- North America is experiencing a shift towards electric trucks and buses driven by governmental incentives, consumer demand, and strategic partnerships aiming to combat climate change and promote sustainability.
- In Canada, the adoption of electric buses is encouraged by government programs offering incentives for zero-emission vehicles, leading to the modernization of transit systems and increased interest from commercial companies.
- The U.S. is also witnessing a surge in electric bus sales, driven by the Buy America Act and the Biden administration's commitment to making all new buses electric by 2030. Additionally, government funding and incentives are accelerating the electrification of truck fleets and promoting innovative business models like Electrification-as-a-Service (EaaS).
Amidst the surging momentum towards a greener and more sustainable future, electric trucks and buses have emerged as pivotal solutions in North America. Witnessing a burgeoning demand for electrified commercial vehicles, both Canada and the United States are actively spearheading efforts to expedite their adoption through ingenious projects, strategic partnerships, and governmental incentives. This article delves into the present landscape of electric trucks and buses in North America, highlighting the initiatives driving their widespread utilization and the immense prospects they offer in terms of fostering economic advancement and environmental preservation.
In the past two years, the landscape of electric vehicles in North America has undergone a remarkable transformation. Initially, the region was led by a government that seemed somewhat indifferent to the pressing concerns of climate change. However, this indifference has given way to a progressive outlook, with multiple initiatives, incentives, and policies now being strategically deployed to accelerate the widespread adoption of electric vehicles. This shift in approach has set the stage for an electric vehicle revolution in the region.
One of the most significant indicators of this shift is the exponential increase in the uptake of electric commercial vehicles from 2019 to 2022. The driving force behind this surge can be attributed to various factors. Notably, several states, such as California, have introduced specific taxation incentives that have encouraged businesses and individuals to embrace electric commercial vehicles. These incentives have played a pivotal role in boosting the electric vehicle market.
In addition to the government-led initiatives, the popularity of electric vehicles has reached new heights, captivating the imagination of consumers across the region. In just three years, the number of electric vehicle models introduced in North America soared from 95 to an impressive 207 by the end of 2022. This proliferation of electric vehicle offerings has further fueled the demand for these environmentally friendly alternatives to traditional vehicles. Moreover, the growing global awareness and acceptance of electric vehicles as a more sustainable mode of transportation have played a pivotal role in driving their popularity in North America. Consumers are increasingly seeking eco-friendly solutions, and several prominent original equipment manufacturers (OEMs), most notably Tesla, have successfully capitalized on this emerging trend.
Further bolstering the surge in demand for electric commercial vehicles are the various incentives and vouchers provided by governments and organizations. For instance, the HVIP voucher in California offers substantial incentives of up to approximately 50% on the sale of electric trucks, making them an attractive choice for businesses seeking to invest in greener transportation options. This combination of governmental support and consumer enthusiasm has resulted in an exponential rise in the adoption of electric commercial vehicles, underscoring North America's rapid transition towards a cleaner, more sustainable future.
The significance of electrifying trucks and buses becomes evident when considering that, despite their smaller numbers, commercial vehicles contribute up to 20% of greenhouse gas emissions in the transportation sector. Initially, the electrification drive followed a beachhead strategy, with a strong focus on targeting the easier segment first – passenger vehicles. However, the urgency to meet aggressive carbon neutrality standards worldwide, including in North America, has shifted the focus toward the imperative need to electrify commercial vehicles. Recognizing their substantial environmental impact, the electrification of these vehicles has become a pressing necessity in the pursuit of a cleaner and more sustainable future.
Electric Trucks and Buses in North America: Current and Future States, Incentives, and Policies
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Canada
Buses
Canada is witnessing a growing demand for battery-electric and plug-in electric buses, aligning with the nation's commitment to combat greenhouse gas emissions and enhance energy efficiency. The Canadian government has set a bold target to reduce greenhouse gas emissions by 30% below 2005 levels by 2030, and as part of this ambitious endeavor, all new medium- and heavy-duty vehicles sold in Canada must be zero-emission vehicles by 2040.
