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Savvy’s examination of Electric Vehicle Council and Australian Trucking Association data finds that to meet the country’s CO2 emissions reduction targets and reach net-zero by 2050, Australia needs to electrify its national vehicle fleet. Considering that transport emissions account for 19% of the total, of which road freight comprises 38%, action taken in the next two decades to transition to Electric Trucks will have a significant impact on success.
- Transport equals 19% of total emissions – 38% from road freight
- Goal is 30% new Electric Truck sales by 2030 & 100% by 2040
- ETs much more efficient but cost up to $200k more than diesel
- 70% of truck operators own only a single vehicle
- Subsidies and incentives required to make transition
Without trucks, Australia stops. You’ve likely seen that on the back of a truck in traffic. It’s true – trucks are the lifeblood of freight in Australia, delivering pretty much everything you can think of to stores and distribution centres.
You’ve also been stuck behind a diesel-powered truck, possibly on a highway or freeway. They’re slow to accelerate, pump out massive amounts of fumes, and even if you play your music loud – you can hear them for miles on end. These may sound like minor gripes when commuting but have wider implications for the whole of Australia.
We seek to show the current state of Electric Trucks in Australia, what economic opportunities abound, and the current policies hampering the take-up of Electric Trucks, what the costs are, and what we as consumers and government stakeholders can do about it.
Why Electric Trucks?
Transport emissions comprise 19% of Australia’s total carbon emissions, with 38% of that percentage attributed to the road freight sector. Trucks also consume 23% of all road transport fuel – despite only travelling 8% of all road vehicle kilometres and comprising 4% of the entire Australian road vehicle fleet.
Australia also has a fleet of aging trucks. The average age of a truck is between 10-15 years in Australia; in France it’s 9.3 years, Germany 9.5 years, and Austria 6.4 years.
With climate change challenges now a pressing concern, a widespread adoption of Electric Trucks could reduce air pollution and associated health concerns; create new employment opportunities; encourage sustainable transport solutions; reduce transport costs and therefore the cost of goods for consumers and businesses; ensure our energy security; and contribute to our national commitment for net-zero carbon emissions.
The Australian Truck Fleet 2022 and Sales Goals
Australia uses about 500,000 rigid trucks and 100,000 articulated trucks with two thirds of freight in urban areas carried by rigid trucks, and two thirds of freight carried by articulated trucks in regional or non-urban regions. Rigid trucks are smaller and carry less freight; however, they should be first to transition toward electrification due to urban-specific needs.
This transition aims to see a sales goal of seeing 30% of the national fleet comprising Electric Trucks by 2030 and 100% by 2040.
Economic Opportunities for Electric Truck Owners
Small or family-owned businesses comprise almost 98% of all trucking operations in Australia, with only 0.5% of all operators using more than 100 trucks in their fleet. 70% of the small operators have only one truck.
Electric Trucks represent a unique economic opportunity for trucking operators and the nation as a whole. As trucks are the primary freight method in Australia, reducing costs at the source will cascade into reduced costs at the point of wholesale and retail.
Diesel fuel is the most significant cost for a trucking operator. On average, it represents 20% of short-haul operator costs and 35% of long-haul operator costs. If there is price volatility in the diesel market, this can inflate costs which must be passed on to business and consumers.
Bill Tsouvalas, Savvy Managing Director & automotive finance expert;
“There is a real need for Australia to invest in the transition away from diesel powered road freight transport and towards electric. The issue is how much its going to cost and where the commercial vehicle finance is going to come from. Before regular operators who own only one truck make the shift, they are going to have to be fully confident that it makes financial sense.”
Electric Freight: The Freight of the Future
Freight by Electric Truck is the sustainable choice for Australia as parcel volumes have grown significantly, according to James Dixon, the General Manager, Networks for Australia Post. Trucking operators are facing pressure from customers and business to reduce emissions as part of sustainability commitments.
Electric Trucks have upsides in fleet efficiency. As Electric Trucks are quieter, it means they can be used later at night and avoid urban or suburban “truck curfews” – policies introduced to curb noise pollution. This would also have a flow-on effect for commuters, as it would reduce peak hour traffic and congestion. With all environmental and health benefits combined, it’s estimated that an electrification of both articulated and rigid trucks could save the Australian consumer $324.8 billion by 2050.
Australian Fuel Security
Due to the current economic conditions an import restrictions on oil products from Russia (as of 24th March, 2022), diesel prices have climbed from an average of $1.63 in December 2021 to $2.21 today – an increase of 35%.
By going all electric, operators will save significantly on diesel costs – and a reduction of moving parts means cost reductions in maintenance.
There also only exists two oil refineries in Australia – half of what was available in 2019. Our dependency on imported fuel threatens our fuel security and economic growth.
Looking at a 22-tonne truck covering 300km without freight, the cost in diesel at current prices (24 March 2022) would arrive at $189.61. The cost of powering an Electric Truck in comparison would be between $14-42, based on off-peak tariffs for a depot-based fleet. This represents an incredible saving of 77.8%.
