Hybrids overtake EVs as Australian fleets recalibrate the road to electrification

How are Australia’s fleet-operating businesses rethinking electrification, cost control and AI adoption in 2026?

New research from Fifth Quadrant and the Australasian Fleet Management Association (AFMA) reveals how the country’s one million fleet-operating businesses are rethinking electrification, cost control and AI adoption, with corporate fleets moving first and smaller operators taking a more cautious approach.

Sydney, 21 July 2026: Hybrid vehicles have overtaken battery electric vehicles as the preferred route to fleet electrification in Australia, as operators pull back from a straight jump to full EVs.

Among corporate fleets, hybrid ownership climbed from 41% in 2024 to 56% in 2026, while battery electric vehicle ownership edged up only slightly, from 20% to 22%. Small fleets are following the same path: hybrid ownership more than doubled, from 12% to 27%, while battery electric vehicle ownership rose from 3% to 6%.

“Fleets are still electrifying, just not in the order most people expected,” said Fifth Quadrant Director Ben Selwyn. “Hybrids let a fleet cut fuel use and emissions now, while charging infrastructure and vehicle range catch up to what battery electric actually needs.”

The findings are part of the 2026 Australian Corporate Fleet Insights Report and Australian Small Fleet Insights Report, published by Fifth Quadrant in partnership with AFMA. The reports draw on research with 643 Australian fleet operators and eight years of longitudinal data, and reveal the scale of a market that is anything but uniform.

One million Australian businesses operate almost five million vehicles between them. Small fleets, defined as businesses operating 1 to 19 vehicles, account for 929,000 businesses and manage 2.45 million vehicles. Corporate fleets operating 20 or more vehicles represent just 23,500 organisations but manage a further 2.43 million vehicles.

“Corporate and small fleets face many of the same pressures, but they’re not the same market,” Selwyn said. “A national account with 500 vehicles and a tradie with three utes are both making fleet decisions, but with completely different budgets, tools and risk tolerance. Treat them the same and you’ll misread both.”

Cost shapes every fleet decision

Reducing running costs is now the leading priority across both fleet segments. Three quarters of corporate fleets rate reducing running costs as a high or top priority, alongside vehicle safety, driver safety, operational efficiency and compliance. Running costs are also the leading priority for small fleets, nominated by 57%, followed by service delivery, compliance costs and safety.

Scale doesn’t guarantee speed on AI

Corporate fleets are well ahead of small fleets in adopting artificial intelligence. Sixty-two per cent of corporate fleets are using or trialling AI to automate administrative and compliance tasks, compared with 24% of small fleets. Corporate fleets also lead in AI for fleet optimisation, at 61% compared with 16%, and generative AI for fleet-related tasks, at 57% compared with 16%.

But within corporate fleets, the largest are not the fastest movers. Use and trialling of AI for administrative and compliance automation stands at 63% among both 20 to 49 vehicle fleets and 50 to 249 vehicle fleets, compared with just 42% among fleets operating 250 or more vehicles.

“The fleets you’d expect to be moving quickest on AI are moving slowest,” Selwyn said. “Once a fleet gets past a certain size, the sign-off processes and layers of approval that keep it running smoothly are exactly what slows down anything new.

Scale helps, until it doesn’t.”

Safety ambitions are not always supported by policy

Safety remains a major priority, particularly among corporate fleets, where 69% rate vehicle safety and 68% rate driver safety as a high or top priority. However, formal policies and supporting tools are not always keeping pace: only 25% of small fleets have a formal ANCAP purchasing policy, with the greatest gaps evident among the smallest operators.

These findings have implications for vehicle manufacturers, finance providers, fleet management organisations, technology companies, servicing networks and charging infrastructure providers, all of whom are selling into a market that behaves very differently depending on fleet size.

The 2026 Australian Corporate Fleet Insights Report and Australian Small Fleet Insights Report are now available from Fifth Quadrant.

The Australian Corporate Fleet Insights Study surveyed 318 organisations operating fleets of 20 or more vehicles. The Australian Small Fleet Insights Study surveyed 325 organisations operating between 1 and 19 vehicles. Both studies form part of a biennial research program tracking the Australian fleet market since 2018.