Something exciting is happening in the medium- and heavy-duty vehicle industry. The trucks, buses and port vehicles that drive our economy are quickly heading toward a zero-emission future.
Automakers and battery manufacturers are investing over $600 billion worldwide through 2030 to develop new electric cars, trucks and buses. This shift will benefit the communities and the environment by reducing toxic tailpipe pollution. But it will also fuel a new generation of American manufacturing and technology jobs and innovation opportunities.
Battery, motor and charging technologies are all improving, and costs are falling — trends that will continue as more trucks hit the road. Add to that momentum a slate of federal and state policies that are spurring market supply and demand and providing funding to ease the cost of this transition, and it’s clear that the future of trucking is electric.
States are spurring clean truck supply and demand
California got things rolling in 2020 with the Advanced Clean Trucks rule, which spurs supply by requiring truck manufacturers to meet specific sales targets of zero-emission trucks beginning in 2027. This phased approach gave manufacturers a clear market signal to spur investment and the time and flexibility to meet the rule’s requirements. Other states followed suit: Colorado, Maryland, Massachusetts, New Jersey, New York, Oregon, Vermont and Washington have all adopted or committed to adopt the ACT.
Policy and technology are driving clean truck momentum Click To TweetTackling the charging challenge
Among the most complicated challenges of the transition will be building the charging infrastructure needed to support new electric trucks. For fleets, going electric is more complicated than installing new chargers. It requires a potential increase in the amount of electricity needed to serve the demand at the fleet depot, new utility equipment and careful analysis of how fleets — and utilities — can offset the up-front investment with new revenue streams. An analysis commissioned by EDF, for example, examined how utilities could recoup the upfront costs. It found that when utilities cover the cost of infrastructure upgrades needed for fleet charging, this can increase utilities’ revenue without raising consumers’ electricity rates.
Meanwhile, two significant states are moving forward on charging. The New York Public Service Commission recently started a proceeding to begin deploying the charging infrastructure needed to help meet the goals of the Clean Trucks Rule. In Illinois, the Commerce Commission approved beneficial electrification plans from Ameren and Commonwealth Edison, the state’s two largest utilities. The plan is an important step toward wider electrification efforts that will be necessary to serve electrified fleets.
Funding flows to ease the transition
The Inflation Reduction Act and other national policies are increasing already thriving investments in electric vehicle manufacturing. According to a report by EDF and WSP USA, more than $120 billion in investments and 143,000 new U.S. jobs have been announced in the last eight years, with more than 40% of those announcements happening since the passage of the IRA. In less than a year, the historic investments in the Inflation Reduction Act and Bipartisan Infrastructure Law have helped launch an American vehicle manufacturing renaissance for cars and trucks.
The IRA provides billions in rebates and tax credits to spark demand for zero-emission trucks and reduce the cost of charging infrastructure, including a new $40,000 tax credit for zero-emission commercial vehicles, $100,000 per charging item installed at a depot and a $1 billion grant program through the EPA for clean class six and seven trucks. It also includes billions more to support the build-out of infrastructure for trucks and buses across the nation.
An important component of IRA funding — and one we must ensure is well-executed — is close involvement with and a direct benefit to the communities where these investments will be made. Once the funding flows, it will be critical these requirements are met and enforced.
Several states are providing attractive rebates and tax credits, too. New Jersey announced $70 million in funding for trucks and charging infrastructure. Colorado increased a tax credit for electric trucks and provides a suite of rebates for each vehicle purchased. The Texas Commission on Environmental Quality has awarded $8.2 million in state incentives to help companies purchase electric trucks.
More ahead
The clean truck revolution is underway, but we’re still in the early stages. It’s a big switch, and manufacturers and fleets will need additional support. Challenges with charging infrastructure, for example, are only partially financial. Regulators, utilities and the private sector will each have important roles to play to ensure this transition benefits everyone.