction targets that span both their own fuel use under scope 1 and the fuel use of subcontractor trucking companies under their scope 3 emissions.

Smaller and medium-sized operators need to adapt to these changing circumstances and start calculating their scope 1 and scope 2 carbon footprint, setting emissions reduction targets, and developing decarbonisation plans. As part of the training, operators get access to an Excel-based tool for calculating their carbon emissions and a toolkit that allows them to establish a decarbonisation plan to meet customer requirements.

Conclusion

The transition to sustainable fleets represents a crucial step in mitigating emissions and addressing climate change. By better understanding your fleet requirements, the potential of diverse vehicle technologies, and key transition milestones, you can begin to chart a course toward a greener transport future.

Need help with your fleet transition?

100% Renewables can work with you to analyse your fleet and help develop and optimise a vehicle transition strategy that works for you and your circumstances. Please contact Ian for further information.

 

 

If you need help developing a net zero strategy, contact us today to learn how we can support your transition. Reach out to  Barbara or Patrick for more information.

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