Author(s) :

JIALE HUANG.

Volume/Issue :

Abstract :

This paper explores whether the financial conditions facing fleet electrification today are sufficient for Medium and Heavy-Duty Vehicle (MHDV) operators in the U.S. and if these conditions ensured a meaningful entered in the cap-and-trade market. Research used a forecast computational model that combined Net Present Value (NPV) and total annual cost (TAC) analyses with simulated cap-and trade market mechanics against true vehicle ownership costs which include for example, purchasing cost and operating cost. The model assessed the economic viability of diesel and electric MHDVs with respect to various carbon credit price scenarios. The findings suggest that the credit price needed for electric trucks to compete under the current cost structure was much greater than allowance prices in more established carbon markets such as California or the EU ETS, especially for medium duty trucks. For heavy-duty trucks, the carbon price needed for the lifetime cost difference was close to prevailing market values but still above current market rates. These results implied that at this point in time, the cap-and-trade market alone would not be sufficient to get diesel MHDV operators to adopt large-scale fleet electrification in the U.S. Thus, additional support, such as direct subsidies, tax incentives, or increased carbon prices, will be necessary. These supported policies should remain until further technological or market changes reduce the cost gap. This paper’s conclusions were limited by the used of static cost assumptions and simplified market dynamics which may not fully capture some future changes.