To realize this vision, the Canadian government launched the Medium- and Heavy-Duty Zero-Emission Vehicles Program in 2022. This initiative offers incentives equivalent to approximately 50% of the price difference between electric vehicles and conventional ones, fostering the adoption of zero-emission vehicles across businesses, local governments, municipalities, and organizations. The program covers various commercial, medium-, and heavy-duty zero-emission vehicles, presenting opportunities to save up to $200,000 per vehicle and benefit from additional provincial or territorial incentives, making these eco-friendly alternatives more accessible and cost-effective. By encouraging the widespread adoption of zero-emission vehicles, this program aligns with Canada's long-term objective of having 100% of medium- and heavy-duty vehicles sold as zero-emission by 2040, where feasible, affirming the government's resolute commitment to a sustainable future.
Moreover, Canadian provinces and municipalities are actively implementing policies and incentives to promote electric buses. British Columbia, for instance, is steadfastly working towards electrifying all public transit buses in the province by 2040, offering rebates for electric bus purchases and charging infrastructure. Similarly, the City of Winnipeg is modernizing its transit system by acquiring 100 electric buses and diesel buses, backed by substantial funding from federal, provincial, and municipal governments. The city aims to have over 100 zero-emission buses in its fleet by 2027, with the first 16 electric buses set to be operational by 2024. New Brunswick, too, has joined the movement, leasing six electric buses and launching an on-demand transit service as a significant stride towards an entirely electric transit fleet by 2040.
Transit agencies across Canada are increasingly embracing electric buses to curtail greenhouse gas emissions and reduce operational costs. Transdev Canada, for example, has purchased 30 new electric school buses from Lion Electric, electrifying nearly 40% of its Quebec-based bus fleet. Grand River Transit (GRT) has also ordered six electric buses from Nova Bus to serve Ontario's Waterloo Region, with the first electric bus expected to be in service by 2023 as part of the region's mission to embrace electrification and diminish greenhouse gas emissions.
Looking ahead, the future outlook for electric buses in Canada is highly promising, bolstered by various policies, incentives, subsidies, and strategic plans designed to foster electric vehicle adoption. The transit agencies' increasing interest in electric buses, alongside the growing number of such vehicles already in operation, augurs well for the coming years. However, to accelerate this transformation and encourage broader electric bus adoption, further investment in charging infrastructure and additional incentives and subsidies will be essential. With concerted efforts and continued commitment, Canada is poised to drive the shift towards a more sustainable and eco-conscious transportation landscape.
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Figure 1: Buses Electrification in Canada -Source: PTR Inc.
Trucks
The current and future landscape of Canada's internal combustion engine (ICE) and electric truck market exemplifies a remarkable transition towards the embrace and promotion of electric vehicles (EVs) in the country. Spearheaded by a confluence of companies and government initiatives, this shift is driving heightened investments, infrastructure expansion, and incentives to accelerate the electrification of commercial fleets.
Distinguished Canadian companies like Kruger Energy, Coca-Cola Canada Bottling, GLS Canada, Canada Post, and Orange EV are at the forefront of this movement, actively integrating electric trucks into their operations. By committing to electrify their fleets, these forward-thinking enterprises manifest a growing awareness of the myriad environmental and economic advantages that electric vehicles confer. The ambitious expansion plans of Kruger Energy, which involve the addition of 50 new electric trucks to their fleet, exemplify their resolute determination to electrify a substantial portion of their operations.
In parallel, government support plays a pivotal role in propelling Canada's electric truck market forward. Notably, provinces like Quebec and British Columbia provide enticing purchase incentives for medium- and heavy-duty electric vehicles, motivating fleet operators to make the transition. Furthermore, the federal government offers its own purchase incentives, which can be combined with provincial rebates, significantly reducing the upfront cost of electric trucks. These incentives are instrumental in promoting the widespread adoption of electric trucks, mitigating financial barriers, and positioning electric alternatives as competitive options alongside traditional ICE vehicles.
Moreover, collaborations between Canadian and international manufacturers, such as Lion Electric, Volvo Trucks North America, and Nikola Corporation, underscore the burgeoning interest in and demand for electric trucks within the country. These strategic partnerships contribute to the continual advancement and deployment of electric truck technologies, broadening the range of options available to Canadian fleet operators.
The future outlook for Canada's electric truck market holds immense promise. Driven by the government's steadfast commitment to net-zero emissions and the promotion of clean transportation, coupled with relentless technological progress and the expansion of charging infrastructure, the adoption of electric trucks is poised for acceleration. This pivotal shift aligns with global efforts to curtail greenhouse gas emissions, enhance air quality, and achieve sustainability objectives. Furthermore, as more companies invest in electric vehicle production and charging infrastructure, job opportunities within the electric truck industry are expected to proliferate, bolstering the overall economic growth of the sector.
