Banks fuel eco loans as firms shift wheels to EVs.

Two of Australia’s largest banks, National Australia Bank and Commonwealth Bank of Australia (CBA), have seen a three-fold increase in business loans for electric vehicles (EVs) as companies switch to greener fleets. NAB reported that between October 2022 and September 2023, finance for EVs grew 224% compared to the previous year. The median value of the loans was approximately $70,000. South Australia led the largest growth with a 629% increase, followed by Victoria (393%), Western Australia (281%), New South Wales (152%), and Queensland (150%). CBA recorded a 235% increase in EV financing over the past year.

The rise in EV loans has been attributed to cheaper financing options, a wider range of EV models, and government incentives. High energy costs have also played a part, encouraging companies to invest in EVs, solar panels, and batteries. Despite the growth, a lack of charging infrastructure still poses a challenge to wider EV adoption in Australia. To address this, banks are offering loans for EV charging stations and governments are working to expand the charging network.

However, while banks are increasing their support for EVs and promoting their green credentials, they are under pressure to stop financing new gas projects, which contribute to carbon emissions. The Reserve Bank of Australia has warned of the economic risks associated with climate change and noted that carbon-intensive businesses may become less profitable as the market transitions to a net-zero world by 2050.

The increase in EV loans aligns with the growing adoption of EVs in Australia. EV sales tripled year-on-year, making up 7.4% of all vehicles sold in the country in the past financial year. This is a significant increase from less than 2% in 2021-2022. The number of EV charging stations also grew by 72% in the past year, with 800 stations and 2,000 fast plugs installed around the country.

The shift to EV fleets is driven by both financial and environmental factors. Businesses are taking advantage of government incentives and cheaper finance to accelerate their adoption of EVs. The strategy is to increase the proportion of EVs in fleets to 20% within the next year. The growth in EV loans and the broader adoption of EVs reflect the commitment of businesses and governments in Australia to reduce carbon emissions and transition to a more sustainable transport sector.