Clean energy journalism for a cooler tomorrow

How quickly can trucking decarbonize? California is about to find out

California’s new Advanced Clean Fleets rule will push trucking to go electric over the next 20 years — the most ambitious such mandate in the country.
By Jeff St. John

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An electric Freightliner e-Cascadia truck owned by Velocity Truck Rental & Leasing
An electric Freightliner eCascadia truck (Velocity Truck Rental & Leasing)

David Deon doesn’t downplay the challenge trucking companies will face in complying with California’s sweeping new mandate to decarbonize its trucking sector. But as president of Velocity Truck Rental & Leasing, a major provider of commercial trucks, he is preparing to help them do it.

I believe zero-emissions vehicles are the future. You can’t ignore it,” he said. 

And now that the California Air Resources Board unanimously approved an Advanced Clean Fleets rule on Friday, he foresees plenty of demand from customers looking to rent or lease the 200 battery-electric trucks his company will be bringing to Southern California over the next two years.

Velocity’s 200 electrified trucks are just one small step toward meeting the nation’s most aggressive clean trucks rule, which calls for the conversion of California’s fleet of 1.8 million commercial trucks to emissions-free vehicles over the next two decades. In almost all cases, that’s going to mean electric vehicles. Companies will have to figure out a way to comply in spite of the fact that electric trucks — and the infrastructure necessary to charge them — remain costly and in relatively short supply. 

Most truck fleet operators in California aren’t ready for this massive shift, said Alex Voets, general manager of Velocity EV, which, like Deon’s company, is a subsidiary of Velocity Vehicle Group.

It’s a big investment — electric trucks are expensive, infrastructure is expensive,” he said. But very few people have run them with their own operations, seen them with their own eyes.”

Getting polluting commercial trucks off the road is a climate, health and equity imperative. These trucks make up 7 percent of vehicles but are responsible for more than a quarter of greenhouse gas emissions and more than half of the smog-forming nitrogen oxides and health-harming fine-particulate pollution from vehicles, Sam Wilson, senior vehicles analyst at the Union for Concerned Scientists, noted in an April blog post.

But the new rules will be hard to meet. 

Between now and the middle of next decade, companies with more than 50 vehicles or more than $50 million in annual revenue will need to hit zero-emissions targets for half of their long-haul trucks, 75 percent of work trucks and daily-route heavy trucks, and all box trucks, delivery vans and yard trucks,” which serve the state’s busy seaports. After 2036, all new commercial trucks sold in the state must be zero-emissions, and by 2042, all fleets must be emissions-free. 

CARB chart of compliance mandates for different classes of vehicles under the Advanced Clean Fleets rule
(California Air Resources Board)

That’s a big stretch even for California, by far the U.S. leader in deploying electric vehicles. Just over 300 electric heavy-duty trucks were on the road in the state as of mid-2022. According to data collected by CARB from 2021 onward, less than one-third of companies large enough to be subject to the new mandate had sustainability plans in place, and only one-quarter included emissions reductions in their future plans. 

As with previous truck emissions rules that California has imposed, many industry groups are fighting the new clean fleets mandate. The amount of chaos and dysfunction that is going to be created by this rule will be like nothing we’ve ever seen before,” Chris Shimoda, senior vice president of government affairs for the California Trucking Association trade group, told CalMatters.

Others, like the Truck and Engine Manufacturers Association trade group, have reacted with more measured statements of concern in advance of the rule’s approval. Adequate lead time, regulatory stability, and the necessary zero-emission recharging and refueling infrastructure are imperative for manufacturers” to meet the mandate, said Jed Mandel, the association’s president.

CARB has left wiggle room for fleet operators that can’t meet its deadlines through no fault of their own. The rule offers exemptions that allow companies to buy internal-combustion-engine vehicles if they can’t obtain the zero-emissions vehicles in the configurations they need or with the ranges they require. And companies can receive exemptions for up to five years if needed charging infrastructure is delayed.

But if there are too many exemptions, it could undermine a policy seen as critical to combating climate change and reducing air pollution that is largely concentrated in low-income and disadvantaged communities. 

California’s success or failure could have repercussions across the country. Besides being the home of more electric heavy-duty vehicles than the rest of the states combined, California is also a climate policy leader. As of now, 13 states and the District of Columbia, representing 45 percent of the country’s population, have agreements to match or consider matching California’s policies for electrifying medium- and heavy-duty vehicles. 

Map of state-by-state deployment figures for medium- and heavy-duty zero-emissions trucks from 2017 to mid-2022
Dark blue states on the map passed legislation to follow California’s lead on its previous truck emissions rules from 2020, while light blue states are considering such mandates. (Calstart)

California’s public agencies, freight companies, charging-site operators and utilities will be under pressure to coordinate their efforts at an unprecedented speed and scale — and to ensure that high costs and lengthy delays for trucks and charging don’t drive the state’s clean trucking plans into a ditch.