Nonetheless, challenges remain in achieving widespread electric truck adoption. Addressing the limited range and charging infrastructure, particularly for long-haul and heavy-duty applications, necessitates further development to cater to the specific requirements of the trucking industry. Continued investment in research and development is vital to enhance battery technology, reduce costs, and optimize the performance and efficiency of electric trucks.
Overall, Canada's ICE and electric truck market is undergoing a profound transformation towards electrification. The increasing presence of electric trucks in commercial fleets, coupled with government incentives and manufacturer collaborations, signifies a compelling momentum towards a cleaner and more sustainable transportation sector. With sustained support from government policies, ongoing technological breakthroughs, and the unwavering dedication of industry stakeholders, Canada's electric truck market is poised for exponential growth, playing a pivotal role in the country's climate objectives, and heralding a greener future for the transportation industry.
Figure 2: Trucks Electrification in Canada -Source: PTR Inc.
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The U.S.
Buses
The bus market in the U.S. witnessed a remarkable growth in 2022, reaching nearly 65,000 units. Out of these, approximately 62,000 were internal combustion engine (ICE) buses, comprising both diesel and petrol buses, while electric buses accounted for around 2,300 units. However, electric transit buses are gaining increasing popularity in the United States, driven by the government's strong commitment to this technology, which is expected to drive future sales of electric buses.
The Buy America Act has significantly influenced domestic bus sales, as it mandates the purchase of locally produced products, and since most buses in the country are owned by government entities, this act has contributed to an increase in bus sales. The Biden administration aims to make all new buses manufactured in the U.S. fully electric by 2030, providing a significant boost to American companies like Proterra and offering access to resources to enhance domestic sales. Moreover, the White House has announced the allocation of $7.5 Billion to support electric bus efforts, although it falls short of the $174 Billion proposed by President Biden to advance electrification, including the replacement of 50,000 diesel transit vehicles and the electrification of at least 20% of the school bus fleet. The Environmental Protection Agency has also committed $10 Million to the general public for electric buses as part of its initiative to reduce diesel emissions.
To further drive the electrification of the country's bus fleet, the U.S. government is exerting significant pressure on bus manufacturers. The Department of Transportation (DOT) has allocated $1.1 Billion in funding for 2022, with an additional $372 Million provided under the Bus and Bus Facilities Formula Program for the same purpose. The Low- and No-Emission Transit Vehicle Program has also been expanded to $5.5 Billion, aiming to nearly double the number of electric buses on U.S. roads in a single grant cycle. The Bipartisan Infrastructure Law has played a crucial role in expanding these federal programs, granting a record $2.2 Billion in competitive awards from the Federal Transit Administration, with the majority directed towards purchasing clean vehicles and investing in green transit infrastructure and technology training.
In 2022, several U.S. states have made notable commitments to electrify their school buses. New York, for instance, passed historic legislation requiring all new school bus purchases to be zero-emission by 2027 and all buses in operation to be zero-emission by 2035. Other states such as Connecticut, Maryland, Maine, Colorado, and New Jersey have implemented their own plans and grant programs to electrify school buses, significantly contributing to national efforts to reduce greenhouse gas emissions and improve air quality, particularly in communities disproportionately affected by pollution.
Despite strong government commitments and increasing demand for electric buses in the United States, the industry has faced challenges in meeting production targets due to supply chain issues and the impact of the pandemic. Renowned bus manufacturers like New Flyer and Proterra have experienced significant backlogs due to shortages of critical components and the ongoing geopolitical situation in Ukraine.
In light of these factors, the market for electric buses is projected to experience rapid growth in the coming years. However, it is expected to take several years before electric bus sales surpass those of diesel buses in any given year. The combined efforts of government support, technological advancements, and industry resilience hold the promise of a brighter, cleaner, and more sustainable future for the US bus market.
Figure 3: Buses Electrification in USA -Source: PTR Inc.
