Will Electric Semis Ever Become Popular? California Expects $1B Rebate Program to Assist

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      When addressing emission reductions, it's crucial for regulators to expand their focus beyond passenger vehicles. Commercial trucks typically accumulate significantly more mileage compared to the average privately owned car, often resulting in greater tailpipe emissions. Once again, California, the leading state in electric vehicle sales, is spearheading the push for electric semi-trucks and other commercial vehicles. It is employing a well-known strategy that has successfully increased electric car sales.

      On May 13, the California Air Resources Board (CARB), which regulates the state's emissions standards and electric vehicle incentive programs, announced a $1 billion rebate initiative for electric trucks called the California Clean Fuel Rewards program. This should not be confused with a rebate program for light-duty vehicles that was discontinued a few years ago. This new initiative will target medium-duty and heavy-duty vehicles. Beginning June 26, fleet purchasers will be eligible for rebates ranging from $7,500 to $120,000 when buying a battery-electric vehicle, with the rebate amount increasing according to vehicle size.

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      There are some important details to consider. The minimum rebate of $7,500, applicable to Class 2B vehicles like pickup trucks, is exclusively available to public fleets. Although California has hosted demonstrations for hydrogen fuel-cell semi-trucks—such as the "Project Portal" drayage operation at the Ports of Los Angeles and Long Beach conducted by Toyota and PACCAR (parent company of Peterbilt and Kenworth)—this rebate applies only to new battery-powered trucks. Hybrids, used vehicles, and battery-electric motorcycles are not eligible. However, CARB highlights that the covered vehicle classes (2B-8) encompass most commercial vehicle categories, including semis, box trucks, and delivery vans.

      Fleets that acquire a qualifying vehicle will receive their rebate at the point of sale, without needing to file a separate application. A 2022 study discovered that buyers preferred this approach for passenger cars, which may also stimulate more interest in electric truck acquisitions in California. The state is in the process of registering dealers to provide the rebate ahead of the June 26 rollout.

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      The initiative is financed through revenue generated from California's Low Carbon Fuel Standard, established in 2009, which sets emissions targets throughout the lifecycle (including production and transportation) of the fuels that power vehicles on California's roads. Companies that fail to meet these standards must purchase credits to compensate for the discrepancy, similar to the requirements that automakers faced regarding emissions before the Trump Administration opted not to enforce the regulations. CARB anticipates that $250 million will be available for EV rebates this year, with a total of $1 billion expected through 2030.

      The Clean Fuel Rewards program complements the Clean Truck and Bus Voucher Incentive Project, which California reports has allocated $1 billion to support 11,600 "clean" vehicles (including battery-electric and hydrogen) across 2,000 fleets in the state. Together, these two initiatives will assist California in achieving a target set in 2020 for 100% zero-emission truck sales by 2045. CARB asserts that 23% of medium- and heavy-duty truck sales in California were zero-emission in 2024, more than double the state’s target. However, significant progress is still necessary to achieve that goal by 2045.