Groups warn of $1 trillion cost for electrification of America’s trucking industry

As the Biden administration moves ahead with planned deployment of medium- and heavy-duty vehicle electric charging and hydrogen fueling infrastructure from 2024 to 2040, trucking industry officials are warning of excessive costs associated with such electrification.

How excessive? How does $1 trillion sound?

That’s the amount the Clean Freight Coalition (CFC) disclosed Tuesday in what it called “a groundbreaking study” conducted by industry consultant, Roland Berger Group. The report calculates the enormous costs of electrifying the supply chain for trucking fleets and utilities.

By comparison, the trucking industry in this country produced approximately $830 billion in revenue in 2022, the last full year that figures are available from the annual “State of Logistics” report.

CFC is an alliance of truck transportation stakeholders committed to a clean energy future for America’s trucking industry. Participating associations span motor carriers of every size and sector, truck dealers, truck stop operators, and the bus industry. 

The study forecasts what it called “a realistic infrastructure buildout” for the electrification of medium- and heavy-duty commercial vehicles. It exposes what the CFC calls a “massive” investment gap as state and federal policymakers mandate increased adoption rates for battery-electric commercial vehicles.

 Key findings from the report:

• Preparing today’s commercial vehicle fleet for electrification would require the commercial vehicle industry to invest upwards of $620 billion in charging infrastructure alone, including chargers, site infrastructure and electric service upgrades; and
• Utilities would need to invest $370 billion to upgrade their grid networks to meet the demands of just commercial vehicles.

This nearly $1 trillion expenditure does not account for the cost of new battery-electric trucks, which according to market research, can be two-to-three times more expensive than their diesel-powered equivalents. For example, a diesel Class 8 truck today costs roughly $180,000, while a comparable battery-electric truck costs over $400,000.

The study found that while medium-duty vehicles will face fewer roadblocks, economic and operational constraints make electrification very challenging for the heavy-duty segment. Furthermore, the study outlined the significant improvements in battery range and charging infrastructure capabilities that would be needed to support a path for the electrification of long-haul vehicles.

“Electrification means focusing on the vehicle segments that are easier first; it means that we have to look at how fleets operate and potentially adjust; it means that we need better cooperation and planning across industries and governments; and it requires an openness to alternative technology paths to decarbonizing the heavy-duty segment,” said Roland Berger Senior Partner Dr. Wilfried Aulbur, an author of the study.

“It also is clear that an industry with a yearly turnover of about $800 billion and a profit margin around 5% cannot invest $620 billion without financial support or a significant increase in freight rates,” Aulbur said in a statement.

This investment would cost shippers “significant increases,” in their freight bills, Aulbur added.

“We don’t have a business model that supports these costs,” Aulbur said at a press briefing. “This is a problem that requires a lot of stakeholders, and these stakeholders in the past have not always agreed with each other.”

“This study thoroughly examines the issues surrounding the infrastructure buildout necessary to electrify commercial vehicles, and it clearly shows how the heavy-duty vehicle industry’s needs are vastly different not just from other sectors of our economy, but from each other,” said CFC Executive Director Jim Mullen.

American Trucking Associations President and CEO Chris Spear called the electrification process “an unfunded, $1 trillion mandate” that carries enormous consequences for the American consumer.

“You don’t overcome obstacles by ignoring them. This study lays out the high investment costs required to electrify the commercial vehicle industry,” Spear said in a statement.

Policymakers should take note that pursuing technology-neutral solutions can deliver operational savings and emissions reductions at a fraction of the cost, Spear said.

“A real-world understanding of the path to our shared goal of zero emissions is needed, but unrealistic timelines and expectations will break the bank,” Spear added.

Spear said the industry is committed to working with the Environmental Protection Agency, noting that 98% of emissions from heavy trucks have been eliminated over the past 40 years.

“This mad dash to zero exposes the supply chain to a $1 trillion unfunded mandate,” Spear said. “That does not include purchase of new trucks, which cost two-to-three times what a (diesel) truck costs.”

