The New Vehicle Efficiency Standards (NVES) will come into effect at the beginning of 2025, reducing carbon emissions from new passenger and light commercial vehicles. Manufacturers will be incentivised to sell more fuel-efficient vehicles, like electric vehicles (EVs), and businesses looking to level up their fleet will have more choice.

Electric vehicle (EV) sales are climbing in Australia. By the end of September 2024, 70,094 EVs had been sold, marking a 6.6% increase compared to the same period in 2023. For Australia to achieve its goal of net-zero by 2050, it is estimated that more than 50% of all new cars sold in 2030 will need to be EVs. This translates roughly to a goal of 1 million EVs on our roads by the end of 2027.

To effectively reduce environmental impact and meet current climate targets, Australia must tackle a significant automotive challenge: the electrification of corporate fleets, trucks, and heavy transport vehicles.

Despite corporate fleets accounting for only a quarter of vehicles on the road, they are responsible for two-thirds of all greenhouse gas emissions from road transport.

With an increasing demand for heavy transport vehicles and trucks, driven by changing consumer demands and behaviours, corporate fleets must not be left behind in the current push to electrify Australia’s transport systems.

The warehouse and logistics industries have already made great strides in achieving sustainability goals in recent years in areas such as solar, lighting and heating. But the incorporation of EVs in the supply chain has the potential to further reduce carbon emissions and unlock cost savings.

Here are five reasons why EVs are playing a central role in driving the future of these critical industries.

1. Cost-saving benefits

One of the primary advantages of adopting EVs is the potential for cost savings. Although EVs often come with a higher initial purchase price, their total cost of ownership is lower over time. Electricity costs for EVs are typically 40% cheaper than the fuel costs for comparable gasoline vehicles, leading to savings on refueling and maintenance. Additionally, EVs help avoid the volatility of diesel prices. As more cities implement low-emission zones and congestion taxes, the financial benefits of EVs are likely to increase further.

2. Environmental benefits

Reducing carbon emissions is crucial as Australia aims for net-zero by 2050. Large road fleets can no longer depend on fuel-engine vehicles that emit harmful pollutants. The Australian Department of Climate Change, Energy, the Environment and Water reported a 6.4% increase in transport emissions, reflecting the rise in travel demand post-COVID. Additionally, as urban populations grow, road freight demand will also rise, putting pressure on businesses to operate non-polluting fleets.

3. Confident driving

EVs offer easier driving and improved hazard perception. According to Transport NSW, many EVs have batteries located under the vehicle, lowering the centre of gravity and enhancing handling.

4. Future-proofing technological advancements

With the rise of artificial intelligence (AI), manufacturers can gain predictive insights into various aspects of EVs, leading to advancements in battery chemistry, smart routing, automated driving, and other safety features. EV fleets can outperform traditional internal combustion engine (ICE) vehicles. For example, Tesla’s Model 3 can self-detect issues and automatically order replacements, showcasing the technological edge of EVs.

5. Keeping up with the times

Transitioning to EV fleets not only benefits the environment but also enhances the business’s reputation. A recent survey found 79% of Gen Zs want brands to promote environmental sustainability and be transparent about their climate impact, which makes adopting EVs a business necessity. In fact, a global study revealed the majority (64%) of consumers willing to stop supporting companies that fail to meet environmental standards

The road ahead

Electrifying fleets comes with its own set of challenges. Infrastructure remains a significant barrier, as does vehicle range. Few countries, including Australia, currently have the robust infrastructure needed to meet the ambitious targets being set. Companies can aim for self-sufficiency by installing their own charging stations, but this can be a costly endeavour.

Range is another critical issue, particularly for urban drivers. Electric heavy goods vehicles (eHGVs) have been slower to market, primarily due to range limitations. Larger vehicles need to travel longer distances and therefore require bigger batteries.

If a transport vehicle reaches its payload limit before its volume capacity, adding heavy batteries for extended range can become problematic. Vans, which are often used in urban settings, typically require lower mileage, but the need to travel between various urban areas must be considered.

However, manufacturers are making progress in developing longer-range vehicles and smaller, more efficient batteries. These advancements indicate positive steps forward. The long-term benefits of integrating EVs into the supply chain make the transition worthwhile.

Garry Valenzisi is vice president & general manager at Iron Mountain ANZ.