Electric Big-Rigs Struggle to Make Economic Sense Despite $40,000 Tax Credits

Impact of Biden's Regulations on Trucking Industry

Due to regulations introduced under the Biden administration, truckers are maintaining older engines for longer periods because they cannot afford newer diesel models. The unintended consequence of this is an increase in pollution.

California's EV Rules Lead to a 50% Reduction in Truck Sales

The Wall Street Journal highlights that California's Advanced Clean Fleets rule requires an increasing share of semi-truck fleet sales to be "zero-emission" trucks. A similar mandate is in place for passenger cars. However, truckers are not purchasing electric big rigs because they are unaffordable, even with $40,000 in federal tax credits. Electric trucks are twice as expensive as diesel-powered rigs and have a limited driving range—150 miles on average, compared to between 1,000 and 1,500 for diesel trucks. Furthermore, there are very few truck charging stations.

As a result of California's rules, dealers are unable to sell a diesel truck unless they also sell a ZEV truck. Consequently, new class 8 truck sales, both ZEV and Diesel, were down 50 percent year-over-year in June 2024. Truckers are using older engines for longer because they can't purchase newer diesel models, leading to more pollution.

Dealers are reporting that trucks are accumulating on their lots—electric models because truckers won't buy them, and diesel rigs that dealers aren't allowed to sell. Dealers are incurring monthly interest penalties on unsold truck inventory that can exceed $99,000.

Dealers warn that without significant changes, there is a high likelihood that some dealers and their customers will start going out of business in the near future. This will hit small businesses the hardest.

Driving Range of Various Electric Trucks

Here are the driving ranges of various electric trucks:

• Tesla Semi: Approximately 300 or 500 miles.
• Freightliner eCascadia: Between 155 and 230 miles, depending on the battery capacity and configuration.
• Volvo VNR Electric: 275 miles.
• Kenworth T680E: 150 miles.
• Peterbilt 579EV: 150 miles.
• BYD 8TT: 167 miles.

In contrast, the driving range of a diesel semi is 900 to 2,000 miles on average.

Slow Adoption of Heavy Electric Trucks

Heavy-electric truck adoption in the U.S. is growing, albeit slowly. Charging infrastructure rollout is lagging, truck-model recalls slowed market launches, and two battery makers—Romeo Power and Proterra—liquidated assets and entered Chapter 11 bankruptcy, respectively.

As of January 2024, of a fleet of 12.2 million trucks, just 13,000 were electric, according to the Environmental Defense Fund analysis. That analysis defined these trucks as Class 2B to Class 8 vehicles, ranging from step-up vans to tractor-trailers.

Even as battery technology for electric trucks continues to evolve, manufacturers will face formidable challenges on the path to widespread adoption.

Challenges to Widespread Adoption of Electric Trucks

Despite the potential to increase the range of electric trucks by 30%, the large size and hefty weight of Daimler Trucks’ lithium iron phosphate batteries—plus their lower energy density and poor performance in extreme temperatures—make them less than ideal for cross-country treks in varied conditions. Nissan projects exclusive use of lighter-density solid-state batteries by 2028; but drawbacks remain, including the high price of lithium, a lack of viable recycling options, and the risks of lithium electrodes shorting out as batteries age.

Disparities in charging infrastructure in rural areas remain a significant barrier to electrification. Another common concern in the passenger vehicle market is charging time, which could impact truckers operating on tight schedules. This, however, can be mitigated by improving charging technology and exploring the use of China’s battery swap technology in the American market.

Tesla's Semi Rollout

Elon Musk had promised in 2017 that he would be producing 50,000 EV semis a year. However, as of December 21, 2023, the Tesla Semi Fleet had almost 100 trucks. Tesla delivered the first Semi trucks in December 2022, but little has been said about the Class-8 truck or its dedicated production line at Giga Nevada in the past year.

Challenges Facing Electric Big-Rigs

The lack of charging stations is a significant issue. Moreover, the cost of electricity could be a concern if we were to meet the zero emission goals in the stated timeframe. And the idea of EVs being entirely made in the US with 100 percent US components is unrealistic. We do not have the minerals needed for the batteries.

While EVs will eventually become a reality, the pace of adoption will not be as fast as expected.

Charging Infrastructure for Electric Trucks

As of April 1, there were 4 million semis on the road, but only 35 Class 8 Truck EV Charging Stations. If EVs were less expensive in practice, considering all factors, penetration would not be as low as 0.1 percent. It's even challenging to sell them with $40,000 tax credits in California, which has more chargers than anywhere else.

Bottom Line

While the push towards electric vehicles is commendable for its potential environmental benefits, the current economic and practical realities present significant challenges. The high cost of electric trucks, coupled with the lack of necessary infrastructure, makes their widespread adoption a distant dream. What are your thoughts on this issue? Do you think the shift to electric trucks is feasible in the near future? Share this article with your friends and let's get the conversation started. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.