With 24% of Australia’s total electricity generation coming from renewables – and that percentage set to increase – Australian Electric Trucks could increasingly be powered by sustainable and renewable sources.
Health Implications
According to the Australian Conservation Foundation, maintaining our current approach to road transport could cost the community $865 billion between 2022 and 2050 – with $488 billion consumed by the impacts of air pollution. Also, 60% more people die from emissions than car crashes in this country. Air pollution causes reduced lung function, heart disease, stroke, and cancer.
Adopting a zero-emission transport mindset could save between $233 billion and $492 billion in costs, depending on how aggressive governments set their targets and policies.
Policy Implications
At the moment, only 14 out of the 58 available truck models available in North America, China, and Europe can be used in the Australian market. According to the Australian Trucking Association, this is due to current policy rules. Therefore, there is artificial scarcity and limited choice for truck operators in Australia, even if they wanted to move over to Electric Trucks.
The policies in place at the moment restrict importation and use of trucks due to steer axle mass and width. The ATA says the government should provide a one tonne concession for Electric Trucks, taking the battery weight into consideration. They also say widths should be increased to align with the standard width used by major supplier economies.
The ATA says that Electric Trucks should be exempt from urban curfews, designed to reduce noise pollution. As an electric vehicle, ETs are much quieter compared to a diesel-powered truck.
Other policies that raise the barrier of entry into Electric Trucks are high stamp duty prices which should be made exempt for electric or zero-emission trucks; a lack of incentive payments to reduce costs of public and private charging infrastructure; and no incentives to reduce the upfront purchase price of Electric or Zero-Emission Trucks. Currently, the upfront purchase price of an Electric Truck is almost double its diesel equivalent.
The government’s Euro VI emissions standards for heavy vehicles take effect in Q2 2027, according to the draft Regulation Impact Statement. The ATA believes bringing this forward to 2024 will incentivise greater take-up of Electric Trucks.
Electricity vs. Diesel Costs
| Fuel Type | Electricity | Diesel |
|---|---|---|
|
Energy Required for 300km Range |
280 kWh |
84L |
|
Cost Per kWh (offpeak commercial) |
$0.05-$0.15/kWh*
|
-
|
|
Cost per L ($ Average) |
-
|
$1.33/L
|
|
Cost Per 100km |
$4.67-$14.00
(93.33kWh/100km) |
$38.78**
(28.6L/100km) |
|
Cost for 300km Worth of Fuel |
$14-$42 |
$116.34 |
*Electricity price is based on a commercial off-peak tariff for a depot-based fleet.
**including diesel cost of $32.24 (28L/100km) and Adblue of $1.54
Source: Electricvehiclecouncil.com.au, Electric Trucks: Keeping shelves stocked in a net zero world, p.8
Truck Ownership in Australia
No Data Found
Source: Electricvehiclecouncil.com.au, Electric Trucks: Keeping shelves stocked in a net zero world, p.5
Infrastructure for Electric Trucks
The infrastructure for Electric Trucks will need collaboration across the entire economy. The fleet operators will be the first to inspire change, as they will choose to purchase or lease zero emission vehicles.
Financial institutions will need to fund the smaller operators so they can acquire or lease electric trucks. Truck manufacturers will also need funding and support to supply these Electric Trucks and deliver them to market.
Government policy must also support the infrastructure around Electric Trucks. Australia is unique in how far apart our urban areas are – 870km lies between Melbourne and Sydney, for example – and electric charging stations would need to be installed at key destinations, hubs, and stops. As of writing, the Janus Electric truck conversion has the longest range of any legal and available truck in the Australian market at 400-500km.
Electricity sector operators and Distributed Network Service Providers would also need to upgrade and supply the electrical capacity needed for the new network of charging infrastructure.
Financial Considerations
Buying Electric Trucks or converting existing trucks requires sound investment decisions. Prior to the COVID-19 pandemic, it was estimated that truck operators would need to invest $3.5 billion combined to meet demand over a typical five-year period.
With the price of diesel now so high, this cuts into profit margins and avenues for reinvestment. For some truck models, the upfront cost of buying electric can be twice that of an equivalent diesel-powered truck. This may mean an additional outlay of $200,000.
A government purchase price incentive is required to better equip smaller operators for the transition to Electric Trucks. The US State of California has provided 7,500 Zero Emission Truck and Bus Vouchers worth US$120,000 to purchase zero-emission vehicles. The German government gives operators an 80% price incentive for battery, fuel cell, and trolley hybrid drive systems.
Governments should also exempt electric and zero emission trucks from stamp duty, if possible.
The future of trucks means the future of making parts and maintenance. This needs to be supported by government funded training to upskill or qualify people entering or already working in the sector.
For more information, contact Adrian Edlington – [email protected]
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