31 August, 2023

California’s Assault on Trucks

A Tesla Semi electric truck parked outside the Frito-Lay manufacturing facility in Modesto, Calif. in January. PHOTO: BENJAMIN FANJOY/BLOOMBERG NEWS

Climate policy keeps colliding with economic and technological reality, and California is ground zero. The state’s latest effort is a forced sprint to ban diesel trucks with nary a concern for costs or consequences.

Truckers are raising alarms about a new mandate proposed by the California Air Resources Board (CARB) to electrify their fleets. Starting next year, drayage operators that transport goods between state’s ports and distribution centers would be prohibited from registering new diesel trucks. By 2035 almost all package delivery, drayage and box trucks would have to be “zero emission.”

That’s the same year California’s ban on new gas-powered cars takes effect, but electrifying trucks will be even more costly and difficult. A mere 272 electric trucks were registered in California as of last year. Under CARB’s mandates, some 510,000 trucks would have to be zero emission by 2035. Talk about putting the pedal to the metal.

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Here is a classic example of regulating first and thinking later. Start with the costs. Electric heavy-duty trucks are about three times more expensive than new diesel big rigs. The Inflation Reduction Act’s tax credits will offset only $40,000 of the $400,000 to $500,000 cost.

Installing chargers can cost millions of dollars and requires coordination with charging-equipment makers and local utilities. Trucks suck up loads of power, which can destabilize the electric grid. Charging a small trucking fleet can require three times more power than a factory and about as much juice as a shopping mall or sports stadium.

One trucking company wanted to install charging stations for 30 trucks at a terminal in Joliet, Illinois, only to be told by local officials they would draw more power than the entire city. In January northern California utility PG&E told a charging provider that one of its large fleet customers couldn’t charge its trucks on summer afternoons owing to a power crunch.

A Southern California Edison executive recently said some fleets are powering chargers using diesel generators so electric trucks don’t go unused. This captures the folly of California’s climate policies. Who cares if policies don’t reduce CO2 emissions or improve public health as long as regulators claim they do?

It gets more ridiculous. As of last month, there were fewer than 700 chargers at trucking depots, yet California’s energy commission estimates 157,000 more will be needed for medium- and heavy-duty trucks by 2030. This would require more than 450 to be constructed each week, while grid upgrades to install chargers could take five to 10 years at minimum.

Then there’s the weight problem. Electric trucks run on two batteries that each weigh about 8,000 pounds. Since trucks must comply with strict federal weight limits, they won’t be able to carry as large a load as diesel big rigs. PepsiCo this year is deploying Tesla’s electric semi-truck to deliver Frito-Lay products, but the trucks can’t go as far delivering soda.

Batteries can power trucks for about 150 to 330 miles between charging, which can take five to eight hours. Longer battery ranges require bigger and heavier batteries, which add more weight and reduce payload. That means more trucks and drivers will be needed, which will increase shipping costs.

Drivers will have no choice but to charge their trucks at night, though this is when many prefer to drive because there’s less traffic. That means more trucks will be on the road during the day, causing more congestion during work-time commutes.

One beneficiary of CARB’s mandate will be truck manufacturers, which recently cut a deal with the agency to increase sales of zero-emission vehicles in return for regulatory flexibility. By giving manufacturers captive customers, CARB is reducing the odds they lose money on their electric transition. Does this government-industry collusion violate antitrust laws?

Among the losers will be independent contractors who won’t be able to afford electric trucks. Some may retire or leave the state. This could disrupt supply chains. California’s ports process about 40% of U.S. imports and 30% of exports. Recall how a shortage of truck drivers two years ago contributed to a backup at the state’s ports.

Shippers will invariably pass on their electric-truck costs to customers around the country. So Americans in Joliet will have to pay more for whatever travels by truck. While the U.S. Constitution grants states police powers to regulate public health and safety, Congress can pre-empt states that regulate recklessly outside of their lane. The current Congress is too gridlocked to pass anything, but GOP candidates could start talking about California’s climate assault on truckers.