California doubles electric truck rebates for small fleets
How will small fleets afford electric trucks? The answer is surprisingly easy. Just work with the nonprofit that runs the $647 million voucher program in California. It offers twice the discount that larger fleets qualify for.
Calstart is a non-profit organization working to build a clean, high-tech transportation industry. It administers hundreds of millions of stimulus dollars from the California Air Resources Board (CARB). This money is collected from companies that cause a lot of pollution.
For fleets with fewer than 20 trucks, Calstart may be the best friend they didn’t know they had.
“What I feel like we’re doing is making sure small businesses don’t get left behind,” Nikki Ocock, Calstart’s alternative fuels program manager, told me.
Calstart’s Nikki Ocock oversees the California Air Resources Board’s HVIP program for electric truck vouchers. (Image: Calstart)
Calstart is fully aware that funds in CARB’s Hybrid and Zero Emission Truck and Bus Voucher Program (HVIP) are typically snapped up by large fleets that qualify to save up to $168,000 on an electric truck. This year Calstart set aside a pool of funds for small fleets to purchase a Class 2b-8 electric truck. California
The Innovative Small Electronic Fleet (ISEF) pilot program offers double the standard $120,000 voucher that any fleet can apply for. Small fleets don’t even need to buy a truck. Flexible leases, short-term rentals, infrastructure, and sole proprietor planning assistance may all qualify. Taxes are one item that HVIP vouchers cannot cover.
Several companies offering trucks as a service have passed muster to participate in ISEF, which targets companies with fewer than 20 trucks and less than $15 million in revenue. This represents 80% to 90% of fleets in California.
Play Now: Truck-as-a-Service Providers
“It’s been really interesting to see the emergence of the truck as a TaaS business model,” Okok said. “Having been a small fleet owner, I was very skeptical that it would turn into some kind of indentured servitude, where you have people paying monthly subscriptions endlessly but never owning an asset.”
It was a pleasant surprise.
“I’ve seen many cases where it’s actually worked out to be the best solution for a fleet because it gives them an opportunity to use new technology with very little risk,” Okok said.
Some small fleets that lack the capital or interest in purchasing an electric truck that costs up to three times as much as a diesel truck can partner with a startup like WattEV, Zeem Solutions, or Forum Mobility and assign their optimized voucher to the TaaS as part of the contract.
In return, they get a truck, access to charging infrastructure, and the opportunity to sell the low-carbon fuel credits they earn.
Most importantly, they get the opportunity for spot or contract loads from shippers that want to move their goods with zero emissions either because their customers demand it or because they have their own sustainability goals.
Bend HVIP rules for small fleet flexibility
As a government program, HVIP has strict qualifications: Fleets must own the truck they purchase for at least three years, sign a traditional purchase contract or lease it and use it in their business.
The International Economic and Finance Forum waived some of these requirements for small fleets after Calstart’s interviews with 30 of them found that flexibility was a bigger issue than financing. Education ranked first in a Calstart survey of 500 fleets.
To help address this, Calstart hosts frequent ride-and-drive programs for small fleets. Addressing flexibility concerns requires modifying HVIP rules. TaaS companies that wanted to qualify as HVIP providers had to pledge transparency and promise to only work with small fleets.
For example, if a small fleet wants to rent an electric truck for six months to “hit the ground running,” the TaaS provider must commit to finding another small fleet as a second user.
“Because it’s a high incentive amount, we want to make sure that the value continues to go to the small businesses, and they’re not just leasing the truck to (grocery stores like) Von’s or Kroger,” Ocock said.
Calstart is reviewing TaaS business models to ensure any electric truck subscription matches the value of the incentive through a lower monthly price for a small fleet.
HVIP opened its second round of ISEF financing with $13 million on August 30. It started with $33 million and issued ISEF vouchers worth $20 million.
The advanced clean fleets rule will cause large fleets to lose access to HVIP
The remaining $28 million of the $50 million allocated to larger fleets also recently became available. Large fleets should apply soon because it won’t take long to obtain HVIP funding, as most will convert to small fleets before being phased out completely.
“I can confidently say that starting in 2025, fleets with more than 50 trucks will no longer be able to use HVIP,” Okok said. “These fleets are only mandated to make the transition” because of California’s Clean Fleets Rule that mandates increasing percentages of zero-emission truck purchases.
“The great opportunity here is that small fleets often contract with larger fleets,” she said. Small businesses can use HVIP to obtain zero-emission trucks. They will likely be in very high demand because larger fleets will look for subcontractors who can help them with compliance.
Coming soon: The World of Volvo
Gothenburg, Sweden – This Scandinavian city will celebrate its 400th anniversary in 2023. Volvo Cars and the Volvo Group will celebrate their 97th birthday next April with the opening of Volvo World. It is a five-story sustainable structure constructed of spruce wood from southern Germany and crushed stone in Poland.
Two exhibition areas, an event hall, co-working spaces, a world-class restaurant and six conference rooms overlooking the landscape are the highlights of the circular structure. The Volvo Lounge will be open to everyone. Buyers of Volvo cars and trucks can schedule vehicle deliveries at the 237,000-square-foot building.
Public buses will deliver passengers to the door during the eight months of cold and snowy weather in the country. Outdoor concerts are planned during the warmer months.
In an effort to explore the brands’ softer side, Volvo World has adopted the Swedish word omtanke, which means deep care for each other, said Tess Andersson, commercial director of Volvo World.
“We wanted to bring Volvo closer to the community…to bring it closer to Gothenburg as a thank you.”
Volvo’s massive employment in Gothenburg
Volvo Cars, Volvo Group and Volvo Technology employ approximately 24,000 workers in Gothenburg. This far exceeds the total of the seven other companies that make up Gothenburg’s top 10 employers, including biopharmaceutical research, drug maker AstraZeneca and telecommunications giant Ericsson.
The project in the heart of Gothenburg began construction in February 2021. It is a joint venture between Volvo Cars, now owned by China’s Geely Auto, and Volvo Group, maker of trucks, buses, marine and construction equipment.
The Volvo car and truck companies were founded here in 1927. But its location on the nearby island of Hisingen deprived Volvo of an effective presence in the city centre.
Some of the best in Volvo history will move downtown. The land on which the Volvo Historical Museum in Hesingen is located was purchased by the Stena passenger ferry line. This requires a new home. About half of the exhibits will be moved to permanent storage.
That’s it for this week. Thanks for reading. Click here to get Truck Tech emailed on Fridays. And watch Truck Tech on the FreightWaves YouTube channel at 4pm Wednesdays. Next week, we’ll share some ride and driving impressions from Volvo’s test track near Gothenburg, Sweden.
In case you missed it, you can watch this week’s episode with Salim Yousefzadeh from WattEV. You can also catch up on past episodes.