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Biden Administration Introduces Incentives to Increase Demand for Electric Delivery Trucks

The United States will offer incentives starting on January 1st for delivery companies and other businesses to switch to electric trucks.

Electric Delivery Trucks
Electric Delivery Trucks

These incentives, established under President Joe Biden's Inflation Reduction Act (IRA), will provide tax credits of either $7,500 or $40,000 depending on the size of the electric vehicle (EV).

Companies like FedEx and Amazon will qualify for the $7,500 credit for many electric trucks. These credits can be combined with voucher programs in states like California and New York, which invest billions of dollars in encouraging businesses to switch to zero-emission vehicles.

Motivation Behind the Inclusion of Commercial EVs in Biden's Climate Policy

The transportation sector in the US, which includes airplanes, buses, and small and large trucks, is responsible for more than one-third of the greenhouse gases that contribute to global warming in the country. With the increasing frequency of climate change-related events such as floods, droughts, and hurricanes, governments and businesses are becoming more aware of the financial risks and potential liabilities they face. The incentives provided under the IRA are expected to bring the prices of EVs closer to those of traditional gasoline-powered vehicles, helping to "level the playing field," according to Ben King, associate director at research firm Rhodium Group.

This should lead to more commercial EV purchases, lowering manufacturing costs and vehicle prices, making EVs even more attractive to buyers. Jim Farley, CEO of electric van market leader Ford, has predicted that the IRA tax credits will have a "dramatic impact" on EV adoption.

Hurdles to Widespread Adoption of Electric Trucks

While the EV incentives provided by the Biden administration may encourage early adopters to make purchases, they may not be enough to convince a large number of customers to switch from traditional gasoline-powered trucks. This is because the incentives do not completely close the price gap between EVs and gas-powered vehicles and can also come with strict rules. Paul Rosa, Senior Vice President of Procurement and Fleet Planning at Penske Truck Leasing, noted that the incentives "still don't get them over the goal line."