Inflation Reduction Act gives truck electrification a dose of adrenaline

President Biden will make an appearance at the iconic Detroit Auto Show this week, where he’s sure to tout the historic jolt the Inflation Reduction Act will provide the electric car market.

But the incentives of the IRA will reach beyond the Teslas, Mustang Mach-Es and Ford F-150 Lightnings that will get a significant boost through tax credits and charging infrastructure funds to expand the adoption of passenger EVs across America.

The medium-and heavy-duty truck industry that drives our economies has been heading toward an electric transformation for several years. An EDF analysis found nearly 200 fleets have made commitments to deploy or have deployed zero-emission trucks — a nearly 1,100% increase since 2017. A Wood Mackenzie analysis expects the number of electric trucks on U.S. roads to jump from around 2,000 in 2019 to more than 54,000 by the end of 2025. And as the cost-curve continues to improve, this trend will accelerate. A study by Roush Industries found that electric trucks will become less expensive to purchase and to operate than their combustion engine counterparts by 2027.

And all this was assessed before Congress passed the Inflation Reduction Act of 2022.

By nearly any measure, the IRA will have as big an impact on the electrification of America’s truck fleet as it will on clean energy or any other industry the historic package touches. But the bill features substantial new funding for zero-emission trucks that’s worth highlighting:

• Up to $40,000 in tax credits for each commercial ZEV.$1 billion in grants for class 6 and 7 zero-emission trucks.
• A heavy-duty charging infrastructure tax credit, which will increase incentives from $30,000 per property to $100,000 per item.
•  $3 billion for the U.S. Postal Service to purchase zero-emission vehicles and related infrastructure.
• $3 billion in grants to support the purchase and installation of zero-emission equipment and technology at ports.
• $60 million to reduce diesel emissions resulting from goods movement facilities and vehicles that service them in low-income and disadvantaged communities.
•  $2 billion for domestic manufacturing conversion grants to retool existing auto manufacturing facilities to manufacture clean vehicles.
• Up to $20 billion in loans to build new clean vehicle manufacturing facilities across the country — including $3 billion for the Advanced Technology Vehicle Manufacturing program.

The IRA provides a multi-billion-dollar investment that will help overcome the near-term cost of transitioning to zero-emission fleets. Though costs continue to decline, zero-emission vehicles have higher up-front costs, and a complete transition from diesel to electric requires significant infrastructure improvements. By directly targeting these barriers, the IRA will further boost the massive momentum EDF and others have documented in this industry.

This historic bill adds up to an unmistakable message for companies: it’s time to double down on making the transition to a zero-emission fleet. Companies already moving along their electrification journey should ramp up their investments to take advantage of the IRA. For companies still at the starting gate, this is further demonstration that the future is zero-emission and they need to swiftly start planning for how they’ll make this transition.

Switching to zero-emission fleets takes time, focus, resources and significant staff effort. Here are four actions fleets can take now to accelerate their electrification journey:

•  Commit to becoming a zero-emission fleet.
• Share a transition plan with clear milestones and that prioritizes community health.
• Deploy zero-emission solutions today while sharing learnings and key challenges.
• Engage with policymakers in support of emission standards, societal investments and other measures needed to accelerate the transition to zero-emission fleets.

There has never been a better time for fleets to take the next step on their electrification journey. An ever expanding number of vehicle models are available today and hundreds of fleets are already deploying EVs, providing real-world demonstrations of how these vehicles succeed at performing daily operations. Now the Inflation Reduction Act provides further investments to drive down the costs of these vehicles, which is in addition to significant funds now being distributed through the Infrastructure Investment and Jobs Act passed by Congress last year. There’s lots of action on state the state level too, including in places like California, New Jersey and Texas — where policymakers are committing considerable funds to support fleets in their transition to a zero-emission future.

In taking next steps today, fleets will be moving to improve their bottom line, reduce their contribution to local air pollution and free themselves from the volatility of oil prices. It’s an opportunity fleets cannot afford to miss.