Long distances, opaque regulators: no easy ride for US truck electrification

The North American trucking industry is of immense economic and cultural significance to those people who run it, and to those it serves. Just as in any major market, however, climate change, local pollution and technological advances mean that fleet operators are now under more pressure than ever to clean up their acts. Electrification is guaranteed a role in this, and will prove an important strategy for US truck manufacturers over the coming years, says Clayton Slaughter, Senior Analyst and General Counsel at FTR Transportation Intelligence. Commercial vehicle engine manufacturer Cummins made this all too clear in August 2017 when it unveiled ‘Aeos’, an all-electric Class 7 truck prototype. Nikola Motors and Tesla have also been vocal on their work in the sector; the Nikola One was unveiled in December 2016, and Tesla plans to unveil an electric Class 8 tractor in late October 2017. The pressure to electrify, says Slaughter, is largely driven by shippers and consumer demands for transportation options which make a lesser impact on the environment. In addition, whilst low fuel prices enable diesel and gasoline technologies to dominate today’s market, an increase in prices could ratchet up the pressure considerably. Indeed, some suggest there may be savings potential for electric vehicle operation even when measured against today’s cheap diesel. Figures suggest a Class 8, near-dock duty cycle diesel costs as much as US$1.49 per mile, while a competing electric truck costs as little as US$0.44. That said, initial costs may take several years to recuperate – another huge concern for fleet operators. “If standards are relaxed, it will lessen regulatory pressures on manufacturers to produce low emissions trucks, including electric trucks” – Clayton Slaughter, FTR Beyond this, there are regulations to consider, but as recent events have shown, things are not as clear in this regard as they were under the Obama administration. Changing the rules On the regulatory side, Ben Sharpe, Senior Researcher at the International Council on Clean Transportation (ICCT), identifies CO2 and greenhouse gas (GHG) standards coupled with policy work such as the California Zero Emission Vehicle (ZEV) mandate, which currently applies to ten states and dictates that a certain percentage of an OEM’s sales must be ZEVs, with partial credits available on hybrids – although the latter will begin to count for less in 2018. “These get to the heart of what’s needed, which is more aggressive adoption of electric vehicles,” says Sharpe. “We think these are attractive because it sends a clear signal to industry that this is the expectation.” Support for complementary measures such as specific vehicles lanes and tax incentives at the point of purchase, he says, are important, but ultimately CO2 regulations coupled with ZEV policy forms a “bedrock” for pushing electrification. More action is needed. Worldwide, energy consumption from the heavy-duty sector, including buses, is nearly equivalent to that of passenger vehicles. According to the ICCT, between 2010 and 2030, growth in HDV energy use is forecast to increase by 72%, and from the period 2016 to 2051, heavy-duty vehicles could account for 45% of on-road CO2 emissions. “Much of the industry appreciates long-term targets and standards because the industry loves certainty. And so even if targets are aggressive, knowing what needs to be achieved by a certain date allows for investments that can build up a long-term strategy. A limbo situation like this is not ideal” – Ben Sharpe, ICCT Despite this, the ICCT points out that only four countries have adopted fuel economy and GHG emission regulations for heavy-duty vehicles. This includes the US, where the the Environmental Protection Agency (EPA) and Department of Transport (DOT) announced a final rule for second phase standards in 2016. But one recent development calls into question just how stable the regulations are. Stricter GHG and fuel efficiency standards for trailers and gliders were due to come into effect on 1 January 2018. However, in August 2017, the EPA and DOT, now working for the Trump administration, announced a review of the standards. “The review is expected to weaken standards,” says Slaughter. “If standards are relaxed, it will lessen regulatory pressures on manufacturers to produce low emissions trucks, including electric trucks.” The EPA has said the move comes in response to concerns raised by stakeholders in the trailer and glider industry, representatives from which argue the EPA does not have the authority to regulate them under the Clean Air Act. Sharpe agrees it would be wishful thinking to assume that standards won’t be weakened. Details on the review’s methods, and the types of analyses that will be undertaken, are absent, he says. “We know that standards are being re-opened,” he says, “but beyond that, we have no idea what the scope of the changes might be, or what timeline they’re working to.” Bodies like the ICCT had a close working relationship with the EPA under the Obama administration, but that situation has changed since Trump’s arrival. This, he suggests, is to no-one’s benefit, as such an opaque process could create uncertainty for manufacturers. “It’s a difficult situation, particularly on the trailer side where regulations were due to take effect at the start of 2018. The uncertainty this has created is therefore detrimental to the industry, because equipment is already being manufactured.” Without regulatory certainty, companies might have to make risky decisions, and what’s more, says Sharpe, it is easy to imagine a situation in which a weakening of standards leads to litigation by companies who have already invested heavily in changing their manufacturing process, or adding technologies: “Much of the industry appreciates long-term targets and standards because the industry loves certainty. And so even if targets are aggressive, knowing what needs to be achieved by a certain date allows for investments that can build up a long-term strategy. A limbo situation like this is not ideal.” Whether regulation will prove the biggest driver of electrification in the space is a matter of debate. As BMI Research’s Anna-Marie Baisden points out, the US is unlikely to follow the example of numerous European countries, and China. “We’ve seen some markets announce a phase-out of diesel and gasoline,” she