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Trucks
In a resolute effort to combat health hazards linked to diesel pollution and promote a greener future, the U.S. has recently approved California's groundbreaking plan. This ambitious mandate requires that, by 2035, a substantial portion of vehicles sold in California must be all-electric. Specifically, 55% of delivery vans and small trucks, 75% of buses and larger trucks, and 40% of tractor-trailers are targeted for electrification. This progressive move has already inspired other states to follow suit, leading to an embrace of similar emission standards. The Environmental Protection Agency (EPA) intends to grant California waivers to enforce its more stringent environmental rules, which surpass federal requirements. These rules include more rigid pollution limits for heavy-duty vehicles and new sales requirements for truck manufacturers, all aimed at achieving a complete transition to zero-emission trucks by 2045. Notably, several other states have committed to adopting California's forward-looking standards, further amplifying the nationwide shift towards electric trucks.
As the electric vehicle industry experiences significant growth, the electrification of larger vehicles like trucks and buses has been relatively gradual. However, the market for electric trucks is projected to surge exponentially, with an anticipated value exceeding $3.8 Billion by 2030. The Inflation Reduction Act (IRA), passed in 2022, has become a driving force, offering tax incentives for electric trucks and their associated infrastructure, thereby providing unparalleled government support to companies embracing the electric transition. The IRA includes tax credits that can expedite the attainment of financial parity by up to 12 years, encouraging swift adoption. Furthermore, the EPA's newly issued standards for nitrogen oxide (NOx) emissions, set to begin in 2027, promise a significant reduction in emissions, further propelling the adoption of zero-emission vehicles and leveraging the investments made under the IRA.
While short-haul routes are ideally suited for battery electric vehicles (BEVs), the electrification of long-haul trucking poses challenges due to limited range. Nevertheless, breakthrough technologies like the innovative Tesla Semi, boasting a range of 500 miles, hold promise for long-haul electrification. Renowned companies such as Anheuser-Busch, Walmart, and UPS are eagerly awaiting their entry into the medium- and heavy-duty zero-emissions trucking space, showcasing a collective commitment to the electric future. Additionally, advancements in autonomous transportation offer potential solutions to electrification challenges, contributing to reduced idle time and increased operational efficiency.
The transition to zero-emission vehicles necessitates innovative business models. Fleet owners and operators must now consider energy management and infrastructure optimization, involving multiple stakeholders. Electrification-as-a-Service (EaaS) business models aim to overcome the upfront capital costs associated with EVs and charging infrastructure, enabling large-scale project deployments. Notably, companies like Forum Mobility have already initiated the deployment of electric trucks under this visionary model.
Beyond domestic endeavors, Swedish startup Volta Trucks has set its sights on entering the US market with its revolutionary medium-duty trucks, the Volta Zero. The company's plans include a trial Pilot Fleet of Class-6 and Class-7 rigs by late 2023, followed by US-spec production vehicles in 2024. Meanwhile, Ford is making bold strides with the development of BlueOval City, a mega-campus in West Tennessee, set to produce the next-generation electric truck, known as Project T3, from 2025 onward. With the capacity to manufacture 500,000 electric trucks annually, the plant aspires to be carbon-neutral and highly efficient, while also generating 6,000 new jobs. These groundbreaking initiatives reflect President Biden's goal of achieving 50% of all new vehicle sales as electric by 2030, culminating in the EV Acceleration Challenge. The challenge encompasses public and private commitments to support the transition to electric vehicles, resulting in tripled EV sales and an augmented number of charging ports. These collective efforts aim to bolster supply chains, enhance U.S. competitiveness, and foster job creation.
The commitments arising from the EV Acceleration Challenge encompass a range of critical areas, including consumer education and support, tools and resources, EV fleet expansion, and community charging for commercial and multifamily purposes. Companies like Uber, Zipcar, and Pacific Gas & Electric are steadfastly committed to enlarging their EV fleets and expanding access to charging infrastructure, particularly in underserved communities. Other organizations are intently focused on developing EV charging stations, providing dealership training, and offering essential tools and resources to facilitate fleet electrification.
The electric truck industry stands poised to play a pivotal role in propelling the U.S. towards a zero-emission transportation future. While challenges persist, steadfast support from progressive policies, technological advancements, and transformative business innovation will be paramount in unleashing the full potential of electric trucks and establishing them as the cornerstone of a sustainable and emissions-free trucking industry.
Figure 4: Trucks Electrification in USA -Source: PTR Inc.