The 2020s will one day be remembered as the era of mass electric vehicle adoption. Every quarter, the market share for EVs grows, and it feels like every month another OEM is announcing a pledge to go all electric by the end of the decade. As consumers are urged to switch from ICE vehicles to EVs for private use, it is becoming more and more evident that EVs are the future of commercial vehicles. One of the primary drivers of EV adoption is the notion that doing so will drastically reduce carbon emissions. However, focusing solely on private vehicle sales, most of which are light or medium duty, overlooks the source of an enormous percentage of fossil fuel emissions. Medium and heavy duty vehicles such as semi trucks, box trucks, and buses are disproportionately large contributors to mobile source nitrogen oxide emissions. In fact, Congressional research has found that these types of vehicles emit 25% of all CO2 emissions from the US transportation sector. The mass adoption of medium and heavy duty EVs is an inevitability that the automotive industry needs to continue to encourage and work on in order to eliminate one of the largest sources of carbon emissions.
Currently, one of the most well known attempts at commercialized EV adoption has run into unexpected challenges. Rivian, an EV startup that took the market by storm with its R1S and R1T models, has been engaged in a massive contract for custom electric Amazon delivery vans. In 2019, Rivian and Amazon signed an agreement stating that Rivian was to produce and sell 100,00 electric delivery vans exclusively to Amazon by 2030. However, as of March 2023, Rivian was struggling to keep up production and meet the contractual obligations of their buyers, leading to a loss in stock value and some layoffs. Despite Rivian’s challenges, the demand for commercial EVs clearly exists and continues to grow. Amazon is one of a variety of massive logistics based companies, and their order for 100,000 vans will not be unique as other delivery services like FedEx and UPS move away from ICE vehicles and look to adopt EVs.
Aside from the EV van segment, there is a major push to replace diesel semi trucks with electric power. Earlier this year, the EPA passed a new set of regulations that will require combustion powered semi trucks to have an 80% reduction from current emissions levels by 2027. The technology required to adapt today’s diesel engines to these stringent regulations has been blasted by trucking companies as prohibitively expensive and unfeasible. Diesel truck ownership is becoming less financially viable, and under the terms of the Inflation Reduction Act (IRA), the incentives for adopting heavy duty EVs make it effectively an economic no-brainer. The terms of the IRA provide for the Qualified Commercial Clean Vehicle tax credit, which states that an incentive of up to $40,000 or 30% of the vehicles cost will be provided for electric and hydrogen vehicles over 14,000 Gross Vehicle Weight Rating. Instead of having to outfit very costly emissions control technology to existing fleets which harm the environment, companies will be able to receive significant tax breaks towards EVs. Moreover, the creation of new infrastructure to charge these EVs will be eligible for a $100,000 tax credit. Financially, the incentives to adopt electric technology in the commercial sector are undeniable.
In response to these changes, companies such as Tesla, Volvo, Freightliner, and Peterbilt have invested a great deal of time, money, and effort into building semi trucks that meet the government’s new regulations and are eligible for adoption incentives. Tesla is currently producing the aptly named Semi model for PepsiCo, in which around 60 had been delivered by the start of summer 2023. This past week, it was reported that a Tesla Semi traveled over 1000 miles in a single day as a part of a study conducted by the North American Council for Freight Efficiency. Tesla states that the Semi has a range of almost 500 miles, while Volvo’s enhanced VNR truck is capable of going 275 miles on a single charge. Already boasting impressive range and hauling capacity, this first generation of commercial EV combination vehicles shows great promise towards transforming trucking in North America and across the world.
All across the industry, EVs are solidifying their place as the future of automotive technology. With billions of dollars of investment pouring in from national governments and the private sector, it is abundantly clear that electric technology is here to stay. More and more private and commercial consumers are literally buying into the EV market, and with pressure and incentive to conform to stricter regulations, it is inevitable that EVs will make up the lion’s share of vehicles on the road. The commercial EV segment is on the cusp of explosive growth, with demand increasing and companies working around the clock to turn EV dreams into reality. Only time will tell where the automotive industry goes, but it is nearly certain that electric commercial vehicles are here to stay.
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