First, let me get this off my chest: I believe in global warming, and there is abundant evidence showing it’s getting worse. I also believe in the mission of the California Air Resources Board (CARB). The smog in Los Angeles is much better than when I arrived over 30 years ago, and CARB has been a key stakeholder in fostering our much cleaner air.
I also believe in electric vehicles. But I don’t believe they’re right for every application, and that’s particularly salient for fleets. In this context, CARB passed its long-anticipated rule on Aug. 25 that phases out sales of internal-combustion (ICE) passenger cars and light-duty trucks starting at 35% in 2026. New vehicle sales under this rule would be replaced zero emission vehicles.
There is so much political noise in this conversation that it becomes hard to have a conversation. But we need to have the conversation now and do it on a national level, as 14 other states generally follow California’s lead on clean car standards. The passing of this new rule was monumental, with cascading effects we’re only beginning to fully realize.
There are many issues that won’t be solved in this blog or anytime soon. The major issues are around how much battery technology and charging infrastructure must advance in a relatively short amount of time to make this feasible, and how California’s grid (and the national grid) must become ready for the exponential growth in electric load.
Right now, we have a greater ability to conjecture the impact on fleets based on what’s in the rule, particularly how light-duty vehicles are classified:
“Light-duty vehicles are vehicles with a gross vehicle weight rating (GVWR) less than 8,500 lbs., which includes passenger cars (LDA) and light-duty trucks (LDT1, LDT2, and LDT3).”
For the purposes of smog regulations, the U.S. EPA classifies light-duty vehicles as having a gross vehicle weight rating (GVWR) up to 10,000 lbs. Thankfully, the new ZEV rule’s lower weight threshold excludes many work trucks, including ¾-ton workhorses such as Ford F-250, Ram 1500, and Chevrolet Silverado HD. But the rule covers all models of half-ton pickups, including Ram 1500, Ford F-150, and Chevrolet Silverado. The rule is phasing out traditional power in the most popular vehicles in the country.
Unlike sedans, work trucks work. Hauling heavy loads in the bed of an electric truck sucks range, but towing a trailer that has any mass and wind resistance, like an RV, will suck your range by 60%. This essentially makes trailering with an electric half-ton pickup a non-starter if you’re traveling any distance, at least with today’s electric truck specs.
The need to tow could push fleets to spec into a ¾-ton diesel truck to do the job. Of course it’s not smart to use an F-250 — with a tow rating of up to 15,000 lbs. — to tow a 4,000-lb. trailer full of lawncare equipment.
Yet spec’ing up to a larger truck will only get you a reprieve for so long. CARB is concurrently developing regulations to mandate that all operations of medium- and heavy-duty vehicles shall be 100% zero emission by 2045 “where feasible.”
That’s a longer timeline to make the switch, though the language is both more draconian (“all operations” as opposed to sales) and with wiggle room: “Where feasible” language will produce all kinds of legal wrangling and offer a doorway out of the rulemaking for many applications.
When I was able to digest the rule, my first thought was on the pickup conundrum. Here’s a quick hit of other issues for fleets that won’t get answered, but must be pondered:
- Initial costs would spike. EVs sell for an average of $66,000 today compared with $48,000 for the average ICE vehicle. Yes, this gap will narrow, but reducing the considerable cost disparity is now a game played through rebates and tax incentives that must someday sunset.
- What happens to used ICE vehicles, particularly work trucks? They’ll be hot commodities as the ratio increases toward EVs. With this clearer horizon for the shift to EV, automakers will limit investment in ICE in the interim years. This would dampen ICE production, but buoy their initial costs (and wholesale values) well before the final sunset.
- Might automakers once again produce SUVs heavier than 8,500 lbs. to skirt the rules? (Long live the Ford Excursion.) I don’t think this will be the case, as those behemoths were discontinued for a reason. But it brings up the potential for other loopholes. Remember those larger passenger vehicles that qualified for Section 179 bonus depreciation but were really made for work trucks? We can’t yet be sure of how a new loophole might be exploited here; but stay tuned.
- Range and infrastructure would still be an issue in many circumstances, such as off-road and non-paved road fleet activity, salespeople with large territories, those in rural areas, and city dwellers sharing garages.
- Fleets with operations in California as well as bordering states will have to consider buying and titling those vehicles in non-compliant states (though Oregon would likely follow that rule). Will California have authority to police non-compliant vehicles that operate a majority in its state?
- Car rental companies, which refresh their fleet the quickest of any type of fleet buyer, would have a more difficult time serving the traditional market of road trippers. Again, we’re dependent on battery improvements and infrastructure buildout to lessen the impact.
- The rule includes other ZEVs such as hydrogen-powered vehicles, but I don’t see them as a viable mass-market alternative. You think the infrastructure challenge for EVs is monumental? Try hydrogen.
- The rule also includes plug-in hybrid vehicles, which were already being phased out in favor of all-electric vehicles. Will automakers revive them as a middle-ground option?
- Assuming the grid can handle the load, wildfires and brownouts in California present a real threat to EVs’ ability to charge. Mobile charging and vehicle-to-grid systems address electricity shutdowns, but they’re in their infancy. Imagine the insurance adjuster that can’t get into a burn area because of a lack of infrastructure.
- When the fuel tax diminishes as gas-powered vehicles are phased out, will the tax burden shift to EVs?
Yes, the points above are made based on today’s technology, which will improve. But by how much? Technology rarely advances the way we envisioned it at the time. Back in 2017, Toyota announced it was planning an EV with a solid-state battery for 2022. That deadline has now been pushed out to 2025, though they’ll start in cars with (much smaller) hybrid batteries. And we were supposed to be in driverless cars by now, remember? Good thing we didn’t have a mandate to meet there.
While battery costs had been on a 10-year decline, they’re now increasing along with the cost of precious metals. Whether we can source those materials in quantities sufficient to meet this timeline and keep costs down is, to say the least, a big question mark. But again, we won’t understand that paradigm just yet.
Through CARB, California has a history of forcing automakers to step up their efficiency. And sometimes they back off their mandates, like they did in 1995. We can look back at some surprising progress. Three years ago, I wouldn’t have guessed that EVs already account for 15% of new car sales in California, which far outpaces the rest of the nation. But with today’s supply chain strain and inflation affecting labor, parts, semiconductors, and pricing, I’m taking a slightly more pessimistic view moving forward.