America’s commercial truck dealers have made enormous investments to sell and service EVs—nearly $1 billion in this decade, according to American Truck Dealers President Laura Perrotta.

“Unfortunately, dealers are faced with inadequate charging infrastructure, delays when installing chargers due to parts shortages and utility workload challenges and unaffordable upgrades required to meet new electricity demands,” Perrotta added.

“This study puts into perspective the enormous national commercial charging needs and related costs required to meet the (Biden) Administration’s regulatory goals,” Perrotta said.

Forcing the transportation sector to transition to electric vehicles, without considering the totality of what’s involved, “makes no sense,” according to American Bus Association President and CEO Peter Pantuso.

“This study is a wakeup call and should change the conversation,” Pantuso said. “The U.S. bus industry has a strong environmental record, taking cars off the road and reducing congestion. We’ll continue to support climate initiatives, but they need to be grounded in reality, and the reality is: charging infrastructure has a long way to go before EV transition can succeed.”

Today’s report from Roland Berger clearly demonstrates that policy must not depend on a single technology to reduce the carbon emissions from commercial trucks, said NATSO President and CEO Lisa Mullings, who represents the truck stop industry.

“Investing in the necessary charging stations to fuel commercial trucks is expected to require $620 billion from truck stops, fleets and ultimately consumers,” Mullings added.

To raise that kind of capital, the bus industry needs to overcome the many challenges impeding businesses’ ability to recoup these vast investments, she said.

“This report underscores the critical need for policymakers to incentivize the existing low-carbon fueling options available today, including renewable diesel and biodiesel, while the industry implements longer-term options,” Mullings added.

She said it will take hours to power up an 80,000-pound electric truck to run for perhaps two hours. That compares to about 15 minutes to fill a current diesel truck to run 1,200 miles, Mullings said.

National Tank Truck Carriers, President and CEO Ryan Streblow called the new report on costs “eye-opening,” saying the Biden team has been unrealistic in its electrification efforts.

“We will continue to face major electrification concerns in the tank truck industry—excess weight, limited range and safety,” Streblow said in a statement.

He called the tank truck industry “our nation’s insurance policy” when natural disasters strike.

“Before flipping a switch, we need to ensure there is a scalable and affordable energy source in place to allow the tank truck industry to serve those when they need it the most,” Streblow said.

The Roland Berger data is a clear indication our legislators and regulators need to work with the trucking industry to effectively develop and deploy a sustainable long-term solution, he added.

National Motor Freight Traffic Association Executive Director Debbie Sparks said the transition to zero emission trucks is a paramount concern to its members.  

“But if not done in a sustainable and affordable fashion, it will negatively impact their businesses, as well as the overall supply chain,” Sparks said. “This study is imperative to the understanding of the issues at stake in this move to zero emission trucks.”

There are also independent concerns, apart from environmental worries, that the American electrical grid cannot withstand the tremendous growth in demand caused by today’s electric vehicles, industrial demand and energy-demanding data centers.

For example, PJM Interconnection, which oversees the nation’s largest energy grid in the Northeast, is forecasting another 10,000 megawatts of demand by 2030 that wasn’t forecast just a year ago. That’s equal to the electrical demand of New York City.

“I can’t recall the last time I was so alarmed about the country’s energy trajectory,” energy expert Tyler Norris recently told the New York Times. Unless new natural gas plants are approved around the country, he said, “It is game over for the Biden administration’s decarbonization effort by 2035.”

Aulbur, the consultant, concluded: “We really need to know what is feasible,” Aulbur concluded. “We need to look at a phased approach to decarbonization.”

The trucking industry moves approximately 73% of all the freight in the nation by revenue. Cost of those goods in decarbonization “will be tremendously inflated,” said ATA’s Spear. “That’s what consumers are going to see—fewer trucks will be moving the same amount of freight. Instead of eight types of apples, there might only be three.”

Spear said ATA is not opposed to decarbonization. Rather, he said, “We just need a path. This isn’t it.”