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The government-owned Clean Energy Finance Corporation (CEFC) is backing Volvo Group’s plans to electrify Australia’s trucking fleet through an innovative $70 million financing package.
The package centres on support for Volvo customers to lease electric trucks manufactured by Volvo at its Brisbane facility.
Volvo, which is one of Australia’s largest onshore vehicle manufacturers, produces heavy-duty Volvo and Mack trucks at Wacol in Brisbane’s west and has delivered more than 80,000 trucks since it began production there in 1972.
The Swedish auto group’s Australian division has committed to manufacturing Volvo electric trucks in Australia as part of its broader sustainable manufacturing plans.
CEFC executive director Richard Lovell says that with other sectors of the economy decarbonising, transport is expected to become Australia’s largest source of emissions as soon as 2030.
“Switching to battery electric trucks is an important opportunity for freight operators and businesses to show real leadership on the path to net zero emissions, while managing a growing freight network and a stronger economy,” he says.
“This innovative transaction demonstrates how fleet operators can work with manufacturers and financiers to accelerate the transition to electrification.
“Reducing some of the financial risk associated with new technologies like BETs (battery electric trucks), and offering a competitive finance discount helps lower the premium associated with this new technology.
“Sharing the risk aligns lenders, manufacturers and end customers in building momentum to help decarbonise our transport sector.”
The CEFC financing deal will support an interest rate discount of up to 0.5 per cent for eligible Volvo customers to lease medium and heavy-duty battery electric trucks (HD BEVs) and install EV charging infrastructure.
It will also provide finance for an innovative residual value support mechanism to reduce operating lease costs and support the future value of HD BEVs.
“The announcement of this finance comes at a critical time for Australia’s net zero ambitions,” says Volvo Group Australia CEO Martin Merrick.
“We know the cost of entry is a significant hurdle to overcome for many of our customers wanting to take the first steps towards implementing electric transport solutions in their businesses.”
The Truck Industry Council says that zero and low emissions trucks can be two to four times more expensive to purchase than a diesel truck for the same task.
While it is common for operators to lease heavy trucks, the high cost of BEVs and uncertainty about their depreciation rate compared to diesel equivalents is reflected in lower residual value expectations, and increased leasing costs.
“This program is designed to make the transition more affordable, allowing more of our customers to take that first vital step towards a fossil-free future for the benefit of all Australians,” says Volvo Financial Services managing director David McGuire.
“I have no doubt that working with the CEFC will act as a key enabler that will help drive the uptake and adoption of heavy electric vehicles.”
The CEFC says it has directly committed more than $200 million in electric vehicle-related projects since its inception to help decarbonise Australia’s transport sector.
These investments include backing Australia’s first electrified bus fleet and increasing EV infrastructure with JET Charge.
The CEFC, which has access to $30 billion in federal funding, has also helped finance more than 15,000 electric vehicles valued at more than $1 billion in total, including third-party capital through its co-finance programs.
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