Electrification of medium-and heavy-duty commercial
trucks gain momentum with new policy updates, as predicated in IHS
Markit's 2021 Reinventing the Truck study
Greg Genette: IHS Markit
Advanced Clean Trucks, move beyond California
On November 17th, 2021 the state of Oregon became the second
state to adopt the Advanced Clean Trucks (ACT) policy requiring
medium-and heavy-duty truck (MHCV) manufactures to sell an
increasing percentage of zero-emission trucks in their state. Just
twelve days later and a few hundred miles north, on November 29th
the state of Washington became the third state to join California,
thus solidifying the west coast as leaders in the US MHCV
electrification market. Moving east, late in 2021 Massachusetts,
New Jersey and New York also announced they have formally adopted
the rule. Over the last three months, five states have officially
committed to a future of zero-emission MHCV's with their adoption
of California's Advanced Clean Trucks rule. These states, including
California, account for about 17% of all new US MHCV registrations.
To understand the significance of these developments, let's look
back to see how the industry got to this point.
In June 2020, California adopted an industry first rule that
required truck manufactures to sell an increasing number of
zero-emission trucks in their state, called Advanced Clean Trucks.
One month later in July 2020, 15 other states and the District of
Columbia announced a joint memorandum of understanding (MOU) to
accelerate the market for zero-emission MHCV's. The states that
joined the MOU represents almost one-third of new registrations in
the United States which include, California, Connecticut, Colorado,
Hawaii, Maine, Maryland, Massachusetts, New Jersey, New York, North
Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, and
Washington. As we start a new year, the backdrop is now set for
continued momentum towards electrification; the Biden
Administration took office at the beginning of 2021 with a renewed
focus on climate change, a wide-variety of targets and
announcements have been made by industry players including truck
manufactures pushing zero-emission technology and now individual
states are taking matters into their own hands by requiring the
electrification uptake to occur.
The IHS Markit perspective: what these developments could
mean moving forward
The expectation that all MOU states will officially adopt a form
of California's Advanced Clean Trucks is a forecast assumption that
was firmly cemented into IHS Markit's 2021
Reinventing the Truck (RTT) study. RTT is a scenario based
long-term report that includes sales forecasts for battery-electric
and fuel-cell electric medium-duty and heavy-duty trucks. The
signed MOU from individual states was an indication that the
current administrations are likely to implement rules to reduce the
carbon footprint of the transportation sector. In addition, the
United States re-joining the Paris Climate Accord has laid the
foundation to drive individual sectors such as trucking to
implement policies to reduce greenhouse gas emissions. According to
analysis done by IHS Markit, in 2020 trucking accounted for 42.2%
of total road sector carbon emissions in the United States,
highlighting the importance of decarbonizing this sector to achieve
the Paris Climate targets. Regulations and policies with clear
targets on zero-emission MHCV's are an important development that
must not be overlooked. In the past, policies in the trucking
industry regulated emission standards including CO2 as
well as fuel efficiency. However, now with zero-emission sales
targets, uptake of this new technology will not only be driven by
cost reductions and advancements in technology but also with a
strong push from the regulatory environment. As a result, truck
OEMs as well as all industry players are under pressure to
introduce new battery-electric and fuel-cell electric products if
they want to compete in the new future of this market. Already, the
industry is responding. For example, during a 2021 strategy day,
market leader Daimler Trucks stated they would significantly reduce
research and development (R&D) spending on internal combustion
engines in favor of shifting a majority of R&D resources
towards zero-emission technology by 2025. Overall, this industry is
set to experience significant change over the next decade as the
requirement to sell, deploy and use zero-emission MHCV's is now in
place and appears to be attractive to states beyond only
California. However, there are still questions looming as market
conditions continue to change and the future is disrupted. Further
detail on IHS 'Markit's view can be found in the updated 2021
Reinventing the Truck study, which aims to understand trucking's
all new future.
About IHS Markit's 2021 Reinventing the Truck study
As described in this blog, major developments are happening that
will have future impacts in the MHCV industry, not only in the
United States but across the world in major markets such as
Mainland China, Europe, and Japan. An increased focus on climate
change, aggressive regulations, and technological innovation will
fundamentally change the trucking industry. In RTT, IHS Markit has
brought together supply chain, automotive, and energy experts to
identify and address the major questions facing the industry. The
IHS Markit 2021 Reinventing the Truck study provides an
understanding of major upcoming changes in the trucking industry.
Now in its fourth year, this study boasts all-new scenario
storylines, with updated political, social, and economic
assumptions. The Reinventing the Truck study will include excel
data sets for truck sales, and fleet outlooks to 2050 in two
scenarios. The power point Summary Report will provide detail on
the policy, technology, and cost assumptions used in the sales and
fleet modeling and in the total cost of ownership analysis.
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