Corporate Trends

The Business Case for Electric Trucks

The business case for electric trucks is becoming increasingly compelling as companies seek to lower their operating costs, get ahead of upcoming regulations, and reduce their carbon footprint. While electric trucks are still a niche product, we are seeing more businesses implement them. For example, PepsiCo has committed to purchasing 100 Tesla semis and has already taken delivery of at least 36 units. Businesses are shifting to electric trucks due to lower operating costs, increased efficiency, environmental benefits, regulatory compliance, and an improved public image.

“The business case for electric trucks is becoming increasingly compelling as companies seek to lower their operating costs, get ahead of upcoming regulations, and reduce their carbon footprint.” – EFFI Director of Analytics

Electric trucks have significantly lower operating costs than diesel-powered trucks. The cost of electricity is typically much lower than the cost of diesel fuel, and electric trucks require less maintenance than their diesel counterparts, which can reduce maintenance costs. Tesla reports that the operating costs for their truck will be $1.26/mile, as compared to $1.51/mile for their diesel counterparts. In an industry as competitive as trucking, managing ongoing costs is key to long-term success.

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As governments around the country implement stricter emissions regulations, companies that switch to electric trucks will be better positioned to comply with these regulations and avoid costly fines. For example, in April 2023 the California Air Resource Board approved the Advanced Clean Fleets Regulation (ACF). The ACF requires companies who seek to operate drayage trucks at California’s ports & railyards to purchase electric trucks.

A truck-shaped lake in the midst of pristine nature, illustrating the concept of clean, greenhouse-free transport in the form of electric, hybrid or hydrogen propulsion. 3d rendering.
Electric trucks boast considerably lower operating costs compared to diesel trucks, as electricity is generally cheaper than diesel fuel and electric vehicles require less maintenance.

Non-zero emissions trucks must be registered in CARB’s online system by 12/31/23. Beginning January 1st, 2024, only zero-emission drayage trucks may register in CARB’s online system. Some industry analysts expect drayage companies to renew their fleets during 2023, as afterward they will no longer be able to purchase diesel trucks for drayage service. In-use diesel trucks will be allowed to continue operating as drayage trucks until they reach 800,000 miles or the engine becomes older than 18 years. Diesel trucks must visit a port or intermodal railyard at least once a year to remain in the CARB system. By January 2035, all non-zero-emission drayage trucks will be removed from the CARB system.

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Companies that switch to electric trucks can improve their public image by demonstrating their commitment to sustainability and reducing their impact on the environment. According to a study by NielsenIQ, 78 percent of US consumers say that a sustainable lifestyle is important for them. By switching to electric trucks, companies will appeal to these consumers. This is why when PepsiCo took delivery of their new Tesla trucks, the company held a well-publicized media event.

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There are a variety of state and federal incentives available to companies transitioning to electric trucks. For example, the Inflation Reduction Act of 2022 provides a 30% tax credit for electric commercial vehicles, up to $40,000 per unit. Many state governments also provide additional incentives. For example, in California, companies seeking to replace diesel trucks with electric trucks may qualify for up to $410k in grants through the Carl Moyer Program. In New York, companies can apply for the New York Truck Voucher Incentive Program, which provides up to $185k for companies acquiring electric trucks.

While electric trucks may have a higher upfront cost than their diesel counterparts, the lower operating costs and other benefits can make them a smart long-term investment. As the technology continues to improve and the infrastructure for electric vehicles expands, the business case for electric trucks will only become stronger. Significant government incentives are also available for businesses that are seeking to transition to electric trucks. EFFI stands ready to support the needs of American trucking companies, whether they are replacing existing trucks with electric units, or bringing on additional diesel trucks.

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Author: Jason Shihata, Credit Manager at EFFI Finance