Can California get the electric trucks it needs at the right price? 

One key potential hurdle — the availability of electric trucks and other vehicles — doesn’t loom as large as it did only a few years ago, said Heidi Sickler, who runs Western U.S. legislative and regulatory advocacy for bp pulse, a provider of fleet-charging software and services.

More than 100 heavy-duty electric truck models are now available in North America, and there are at least 35 manufacturers of medium- and heavy-duty electric vehicles, she noted. Those include major truck makers like Daimler Truck North America and Navistar which have pledged to shift their core business from diesel to electric-powered models over the next five years.

This growing supply is matched by booming demand. Orders for electric commercial vehicles grew more than sixfold over the past year, clean transportation consultancy Gladstein, Neandross & Associates (GNA) noted in a report released Monday.

Many larger fleets in California are bulking up by adding electric trucks as well as charging capacity. Companies such as NFI, QCD, PepsiCo and Sysco have made big orders over the past two years. Velocity, for its part, is working with Daimler’s Freightliner subsidiary on its 200-truck rollout. Even so, electric vehicles make up an average of only 4 percent of a typical fleet’s vehicles, according to the report.

Plus, the vast majority of trucking companies are smaller companies,” Voets said — and the high upfront cost of electric trucks makes compliance even harder for smaller fleets. 

While medium-duty vehicles like delivery vans and box trucks are seeing rapid growth, heavy-duty trucks have seen persistently high costs and supply-chain disruptions as manufacturers build capacity,” according to GNA’s report. A typical battery-electric heavy truck costs from $300,000 to $500,000, or about three to five times the cost of a new diesel truck. 

In other words, electric trucks are still more expensive than they should be,” said Jasna Tomic, vice president of Calstart, a nonprofit representing vehicle manufacturers, utilities, other corporations and government agencies on clean transportation policy. Luckily for California fleet operators, state and federal incentives are available to fill the gap, she said.

Last year’s passage of the Inflation Reduction Act unlocked a new stream of incentives that lower the cost of electric trucks. The law includes a tax credit for 30 percent of the cost of medium- and heavy-duty electric vehicles up to $40,000 per vehicle, as well as a 30 percent tax credit of up to $30,000 on EV charging systems. It also provides several pools of grant funding, including $1 billion for clean heavy-duty vehicles like school buses and garbage trucks, as well as $3 billion to reduce air pollution at ports, both of which could help boost heavy-duty EV adoption.

The value of federal incentives for medium- and heavy-duty vehicles is anticipated to be $24 billion per year over the next four to five years, per GNA’s report. State incentives bring the nationwide total to $32 billion, including $1 billion to help electrify commercial vehicles in California, the largest state-level investment. 

Map of federal and state incentive funding for medium- and heavy-duty electric vehicles
(Gladstein, Neandross & Associates)

A significant share of that funding is aimed at heavy-duty vehicles, including $2.2 billion of the $2.6 billion that CARB has approved for vehicle incentives. That funding is part of $10 billion over the next six years that California Governor Gavin Newsom (D) has pledged for electrifying transportation.

Most of the state funding for electric truck purchases to date has come from CARB’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP). Of the $835 million in vouchers for more than 11,000 vehicle purchases, the vast majority have gone to electric vehicles, at an average of $101,000 per vehicle, or about 30 percent of the retail price.

If regulations like the Advanced Clean Fleets rule are the stick,” HVIP is the big carrot,” said Orville Thomas, state policy director for Calstart, which administers the program. But HVIP funding can only get the state’s fleets so far. CARB has shifted the majority of future funding to school and transit buses and the yard trucks serving ports in an effort to help communities overburdened by air pollution. Funding for other fleets, such as delivery vans and trucks, will be limited going forward.

Electric trucks do cost more than their diesel-fueled counterparts today, but their total cost of ownership — TCO in industry parlance — is already approaching parity with internal-combustion-engine alternatives. That’s due to a combination of lower maintenance costs, greater efficiency and the price difference between electricity and fuel.

The technology is getting to the point where the cost differential between a diesel engine and a zero-emissions vehicle is minimal,” Thomas said. Various studies predict positive TCO for electric trucks without incentives between 2025 and 2035, depending on drivetrain and battery advances, economies of scale of production and other variables.

But Voets warned that not every TCO will pencil out to your favor. Electric trucks are still expensive. If someone can navigate the incentives and operations, they can come out ahead. But I wouldn’t want anyone to expect that they’ll automatically be a money-saver.”

Still, the primary barrier to fleet electrification is no longer the vehicles, he said. Two years ago, we may have given you a different answer. But now it’s the charging that is the barrier.”

Can California get the charging it needs? 

