Commonwealth Bank launches discounted green vehicle and equipment finance
BANKS are inevitably moving into the so-called ‘green’ or ‘sustainable’ finance space with currently two actioning plans to address climate change through their lending programs either by offering interest rate discounts on loans for ‘green asset solutions’ or by declining to finance anything other than a ‘green’ electric vehicle.
This week, the Commonwealth Bank has announced its own take on the plan with other financial institutions are expected to follow suit soon.
Late last year, Australia’s seventh-largest mutual bank, Bank Australia, announced that it would offer EV-only new car loans from 2025.
The bank said at an EV Summit in Canberra that it will discontinue car loans for new fossil fuel-powered vehicles from 2025 saying that “cars are the key to climate transition”. It said its decision will help to protect the climate and future generations and that “real climate action needs to be bold”.
In a website post, Bank Australia said “around 43 per cent of Australia’s transport emissions are from passenger vehicles,” and that switching to electric vehicles – despite the obvious questions that remain about the source of the electricity used to power such technology and indeed the materials utilised in the construction of EV battery packs – is, “one of the fastest contributors to Australia meeting its climate goals”.
GoAuto reported at the time, “The public relations spin might serve to attract buyers of new energy vehicles to Bank Australia branches, but in covering its bases, the institution says it will continue to support customers who cannot yet access a new electric vehicle by offering loans for second-hand fossil fuel vehicles until there is a viable and thriving market for electric vehicles”.
Down the road, the Commonwealth Bank of Australia (CBA) is taking a different tack offering discount asset financing to “support the sustainability goals of businesses through investment in green vehicles, equipment and machinery”.
The CBA says its ‘green’ asset finance solutions also have the potential of lowering energy costs and boosting productivity. However, exactly what qualifies as a green vehicle (HEV, PHEV, BEV, NEV etc.) has not been made clear in CBA’s statement.
The bank’s new Green Vehicle and Equipment Finance offers discounts of up to one per cent off the standard rate for new and used electric or hydrogen powered cars, trucks, vans or buses valued up to $250,000, and discounts of up to 0.5 per cent on other qualifying assets including electric and hydrogen powered machinery, solar, wind and hydro-powered equipment and charging and storage equipment.
CBA general manager of asset finance, Chris Moldrich, said many businesses were expected to take advantage of the Commonwealth government’s Instant Asset Write-Off scheme before it expires on 30 June, to bring forward purchases of green vehicles and equipment.
“This new green asset finance offering is designed to assist companies in the manufacturing, logistics and construction sectors which are focused on lowering their running costs and energy wastage, while also reducing carbon emissions,” he said.
“These new offerings enable businesses to transition their fleets and equipment to the latest, best-in-class sustainability options such as electric vehicles and green equipment. Our financing solutions cover up to 100 per cent of the purchase price of these assets, as well as supporting infrastructure such as chargers and batteries.
“There is a range of terms to suit different cash flow needs and the ability to use the purchased equipment as security for the loan also enables businesses to free up their working capital for other purposes.”
According to a recent report by East & Partners environmental concerns, lower finance costs and higher cost of fuels as well as regulatory pressures and investor requirements are key drivers for business investment in sustainability.
The report says one in five companies plan to install green energy production facilities on site, while one in three are broadly considering solar, hydrogen, electric vehicle chargers, batteries or pumped hydro, the report found.
Under the Green Vehicle and Equipment Finance umbrella, discounted funding is available for assets including:
- Vehicles: Electric cars, trucks or buses
- Charging and storage: Electric vehicle and equipment charging and storage assets such as batteries
- Electric or hydrogen machinery and engines: Battery powered agricultural, and goods and earth moving equipment
- LED lighting upgrade projects
- Renewable energy: Solar, wind and hydro powered equipment including panel installations
CBA has other ‘sustainable’ asset finance for the purchase or construction of low carbon commercial property, property upgrade loans to improve energy and water efficiency and green home loans.
Keyword: CBA on front foot with sustainable loans