The Impact of Emissions Regulations on the Heavy-Duty Truck Market

Heavy-duty vehicles account for a significant share of smog-forming emissions as well as greenhouse gases, so the failure to establish robust clean air standards could alter technology decisions by truck manufacturers and lead them down an unexpected path.

EPA’s final rule for medium and heavy-duty trucks would reduce greenhouse gas emissions while saving operators money on fuel costs, providing health benefits to communities disproportionately burdened by freight pollution, and saving operators money in fuel costs.

Table of Contents

1. Increased Fuel Costs

Demand for heavy trucks tends to fluctuate with economic cycles. Considerations such as hauling services during periods of economic expansion, profitability and financial resources of buyers as well as age distribution in fleets can all play a part in sales cycles; new emission standards may even have an effect.

EPA’s final heavy-duty truck standards will significantly reduce emissions from transportation – the primary contributor of greenhouse gas emissions in the US – while saving businesses money by lowering fuel and maintenance costs. Ceres and CALSTART have collaborated in supporting policies which facilitate this goal through corporate advocacy efforts.

Leading manufacturers are developing and introducing innovations that will revolutionize goods transportation and increase efficiency, but these advancements may come at a high price for both manufacturers and customers alike due to initial expenses associated with building new facilities and developing prototypes; such costs limit production as well as inhibit internal company diversity.

2. Reduced Productivity

Regan noted in his announcement of the toughest national greenhouse gas standards ever for heavy-duty trucks that they offer truck operators options to build vehicles tailored specifically for their businesses and help us move towards a cleaner economy. These rules clearly state that manufacturers may choose from any technology available to meet emission limits – from advanced internal combustion engines, hybrids, plug-in hybrids or zero emission electric vehicles.”

Phase 3 standards–covering model years 2027-2032–will reduce 1 billion tons of carbon pollution annually while creating $13 billion in net benefits to public health, climate and trucking operators and fleet owners. CATF’s Deaths by Dirty Diesel mapping shows how these vehicles disproportionately harm poor communities.

Many trucking companies are upgrading to more energy efficient vehicles to reduce maintenance costs and meet stringent environmental regulations, while at the same time reduce fuel expenses and retain their competitive edge in the market.

3. Increased Maintenance Costs

As well as lowering operating efficiency of trucks, stricter emissions standards will drive up maintenance and other parts costs in the short-term, which will further diminish profitability for truck operators and delay fleet replacement decisions.

Truck production volumes will likely decrease and, consequently, suppliers’ revenues. Suppliers that rely heavily on aftermarket sales should do better. Examples include Accuride Corp (B+/Stable), Commercial Vehicle Group Inc, JHT Holdings Inc and Eaton Corp (all B/Stable).

While additional costs may make new trucks less attractive to some potential buyers, EPA emissions standards will eventually save trucking operators fuel and maintenance expenses over time. Furthermore, their performance-based approach enables manufacturers to achieve compliance efficiently by employing technologies tailored specifically to the types of vehicles produced or tasks performed.

4. Increased Carbon Footprint

Heavy-duty trucks produce air pollutants that pose serious threats to human health, disproportionately harming communities of color, low-income households and indigenous peoples who tend to reside near roads, highways, ports and other commercial traffic hubs – subjecting them to excessive levels of air pollution.

Global regulations designed to limit greenhouse gas emissions from trucking companies compel manufacturers to make significant investments in emission-reduction technologies. Unfortunately, these high development and manufacturing costs are passed along to customers, which increases overall purchase prices of trucks.

Therefore, greener trucks may have higher upfront purchase costs that deter potential buyers with budget constraints from purchasing one. Furthermore, the requirement to install charging infrastructure may inhibit adoption in certain markets – yet these vehicles provide long-term operational cost savings thanks to reduced fuel consumption and maintenance expenses; leading to rapid market growth of zero emission vehicles in coming years. Moreover, new emissions standards will likely promote more eco-friendly freight shipping practices, which in turn benefit both the environment and society in general.