Velocity’s business model is centered not just on reducing the upfront cost of electric trucks to rent or lease to its customers, said Deon, but also on solving an increasingly urgent problem: charger availability. The company is working on providing sites where trucks can charge up during the day or be left overnight for Velocity service staff to shuttle in and out of open charging slots to make sure they’re prepared for their morning routes, he said.

Velocity has coordinated with utilities to ensure the 39 fast-charging systems it’s deploying at multiple Southern California sites, which can bring its trucks to an 80 percent charge in 90 minutes or less, will be served by adequate grid capacity, he said. That work is expected to take about 18 months — but for new projects, that could turn into 24 or 28 months” because of growing demand for charging capacity, he said. 

This kind of full-service electric-trucking-as-a-service model is being emulated across California. The rationale is straightforward: Until public fast-charging sites are as ubiquitous as diesel fueling stations, the trucks that aren’t part of big, deep-pocketed fleets will need somewhere to power up.

A key early target for these charging-as-a-service and fleets-as-a-service businesses are the 33,500 heavy trucks serving California’s ports. These yard trucks, also known as drayage trucks, run daily routes through some of the state’s most heavily polluted neighborhoods, which are also predominantly lower-income and communities of color.

The Advanced Clean Fleets rule will bar sales of diesel-fueled drayage trucks starting next year and require older trucks to be replaced with zero-emissions models starting in 2025, with a 2035 deadline for an entirely zero-emissions drayage fleet. That’s a tough timeline for small businesses, which make up the majority of drayage truck operators, to meet on their own.

That’s why Forum Mobility has chosen the ports of Long Beach, Los Angeles and Oakland as the first sites for its electric-fleet-as-a-service business. The company last year brought in $400 million in infrastructure finance to secure the land, grid capacity, chargers and electric trucks to provide drayage fleets with trucks at a fixed price that is competitive and beats the cost of diesel,” CEO Matt LeDucq said last week at a San Francisco event hosted by venture-capital backer Elemental Excelerator.

But $400 million is a drop in the bucket compared to what’s needed. Forum Mobility estimates that drayage-truck electrification in California will cost tens of billions of dollars in trucks, chargers and land to site them. 

The 600 trucks that Forum is planning to deploy across eight depots in California over the next 18 to 24 months are a good start, but that will need to be multiplied fiftyfold over the next 13 years to hit state targets. As for the charging to support them, we’ll need to [install] 53 medium- and heavy-duty chargers per day” in the state to meet the Advanced Clean Fleets mandate, LeDucq said.

A growing number of businesses are looking to fill the charging gap. Startup Zeem has secured 10 megawatts of charging at a hub near Los Angeles International Airport to support a fleet of leased electric trucks and vans for use in the metro region. WattEV is building solar-and-battery-powered charging depots across Southern and Central California where drivers can drop off trucks with depleted batteries and drive off in others that are charged up.

Figuring out charging for shorter drayage trips is only half the battle, though; long-haul infrastructure has its own unique difficulties. Today’s electric truck models are suitable for the roughly half of daily U.S. freight routes that are less than 100 miles. But the technology solutions needed for the longer legs of electric trucking are not yet available, including higher-range batteries and higher-speed chargers that cut wait times.

Charging-as-a-service businesses aimed at serving longer-haul trucking are drawing deep-pocketed investors. Terawatt Infrastructure has raised $1 billion to deploy chargers along major freight routes, including the Interstate 10 corridor from Long Beach to El Paso, Texas. Daimler has partnered with utility NextEra and asset manager BlackRock in a $650 million commitment to deploying truck charging nationwide, with Southern California planned as its first site.

At the state level, California is focusing much of its funding for public EV charging on supporting clean fleets. The California Energy Commission has committed $1.7 billion to medium- and heavy-duty charging out of $2.9 billion in charging-infrastructure funding. And the California Public Utilities Commission has directed the state’s big three investor-owned utilities to invest $1 billion in EV-charging make-ready” funding over five years, with 70 percent dedicated to medium- and heavy-duty vehicles.

Utilities will also play a key role in making sure that the power grid is being upgraded to support the big increases in localized electricity demand that heavy-duty charging sites will create. Voets noted, Infrastructure upgrades on the utility side can set you back.”

The state has undertaken some policy efforts to prepare the grid to support fleet electrification, such as AB 2700, a law passed last year that requires state agencies to collect and share fleet-electrification data to inform utility grid planning. 

But the risk that utility grid upgrades will significantly lag behind growth in demand for medium- and heavy-duty vehicle charging is what keeps us all up at night,” said Sickler of bp pulse. 

That view was echoed by CARB board member Davina Hurt before Friday’s vote to adopt the Advanced Clean Fleets rule. I think it’s important to highlight that everything that we’re doing is really riding on infrastructure and the utilities swiftly moving to connect,” she said. Y’all are going to have to get your stuff together in order for this rule to really make sense.” 

Jeff St. John is director of news and special projects at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging and more.