How will small fleets afford the cost of electric trucks? The answer is surprisingly easy. Just work with the nonprofit that manages California’s $647 million voucher program. It is offering double the rebate for which larger fleets qualify.
Calstart is a nonprofit organization working to build a high-tech clean-transportation industry. It administers hundreds of millions of incentive dollars from the California Air Resources Board (CARB). That money is collected from companies that pollute too much.
For fleets with fewer than 20 trucks, Calstart might be a best friend they didn’t know they had.
“What I feel like we’re doing is making sure that small businesses don’t get left behind,” Niki Okuk, Calstart’s alternative fuels program manager, told me.
Calstart’s Niki Okuk oversees the California Air Resources Board’s HVIP program for electric truck vouchers. (Photo: Calstart)
Calstart is keenly aware that funds in CARB’s Hybrid and Zero Emission Truck and Bus Voucher Program (HVIP) typically get snapped up by large fleets qualified to save up to $168,000 on an electric truck. Calstart this year set aside a pool of money for small fleets purchasing a Class 2b-8 electric truck. California
The Innovative Small E-Fleet pilot (ISEF) offers twice the standard $120,000 voucher for which any fleet can apply. Small fleets don’t even have to buy a truck. Flexible leases, short-term rentals, infrastructure and individual owner planning assistance all may qualify. Taxes are one item HVIP vouchers cannot cover.
Several truck-as-a-service businesses passed muster to participate in the ISEF, which targets companies with fewer than 20 trucks and less than $15 million in revenue. That accounts for 80% to 90% of fleets in California.
Now playing: Truck-as-a-service providers
“It’s been really interesting to see the truck as a service business (TaaS) model sort of emerge,” Okuk said. “Having been a small fleet owner myself, I was quite skeptical that it would turn into some sort of indentured servitude, where you have folks endlessly paying monthly subscriptions but never truly owning an asset.”
She has been pleasantly surprised.
“I’ve seen many cases where it really does work out to be the best solution for the fleet because it gives them an opportunity to use the new technology with very little risk,” Okuk said.
Some small fleets lacking the capital or interest in purchasing an electric truck that costs as much as three times as much as a diesel-powered truck can sign on with a startup like WattEV, Zeem Solutions or Forum Mobility and assign their enhanced voucher to the TaaS as part of a contract.
In exchange, they get a truck, access to charging infrastructure and the opportunity to sell low-carbon fuel credits they earn.
Most importantly, they get a shot at spot or contract loads from shippers that want their cargo to move with zero emissions because either their customers demand it or they have their own sustainability goals.
Bending HVIP’s rules for small fleet flexibility
As a government program, HVIP has strict qualifications: Fleets must own the truck they buy for at least three years, sign a traditional purchase contract or lease and use it for their business.
The ISEF waived some of those requirements for small fleets after Calstart interviews with 30 of them found that flexibility was a bigger issue than financing. Education ranked at the top of a survey Calstart conducted with 500 fleets.
To help address that, Calstart hosts frequent ride-and-drive programs for small fleets. Dealing with the flexibility concern required tweaking the HVIP rules. TaaS businesses that wanted to qualify as HVIP providers had to pledge transparency and promise to work only with small fleets.
For example, if a small fleet wants to rent an electric truck for six months to “kick the tires,” the TaaS provider must commit to find another small fleet as a second user.
“Because it’s such a high incentive amount, we want to make sure that value keeps going to small businesses and they don’t just turn around and rent the truck to [grocery stores like] Von’s or Kroger,” Okuk said.
Calstart reviews TaaS business models to be sure any subscription for an electric truck bakes in the value of the incentive through a lower monthly price to the small fleet.
HVIP opened its second round of ISEF funding with $13 million on Aug. 30. It started with $33 million and issued ISEF vouchers for $20 million.
Advanced Clean Fleets rule will cause large fleets to lose HVIP access
The remaining $28 million from $50 million earmarked for larger fleets also recently became available. Large fleets should apply soon because they are not long for HVIP funding, most of which will shift to small fleets before being phased out altogether.
“I could say with confidence that starting in 2025, fleets with more than 50 trucks will not be able to use HVIP,” Okuk said. “Those fleets are just mandated to do the transition” because of the California Clean Fleets rule mandating growing percentages of zero-emission truck purchases.
“The great opportunity here is that smaller fleets often contract to larger fleets,” she said. Small businesses can use HVIP to get zero-emission trucks. They’ll probably be in very high demand because larger fleets are going to be looking for subcontractors that can help them with compliance.”
Coming soon: The World of Volvo
GOTHENBURG, Sweden — This Scandinavian city is celebrating its 400th anniversary in 2023. Volvo Cars and Volvo Group celebrate their 97th birthday next April with the opening of the World of Volvo. It is a five-story sustainable structure constructed of spruce wood from southern Germany and stone milled in Poland.
Two exhibition areas, an event hall, co-working spaces, a world-class restaurant and six conference rooms overlooking natural settings are some of the highlights of the circular structure. A Volvo lounge will be open to all. Purchasers of Volvo cars and trucks can schedule vehicle deliveries at the 237,000-square-foot structure.
Public buses will deliver passengers to the door during the country’s eight months of cold and snowy weather. Outdoor concerts are planned for warmer months.
As an attempt to explore the softer side of the brands, the World of Volvo adopted the Swedish word omtanke, which means deep care for one another, said Tess Andersson, World of Volvo commercial manager.
“We wanted to bring Volvo closer to the community … bring it closer to Gothenburg as a thank-you note.”
Volvo’s massive employment in Gothenburg
Volvo Cars, Volvo Group and Volvo Technology employ nearly 24,000 workers in Gothenburg. That far exceeds the total of the other seven companies making up Gothenburg’s Top 10 employers, including biopharmaceutical research and drug maker AstraZeneca and telecommunications giant Ericsson.
The project in the heart of Gothenburg began construction in February 2021. It is a joint venture of Volvo Cars, now owned by China’s Geely Auto, and Volvo Group, the truck, bus, marine and construction equipment maker.
The Volvo car and truck businesses were founded here in 1927. But their location on nearby Hisingen island deprived Volvo of a meaningful presence in the city center.
Some of the best of Volvo history will move downtown. The land where the Volvo historic museum stands on Hisingen was purchased by the Stena passenger transit ferry line. That required a new home. About half of the exhibits will go into permanent storage.
That’s it for this week. Thanks for reading. Click here to get Truck Tech via email on Fridays. And watch Truck Tech on the FreightWaves’ YouTube channel at 4 p.m. Wednesdays. Next week, we’ll share some ride-and-drive impressions from Volvo’s test track near Gothenburg, Sweden.
In case you missed it, you can catch this week’s episode with Salim Youssefzadeh of WattEV. You can also catch up on past episodes.