Friday, February 17, 2017

Three Years and a Maybe

Electric Freight Transport Forges Forward

The public policy goal is clear, move the California freight transport network to zero emissions everywhere feasible and near zero emissions everywhere else. While the idea is nothing new, 20 years ago, it was thought to be basically impossible.

Today, in the heavy duty truck market, we are starting see electric drive engine platforms emerge for particular sectors, especially in the short haul, package van and drayage segments. Transit buses, shuttle vans and school buses have found success with all electric drive engines in recent years by leveraging heavy subsidies from state, local and federal sources.  So, it is only a function of natural progression that freight specific projects would be next, specifically heavy duty trucks.

CARB is focusing a three year plan on how to encourage zero emissions equipment into the commercial marketplace. There are two main levers, money and regulatory measures. Money is easy, it is coming from all sorts of sources and the three year plan speaks to concepts for effective investments moving towards the goal. Regulation, while as abundant, it proves occasionally to be an erratic endeavor.
Within the larger scope of the zero emission transition, the sustainable freight plan has called out a segment for a direct regulatory measure affecting short haul and local haul delivery possibly including drayage trucks.

The regulatory side might prove more difficult since the equipment isn’t fully commercialized now and we are years away from a product that makes operational sense for fleets. But in the interim, there is money out there and CARB is looking to use it to help remove some of the biggest roadblocks to implementation.

The challenges, which CARB has readily accepted include battery durability, weight and payload capability, range, infrastructure, charging uniformity and finally the main culprit, cost.

Of course, manufacturers speak to reducing the overall operating cost hurdles based on battery efficiency and weight reduction advancements, but, the real cost challenge is the upfront cost.

Once an operator can afford to pony up the $300-$450K to purchase the electric drive vehicle and if he is cognizant when he is charging the equipment, diesel fuel cost savings running 50,000 miles per year could pay him back that initial investment within 5 – 10 years.
His operating costs will based on how far he can go and how much he can haul and so range and weight will of course be the deciding operational factors.

Nevertheless, even if range and weight can be adapted, without massive commercialization, upfront costs are not going to change much, in fact, they are probably going up. And with a 10 year payback period for a port operator who is making two-three turns a day on a good day is completely unrealistic. NO bank or finance company is going to extend a ten year note on experimental equipment that has no secondary market without a MASSIVE down payment and gold star credit.
Enter the State of California.

Millions, if not Billions will be invested in the electric boogaloo over the next 3-10 years, enticing manufacturers to come to market with commercially viable products while soliciting fleet participation though good  old fashioned bribes. Well, not actual bribes, but, massive amounts of incentive or demonstration money to offset the initial costs making the equipment more affordable if not at least palatable.

Although he doesn't know it...he's next...
CARB figures that once fleet operators have an opportunity to log some windshield time behind the wheel of an all-electric drive vehicle, they will be singing its praises from the mountaintops, cajoling their counterparts into ditching the dirty diesel and compelling manufacturers to engineer a cost reduction. Well, in a perfect world anyway

In reality, this will be more than a challenge. Regardless, California is committed to this transportation future and will push the envelope all the way to the brink of no return. In fact, the ports of LA/LB have already thrown down the gauntlet with a 2035 date for zero emissions trucks. It is a sliding date based on where the technology is, but a line in the sand nevertheless. So really, it has already begun…Grab the extension cord, it’s gonna be along decade.

Stay Tuned!

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