Financing the Future of Low Emission Fleets

In recent years, Steer has helped clients close more than $150 billion in transactions across global markets, and we’ve been deeply involved in major low-emission fleet deals worldwide. The discussion addressed the challenges and opportunities associated with financing low-emission fleets across various regions and at different stages of fleet maturity. With the market developing differently across geographies and with a long-term outlook, we convened the panel to share their experiences. 

What we see are public and private organizations facing real trade-offs: meeting strategic goals, ensuring reliability, and achieving financial sustainability. Technology alone won’t get us there. Any transition requires new financial models, new partnerships, and new investment strategies. Our conversation focused on getting real lessons learned from active participants of the financial sector across different regions. 

Thousands of low-emission buses, two and three-wheelers, vans, and trucks are in operation across different continents. Yet overall, deal flow (according to Infralogic) totalled just 10 transactions closed last year globally, barely reaching $2 billion. 

Our Key Takeaways

Financing low-emission fleets relies on the fundamentals: Value proposition, business case, asset structures, scale, sponsorship and ownership models are the main drivers of success. Investors generally want either a strong asset base or a predictable revenue stream; clear, reliable evidence across these dimensions can help secure financing. Service-based use cases have strengthened the case, with charging infrastructure further bolstering the proposition. 

Early uncertainties have been settled, but there are still challenges: Early concerns about battery life have largely been put to rest, but in an evolving market, challenges persist. There are growing opportunities to co-locate transport and energy infrastructure to strengthen grid feedback, but this can increase project complexity and deter traditional lenders. Strong sponsorship helps, allowing investors to lend against a derisked asset base rather than a speculative pipeline. 

There is no one-size-fits-all approach: Different financial instruments can be used creatively, from lending to companies building a core asset to sustainability-linked loans for established leasing companies. The right approach can match investees with different strengths and business models.  

The secret to scaling up: The key to scaling up is building a viable business with a stable customer base. A predictable regulatory environment is also useful, enabling the development of strong business cases, but recent policy developments in the United States show the need for business models that can survive policy shifts. The continuous development of fleets and energy provision in tandem is also an essential component for scale. 

The role of multilateral institutions: Although certain market segments have matured and technical uncertainties have diminished, fleets continue to expand across diverse and dispersed markets, particularly in developing economies. Ownership remains distributed, with both small and large stakeholders requiring distinct forms of support, which necessitates varied business models. Multilateral institutions play a pivotal role in market preparation and in fostering conducive upstream and enabling environments. For example, AssetCo structures – where Steer has played a role and has been developed and implemented by IFC –are being adapted for a range of geographies and market contexts.

Expanding beyond initial projects requires strong collaboration among policymakers, operators, and capital providers, as well as robust delivery and funding models. The market is experiencing both challenges and opportunities, yet the outlook remains promising as growth accelerates across multiple fleet segments. 

Sound financial structuring, long-term planning, and effective risk allocation remain central to investment strategies. While technology continues to advance and costs decline, there is still a need to refine policy, structuring, and financial tools.

Our discussion was insightful and energizing. Many thanks to Jeffrey Matthews, Managing Director and Head of Origination within Principal Asset Management’s Private Infrastructure platform; Dr. Julia Kowalle, Head of Asset Strategy, Global Structured Finance SMBC Bank International (covering Europe, the Middle East, and Africa); and Kartik Gopal, Global EV Industry Specialist at the International Finance Corporation (IFC).