The recently passed Inflation Reduction Act could have a big impact on the trucking industry. That’s largely because the legislation championed by Senate and House Democrats places a bigger focus on zero emissions and the push toward electric vehicles.
With legislation of such scope, it can be confusing to understand what all is in the bill. Industry pundits claim that the bill will raise $738 billion and provide $391 billion in funding for energy efficiency improvements and climate change mitigation.
In this blog post, we have attempted to demystify some of this. Here are some things that fleet managers should know regarding what is to come.
1. Regarding Clean Commercial Vehicles
Section 13403 establishes a new tax credit for “clean commercial vehicles” (e.g., Plug-in Electric Vehicles and Fuel Cell Electric Vehicles), which is distinct from the Section 13401 credit (a double benefit is disallowed). Commercial trucks may be eligible for the unmodified tax incentive for PEVs or the previous fuel usage tax break. The basis of the credit amount varies depending on whether it’s based on 15% of vehicle cost ($30,000 maximum) or incremental costs relative to a comparable vehicle; otherwise, $7,500 GVWRs less than 14,000 pounds or $40K otherwise
2. On Funding for Vehicle Fleets
The IRA also provides financial assistance for purchasing zero-emission and clean vehicles (e.g., PEVs, FCVs). The USPS is eligible to receive $3 billion under Section 70002 for the purchase of zero- emission delivery trucks and infrastructure at postal facilities. The EPA will use $1 billion from this provision to establish a grant program for clean heavy duty motor vehicles as well as programs designed to replace cars in nonattainment areas based on any air pollutant.
3. Credits for Alternative Fuels
The IRA also provides financial assistance for purchasing zero-emission and clean vehicles (e.g., PEVs, FCVs). The USPS is eligible to receive $3 billion under Section 70002 for the purchase of zero- emission delivery trucks and infrastructure at postal facilities. The EPA will use $1 billion from this provision to establish a grant program for clean heavy duty motor vehicles as well as programs designed to replace cars in nonattainment areas based on any air pollutant.
What This Means for Non-Electric Vehicles
There is still some debate as to what this could mean for many companies that have not made the shift away from traditional gasoline engines. The smart money is that staying locked into gas engines could result in short-term growing pains.
Factors that influence your cost per mile, such as diesel fuel, maintenance, and repairs, might be heading up. Proponents of the bill are hoping this will encourage the shift to EVs as a means of offsetting these costs.
Unfortunately, the unknown factor is what could become with a new administration in the White House, or what might occur if control shifts away from Democrats in the mid-terms. (It’s possible we’ll know more about the outcome by the time you read this.)
It’s almost certain that a GOP-led White House and Congress would slow this push toward electric, but you probably shouldn’t assume it will just go away either as political winds can shift every two to four years.
The best thing that you can probably do in the interim is to use the tax credits while they are available to introduce some EVs into your fleet if you have not yet done so. There is a window where it will be advantageous.
The Inflation Reduction Act Will Continue to Be a Factor in the Next Two Years
The recently passed Inflation Reduction Act could have a big impact on the trucking industry—particularly with regards to costs and availability. Fleet managers should be aware of these potential impacts so that they can plan accordingly and ensure that their businesses are prepared for whatever challenges may arise in the coming months and years.
One thing that will not change, however, is J&A Fleet Maintenance in our commitment to getting you the best maintenance and repair prices at the highest possible quality of service. We will help you to steer your fleets in the right direction over the uncertain times ahead. Contact us today to learn more about how we can work together.