California regulators to fleets: Buy those electric trucks

fleet purchasing

  • A California regulation under development would require fleets operating in the state to purchase electric trucks.
  • Trucking associations are leery of the rulemaking, and prefer a phased-in approach, starting with municipal, local haul and last-mile delivery vehicles.
  • Financial incentives for electric truck purchases at risk due to economic downturn

What if you threw an electric truck party and nobody came? 

That potentially is the situation facing commercial truck makers bound by a first-of-its-kind law California regulators approved last week requiring them to sell an increasing number of electric trucks starting in 2024.

Joe Rajkovacz, director of  governmental affairs for the Western States Trucking Association (WSTA), put it this way: “What good does it do to tell [manufacturers] you’ve got to sell ‘X’ percentages in the state, when the buyers can balk?”

A rule for the buyers

Not known for resting on its laurels, the California Air Resources Board (CARB) is already gearing up for the next round of zero-emission truck rulemaking: ensuring those who would balk (among them, WSTA members) at buying the trucks that will hit the California market as a result of the new mandate, known as the Advanced Clean Truck rule, will have to procure them anyway.

“There needs to be mutual assurance: that there will be vehicles for the purchasers and purchasers for the vehicles,” said CARB chair Mary Nichols during last week’s hearing, where the board approved the truck sales requirement.

The Board will hold its first hearings on the fleet purchasing rulemaking this summer, with a tentative goal of implementing the rule starting in 2024, the same year the sales mandate takes effect.

Trucking fleets at the center

Since the rulemaking is just getting underway, any discussion of what exactly such a regulation will entail is mostly speculative at this point.  

But interviews with trucking fleet associations, as well as Board testimony from last week’s hearing, offer clues as to what the rule might look like, and show how trucking companies, wary of a regulation that would compel them to buy pricey electric vehicles, will seek to shape the rulemaking as the process moves forward.

Favoring a phased-in approach

Today’s zero-emission trucks and their applications are limited, argues Chris Shimoda, vice president of government affairs for the California Trucking Association.

“You will see faster uptake in smaller, local haul, return-to-base fleets with the ability to charge slowly overnight to manage battery life and electricity costs,” Shimoda said in an email to FreightWaves. “But the technology simply will not work in all instances.” 

Because electrification use cases are still limited, Shimoda believes CARB will likely explore “a beachhead approach” to the fleet purchasing standard, targeting specific trucking segments such as refuse, utility, municipal fleets and last-mile delivery.

If CARB does take that route, it will mark a change from the way the Board is implementing the Advanced Clean Truck rule. Although the trucking industry had lobbied CARB for a phased-in strategy based on the vehicle class, those efforts proved futile. But the Board during last week’s hearing appeared more amenable to segmenting adoption of a fleet purchasing regulation, starting with the simplest applications. 

“They talked about using that more on the fleet rule than they did on the purchasing side,” said Mike Tunnell, director of environmental affairs for the American Trucking Associations (ATA).

Other strategies the Board will likely pursue to encourage truck purchases, according to Shimoda, include European-style zero-emission zones and “green shipping” rules targeting shippers.

Large vs. small

Embedded in the Advanced Clean Truck rule is a provision that requires fleets with 50 or more trucks to report on their existing fleet operations. Employers, retailers and manufacturers are also bound by reporting requirements. 

Tunnell, for one, believes the fleet purchasing rule would likewise focus primarily on larger fleets.

Rajkovacz isn’t so sure. He pointed out that the vast majority of trucking companies consist of fewer than 10 trucks. Environmental groups, he said, “aren’t going to sit idly by while CARB goes after a small percentage of fleets.”

A coalition of environmental and community organizations lobbied successfully to get CARB to strengthen an initial version of the clean truck sales standard, which is aimed at reducing pollution and greenhouse gas emissions from medium- and heavy-duty trucks. 

Seven of the 10 smoggiest cities in America are in California, according to the American Lung Association, and despite making up only 7% of vehicles on the road in California, diesel trucks account for 70% of the state’s smog-causing pollution and 80% of diesel soot emitted, according to CARB.

Rajkovacz’ association represents small trucking businesses. Noting that small fleets are often “aced out” of subsidy programs aimed at helping truckers pay for expensive emissions control technology, Rajkovacz said WSTA members “are going to say there should be no mandate on small fleets. That’s the purest positioning to take.”

At the very least, he said, regulators should “absolutely” differentiate between small and large fleets when implementing a fleet purchasing standard.

Money, money, money

Topping the list of concerns for large fleets that do benefit from public largesse is that the government funding spigot doesn’t get shut off.

CARB over the past few years has invested millions of dollars in high-profile electric truck pilot programs and charging infrastructure, Tunnell said, and “as rulemaking moves forward, those incentives will need to be recognized and retained to some degree to keep the market advancing in the right direction.”

Shimoda echoed that concern, adding, “Unfortunately, the state of California is facing a $54 billion budget deficit. The question becomes, where is the incentive funding going to come from?”

A good chunk of funding for the zero-emission truck pilots in California comes from the state’s cap-and-trade program. But that program, which allows polluting companies to buy and sell emissions credits, has taken a hit as fossil fuel activity, which generates revenue for the program, declines in the wake of the coronavirus pandemic.

Perhaps anticipating reduced state funding, a group of high-profile trucking manufacturers and suppliers formed the National Zero-Emission Truck Coalition earlier this month calling for more federal investment in clean transportation and a national point-of-sale incentive program for zero emission trucks.

Ultimately, the ATA understands that CARB sales and fleet purchasing rules is trying to accelerate the market for electric trucks, Tunnell said. “It’s a very difficult thing to do, and we want to make sure as these types of initiatives go forward that we don’t have setbacks,” he said. “We are trying to make sure they are considering what they need to consider from the trucking fleet perspective.”

Related stories:

California approves world’s first electric truck sales mandate

California regulator: a ‘remarkable time in history’ for clean truck innovation

Climate legislation protests in Pacific NW spotlight activist trucking group

Click here for more FreightWaves articles by Linda Baker.