says. “We are not convinced that the US will follow suit, because of the product mix. Comparatively speaking, there are far more big vehicles on the road in North America.” Despite this, and the technical limitations, investment in projects like Nikola, Tesla and Cummins continues. “The electric truck segment is one of the more difficult spaces to sell in,” suggests Baisden, “as it requires pulling power and range. So a large part of the continued interest is company image. Sustainability reports, for example, are far bigger than they used to be. For OEMs, it’s also worth the effort now if they plan to sell in markets which are going to crack down on internal combustion engines.” Technical details The road ahead, says Slaughter, presents OEMs and suppliers with several challenges: “The obvious challenge is one of equipment, which needs to provide a useful travel range per charge and, at the same time, the ability to handle heavy loads.” This strikes at the core of the main difficulty of north American truck electrification, namely the length of hauls across the continent: “Manufacturers will need to realise substantial range improvements before electric trucks will become viable.” As such, electrified trucks will first appear in specific, short-range use cases. “Limited markets will have use for shorter travel ranges and lighter load capacities,” says Slaughter, with examples including port drayage operations, and inner city delivery operations. Sharpe agrees: “Up until 2025, electric trucks will primarily be a niche application for short-haul, return-to-base operations with dedicated routes and a spot where vehicles are charged every night.” Electric trucks with ranges of 80 miles can already be found working the ports of Los Angeles and Long Beach, whilst California’s Motiv Power Systems produces Class 8 refuse trucks which can run routes of 80 miles while operating a hydraulic compactor. “We’ve seen some markets announce a phase-out of diesel and gasoline. We are not convinced that the US will follow suit, because of the product mix. Comparatively speaking, there are far more big vehicles on the road in North America” – Anna-Marie Baisden, BMI Research This is still dependent on certain factors, points out Slaughter. One is the standardisation of charging infrastructure, as existing infrastructure is largely proprietary, meaning that forms and functions of charging lack standardisation, impeding adoption. “These infrastructure improvements will most likely be privately funded,” he says, “either as a profit centre or business development initiative.” It will also be important to consider a second user market, he adds. As he points out, the life expectancy of electrified trucks remains unproven, making the costs of maintenance, need for alternative maintenance programmes and life expectancy for second user markets uncertain, and reducing interest. Range issues also create opportunities for partial electrification in the North American heavy-duty and bus sectors. By 2025, Frost and Sullivan predicts annual sales of hybridised buses and medium to heavy-duty trucks could grow to 46,950 units, with all major truck and bus manufacturers expected to offer at least one hybrid platform, and with refuse trucks, delivery trucks and drayage trucks expected to be major adopters. Heavy-duty alternatives Heavy-duty long-haul, Sharpe continues, is a far tougher nut to crack, but should the US market want to quickly move towards a zero-emissions state as quickly as possible, heavy-duty long-haul will need to be a part of the solution. Sharpe does not believe that biofuels will prove to be a silver bullet, and there is still considerable work to be done on battery technology. “The current state of energy storage and power density means it’s really not feasible to think about battery-electric options,” he says. This, he believes, could play in favour of another type of electrification: “It’s my expectation that post-2025, we will start to see electrified long-haul applications, and fuel cell electric vehicles could prove the best solution for emission-free Class 8s.” Fuel cell passenger cars can achieve ranges more comparable with their internal combustion engine counterparts, and can be re-fuelled more quickly by an order of magnitude than an EV can be re-charged. “The announcement from Toyota, a global player which works using long-term strategies, gives me confidence that it’s not just niche players trying to enter the fuel cell trucking space” – Ben Sharpe, ICCT Heavy-duty fuel cells are not quite without precedent – Toyota has already shown what is possible with its Project Portal proof of concept, a Class 8 tractor fitted with two of its Mirai fuel cells that is capable of pulling an 80,000lb (36,287kg) load over a distance of 200 miles (322km). The vehicle performed trials at the Port of Long Beach in California, where it shifted container crates. Other companies, such as Nikola Motor, have also demonstrated fuel cell-based models. “The announcement from Toyota,” Sharpe continues, “a global player which works using long-term strategies, gives me confidence that it’s not just niche players trying to enter the fuel cell trucking space.” For fuel cells, the infrastructure problem is far worse, and without an adequate infrastructure, they will be of no use to long-haul vehicles, which rarely operate along fixed routes. This is the chicken-and-egg problem that has long faced the fuel cell sector: without vehicles on the road, there will be no investment, but without investment, there will be no vehicles on the road. Sharpe, however, is bullish on the technology. Whilst he acknowledges that battery-electric will be the dominant technology in the light-duty sector, the electrification of light trucks will be a broad process which will consider all possibilities. California, and to a lesser extent some Eastern states, is already pushing fuel cell infrastructure, which will bring more vehicles to the road. This in turn could drive technology developments in the heavy-duty sector, which as he suggests will typically follow the light-duty sector with a lag of five to ten years.

Long distances, opaque regulators: no easy ride for US truck electrification

Recent announcements suggest that things are picking up in the US electrified truck market, but regulatory uncertainty and battery limitations could create difficulties. By Xavier Boucherat

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