Over the past year, public policy and new funding have shifted more emphasis on building the zero-emissions commercial vehicle market, according to the fourth annual State of Sustainable Fleets Market Brief.
The annual report from clean-energy consultants Gladstein, Neandross & Associates compiled results and trends as provided by 225 fleet operators and decision-makers that are early adopters of clean-vehicle technologies. It explores the adoption of drivetrains powered with propane, compressed natural gas, electric batteries, and hydrogen fuel cells in medium- and heavy-duty trucks. Results are measured against a baseline of diesel vehicles.
This year’s brief reports “diesel engine development programs are moving toward sunset, and zero-emission vehicles will be the ‘law of the land’ in states representing approximately half of the U.S. economy.”
"The past year has brought a historic amount of investment from the federal government, as well as from private industry,” said Erik Neandross, chief executive officer of Gladstein, Neandross & Associates. “Across clean fuel types, we’re seeing accelerating momentum and an increasing commitment to low-carbon fuels and zero-emission commercial vehicles.”
“As detailed in this State of Sustainable Fleets report, progress is being made across all fronts,” explained Drew Cullen, Penske senior vice president of fuels and facility services. “ZEVs and other alternative powertrains, infrastructure, renewable energy, and funding all continue to make significant strides in meeting and exceeding fleet sustainability targets. This year’s report highlights the growing investments and innovations OEMs, energy providers, public and private fleets, and government agencies are making in developing, experimenting, and adopting clean transportation technologies.”
Cleaner Internal Combustion Engines
The Environmental Protection Agency’s new Clean Trucks Plan establishes 2027 as the sunset year for new diesel engine development programs by North American manufacturers, according to the report. Diesel engine NOx emission standards also will require significant reductions as detailed in the Final Rule for Control of Air Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards. Those new standards will mandate emissions 80% lower than current standards.
Those new standards will mean significant cost increases in the purchase of a new Class 8 tractor, according to the brief, which reports the price may grow by up to $30,000.
Traditional fuels like gasoline and diesel have seen significant price increases in recent years, but at the same time more fleets are starting to show interest in biofuels — however, those fuel options also have experienced increases in price. When the prices between traditional and biofuels are close, the study reports many fleets are leaning toward renewable fuels. On a per-gallon basis, the report finds some fleets did experience about 5% savings by choosing biofuels.
The market brief also looked at two sources that track fuel efficiency. One stated an average fuel economy of 6.24 mpg for over-the-road tractors in 2020. The other source, North American Council for Freight Efficiency’s 2022 Annual Fleet Fuel Study, noted an average fuel economy of 7.23 mpg from fleets that have implemented efficiency technologies and practices for more than a decade.
The State of Sustainable Fleets found that only 48% of responding fleets have used efficiency technologies or practices in the last two years.
Cummins expects its new direct-injection propane B6.7L will emit 15% to 30% less carbon dioxide than the repurposed gasoline engines that are common in the propane vehicle market. Propane engines on the market today, the brief points out, already meet EPA’s Clean Trucks Plan and California’s Low NOx Omnibus.
While the study found 57% of fleets surveyed plan to increase their propane consumption during the next five years, that's primarily among bus fleets rather than medium- or heavy-duty truck fleets.
The price of propane, at private stations, increased 15% from the 2021 average to $2.10 per gasoline gallon equivalent. However, the brief reports this did not significantly undermine fuel cost savings for fleets compared to gasoline. On average, fleets using private stations saved $1.94 per GGE.
Sales of new propane vehicles increased 11% overall in 2022, which the brief attributes to increased demand for medium-duty paratransit, municipal, and utility vehicles.
Expanded production from dairy and swine digesters continued to drive the carbon intensity of renewable natural gas in California further below zero. In October 2022, the greenhouse gas emissions of all renewable natural gas used in transportation was 78% lower on a year-over-year basis. At the same time, the renewable natural gas supply continued to exceed demand in California.
In California in 2022, fleet use of natural gas was mostly attributed to renewable natural gas, amounting to about 95% of the usage. That trend continues to downplay the need for fossil-based compressed natural gas, the report states.
The brief estimates renewable natural gas supplies approached 900 million diesel gallon equivalent nationally in 2022. It also forecasts that production volume will continue to grow and reported more than 500 projects were either producing or would start producing renewable fuel for the transportation sector in 48 states.
Fleet demand for natural gas vehicles also continues to rise, reports the brief, and natural gas consumption in California transportation rose 9% from 2021 to 2022.
