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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
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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