CARB Should Increase, Not Decrease, Electric Truck Incentives

“You’re gonna need a bigger boat.”

The iconic line from the movie Jaws has become a metaphor for when any proposed solution is not up to the challenge it faces.

That’s where we are with the current proposal by the California Air Resources Board (CARB) to reduce the financial incentives it offers companies wishing to electrify their fleet.

In 2009, the state introduced the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP), to accelerate the adoption of cleaner transportation across the state.

While medium- and heavy-duty trucks represent only 10% of vehicles on the road, they generate almost 30% of all transportation-related greenhouse gas emissions, 45% of nitrogen oxide emissions, and over half of fine particulate matter emissions for all vehicles, according to CALSTART. Electrifying this segment of the market has a disproportionally large benefit for the environment and human health.

HVIP has succeeded because of both “carrot” and “stick” motivators.

HVIP’s “carrot” has offered fleets significant funding to offset the higher upfront cost of electric trucks, removing the single largest barrier to adoption.

Simultaneously, state and federal emissions regulations – the “stick” – mandated fleet owners and operators reduce harmful emissions through electrification.

This combination has helped over 2,000 fleets purchase 14,000+ electric vehicles and log over 340 million cleaner-air miles, significantly slashing carbon emissions and pollution.

The steady demand signals enabled electric truck manufacturers to invest in technologies and production and make meaningful progress on reducing the overall Total Cost of Ownership (TCO) relative to gas trucks. But it’s still early days in the industry, and every manufacturer must make thousands of trucks every year to achieve the economies of scale needed to compete on sticker price alone. Current production rates range in the hundreds or less, although thanks to HVIP those numbers have been rising.

Unfortunately, just as our industry is hitting its stride, the federal and state regulations have been undone, freeing fleets from any regulatory obligation to electrify.

With no stick, logic dictates that the carrot should get bigger.

But that’s not what’s happening here. As CARB reopens the program to distribute new funding, it is reducing incentive amounts.

Under the proposed changes, funding for medium duty electric trucks would be reduced from $85,000 to $30,000, leaving electric trucks at a significant financial disadvantage to gas-powered trucks, and likely diminishing any appetite from customers to electrify their fleets.

The message to fleets is clear: “Not only are you no longer obligated to electrify your fleets, but if for some reason you still want to, it’s going to cost you more.”

The state can’t rely on consumer or fleet EV adoption to reduce transportation emissions. The federal $7,500 tax incentive for passenger EV cars and light duty trucks is on the chopping block, as is the $40,000 federal tax credit for commercial clean vehicles. President Trump has effectively ended the state’s EV mandate. Even before these headwinds, California had posted a second quarterly decline in EV registrations according to the California New Car Dealers Association. It’s likely to get worse.

CARB’s stated goals in its 2022 Scoping Plan include: Reducing fossil fuel consumption (liquid petroleum) by 94 percent; cutting greenhouse gas emissions by 85% below 1990 levels; and reducing smog-forming air pollution by 71%.

All of these goals are now at risk..

As federal support wanes and market conditions become more challenging, state-level incentives like California’s become even more crucial for maintaining progress and ensuring that the most impacted communities continue to see real improvements in air quality and public health.

The choice is clear: double down on proven incentive strategies that accelerate adoption across all fleet sizes, or risk watching years of electrification progress slow to a crawl. For the sake of California’s climate goals and community health, CARB should offer aggressive incentives to fleets who wish to start or continue their electrification journey.

In short, we’re going to need a bigger boat (or carrot).