The report surveyed fleets already using natural gas, in either form, and found natural gas fueled about 20% of a fleet’s vehicles. Many responding fleets, 43%, reported they rely on renewable natural gas.
Engine manufacturers understand the need to adapt to the natural gas environment, as evidenced by Cummins’ announcement of a new 15-liter engine for natural gas vehicles which is touted to improve efficiency by up to 15%. The X15N is expected to be offered in both Kenworth and Peterbilt models, and Cummins has reportedly received similar commitments from other manufacturers.
Interest in battery-electric vehicles, both medium and heavy-duty, has continued to grow, according to the annual market report. Yard truck fleets produced the highest battery-electric vehicle numbers, at 85% of fleets using.
On average, battery-electric vehicles only comprised 4% of a fleet’s population — but six fleets reported a higher adoption rate of 10%.
- 24,000 pickups
- 42,000 cargo vans
- 5,000 step vans
- 5,000 box trucks
- 2,000 utility trucks
- 6,000 Class 8 tractors
Orders for over-the-road Class 2-8 battery-electric vehicles rose 640% from 2021 to 2022, the brief states. In 2021 there were only 4,500 orders announced in public, while in 2022 that number exploded to more than 33,000.
In the heavy-duty tractor arena, sales dropped by approximately 27% to an estimated 660 units. California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) reported only six truck vouchers were redeemed in 2022. A year earlier, in 2021, 29 were redeemed.
The cost of a 450-kWh heavy-duty traffic battery would be between $144,000 and $243,000 before taxes and fees, which could push the base price of a Class 8 battery-electric tractor up to $350,000 to $500,000, which the brief reports is three to five times the price of a new diesel truck.
Hydrogen Fuel-Cell Electric
This year’s market brief paints a picture of legislators and regulators interested in investing heavily in hydrogen production and fueling infrastructure, which in turn supports the growth of the hydrogen fuel-cell electric truck market.
The Department of Energy is considering 79 concept papers for its Regional Clean Hydrogen Hub program. That program will provide the funds, $8 billion, to develop six to 10 hubs for production and distribution. Those funds are expected to be awarded late in 2023.
Analysis within the report suggests that the hydrogen fuel production projects announced in 2022 will add more than 900 metric tons per day of hydrogen capacity by 2023. However, Shell and Chevron have already made several investments in hydrogen and renewable hydrogen production worldwide.
Walmart appears to be leading the charge to pave the way in using zero-emission trucks for long haul.
"FCEVs will play a crucial role in Walmart's goal of converting long haul routes to zero emissions. By becoming an early adopter, we can help unlock viable ZE solutions with increased range and lower weight impact, benefiting both our industry and our planet," said Fernando Cortes, senior vice president, transportation, Walmart U.S., as quoted in the report.
About the Report
Produced with support from State of Sustainable Fleets Market Brief’s title sponsors Daimler Trucks North America, Penske Transportation Solutions, and Shell Oil Company, and supporting sponsor Dana, the report offers additional insights into the key trends shaping the clean vehicle market. A news release outlined nine key findings:
- The federal government and California have adopted rules requiring an 80% reduction in NOx emissions from diesel engines, adding tens of thousands of dollars to the cost of new diesel engines and likely require additional ongoing maintenance
- More than $32 billion per year, on average, in public incentive funding for clean vehicles and infrastructure will be available for the next four to five years
- A total of 13 states and the District of Columbia have passed or are considering some form of California’s zero-emission vehicle sales mandate on manufacturers and these same states are expected to consider California’s zero-emission vehicle purchase mandate on fleets that passed last week
- U.S. renewable diesel production doubled to 800 million gallons from 2021 through 2022 and renewable natural gas replaced nearly all fossil natural gas in California transportation for the second year in a row
- In 2022, compressed natural gas averaged $2.73 per diesel gallon equivalent, and propane averaged $2.10 per DGE compared to an average of $5.78/gallon and $4.79/gallon for diesel and gasoline, respectively
- Orders for medium and heavy-duty battery-electric vehicles surged 640% with nearly 30,000 medium-duty orders and 2,400 heavy-duty battery-electric school bus orders in 2022
- At least half of fleets across 11 different fleet types, including logistics, transit, school, cargo, and delivery fleets, have operated a medium or heavy-duty battery-electric vehicle in the annual survey and 92% of those fleets plan to grow their use
- Supply chain disruptions have raised the price of medium and heavy-duty battery-electric vehicles and delays for electrical service have caused multi-year delays for some deployments
- The public hydrogen station network grew 12% and the first plans to build station networks outside of California were announced for the central, mid-Atlantic, and southwestern U.S.