Develop a business case and establish a vehicle replacement roadmap
You may need to write a compelling business case or transition strategy to implement the changes you’d like to make to your fleet.
One of the biggest hurdles in a business case is funding. Your business case or transition strategy will need to cover how you can pay for it.
Some options are:
- Funding through the State Sector Decarbonisation Fund, a government fund administered by the Energy Efficiency and Conservation Authority (EECA), for electric vehicles and charging infrastructure.
- Agencies can receive rebates on brand new electric vehicles and plug-in hybrid vehicles under the Clean Car Discount scheme:
- The Clean Car Discount is applied in addition to the existing AoG vehicle price.
- From April 2022, fees will be added to the registration of high emission vehicles.
- Related changes to depreciation and Fringe Benefit Tax (FBT) make electric vehicles financially more attractive.
- Moving to a leasing scheme can be beneficial, including where agencies do not have available capital expenditure (CAPEX) to buy new vehicles. Leasing arrangements are typically funded as operating expenditure so don’t require CAPEX.
- Leasing vehicles can help ensure your fleet is up-to-date and regularly maintained. The residual value of vehicles can affect the overall leasing price. With more electric vehicles on the road and more demand for them, residual values are increasing, which means it’s becoming cheaper to lease them.
- Repurposing any savings gained by optimizing your existing fleet.
You’ll need to consider operating costs, too. These include:
- Electricity costs for charging electric vehicles, which can be significantly lower than the cost of petrol or diesel, particularly if the electric vehicles are charged overnight. EECA considers that charging an electric vehicle overnight is the equivalent of buying petrol at 40 cents per litre at residential electricity rates. The cost will be lower again for charging at workplaces, as commercial electricity rates are typically lower than residential rates.
- Maintenance costs can be much lower for electric vehicles than for petrol and diesel vehicles.
- In-vehicle telematics systems (recommended for monitoring vehicle use, data collection and analysis).
- Parking costs when away from base.
- Any fringe benefit tax payable.
Electric vehicles are exempt from road user charges until 31 March 2024. The Government has yet to determine what mechanisms will be applied to vehicles in the future to cover national transport costs, such as roading.
Build internal support
Getting staff support is key to ensuring transition to electric vehicles is a success.
Change is led from the top down and decision makers need to understand the rationale for the change and have confidence in both the financial and practical sides of implementation. Getting them to test drive the new vehicles can help get them on board with the vehicle changes.
Remember that fleet optimisation, and prioritising battery electric vehicles (BEV), is a requirement for mandated agencies.
Staff may be anxious about transitioning to new vehicles or travel arrangements. It’s a good idea to explain the reason for the change and the benefits of doing so. Keep them informed about upcoming changes and provide training when needed.