Licence to kill

Sofie Defour — December 19, 2022

The US is coming for Europe’s leadership on the automotive industry, trucks are next

2022 will go into history as the year the US geared up to steal Europe’s global leadership on commercial vehicle technology. Whether in the end they will succeed is entirely up to us.

Joe Biden’s landmark climate legislation, the Inflation Reduction Act (IRA), is the talk of the town. And its muscular support for mined and made in America batteries and electric vehicles, has Brussels worried.

Less known, the IRA also includes a $40,000 credit for big electric trucks. This will radically bring forward their cost parity with diesel rigs. Some analysts project electric trucks will make up more than 60% of new US truck sales by 2030. But more than the tax credit, it’s the IRA’s financial stimulus for the entire supply chain, from green energy to battery production, that makes it a lethal weapon.

At COP27, president Biden struck again. The US committed in a ‘Global Memorandum of Understanding’ (MoU) to sell only zero emission trucks from 2040. California is even considering bringing that forward to 2036. Together the IRA and MoU form a licence to kill: the direction of travel is clear and there’s massive tax credits available for a home grown supply chain to ramp up production in the next few years. 

If Europe doesn’t introduce an ambitious trucks package of its own, it will get left behind. Its world leading truckmakers risk going down the same path of their car brethren, struggling to keep up with Chinese and Californian competition.

The European Commission is currently drafting a piece of legislation that could allow us to take back control: the CO2 standards for heavy duty vehicles. Slated for January, the draft law is rumoured to include Europe’s own date from which only zero emission trucks can be sold, just like for cars and vans. Cars and trucks share much of their supply chain. If we’re going electric for cars, it would be crazy to try and keep engines alive for trucks.

In the world of trucking, Total Cost of Ownership (TCO) is king. Research organisation TNO calculated that by 2035, over 99% of electric freight trucks would beat their diesel counterparts on cost, while not losing an inch of operational capabilities. 

The fact that Scania already announced they will go fully electric from 2040 and Daimler that they’ll be fully zero emission from 2039, confirms this is feasible. 

No EU country can meet its new 2030 climate goals if truck pollution keeps going up – already trucks represent just 2% of the vehicles on the road, but more than a quarter of road transport emissions in the EU. That’s why ten EU capitals want a 100% zero emission sales target. Companies too want to move. A coalition of 44 companies, including Pepsico, Unilever and Maersk, has just called for a higher near term target

The current 2030 truck CO2 target was set at 30% emissions reductions back at a time when electric trucks were deemed impossible and fuel economy was the coolest kid in town. 

Increasing that target to -65% is the game changer we need to get the transition started and deliver the emissions savings and industrial scale required.

We cannot afford to delay the ramp up of ambition until 2035 or 2040. The IRA is challenging the EU’s industrial leadership on commercial vehicles right here, right now. Some battery and critical minerals investments in the EU are already at risk of going to the US. The Tesla semi is being launched in America, not in Europe. 

Europe has long led the world in truck technology and innovation. Now global competition risks taking that lead from us. Strong truck CO2 targets and a 100% zero emission goal for 2035 – beefed up by strong industrial policy to process metals and make green batteries in Europe – will ensure European leadership in future, and provide truckers with clean and cheap to operate rigs needed to deliver goods.

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