A Diversified Path for Sustainable Fleets

Use of renewable diesel and renewable natural gas is growing, and interest in BEVs increases among fleets of all types, according to new State of Sustainable Fleets report.

June 1, 2023

Ryan Gehm

Ninety percent of surveyed fleets that deploy battery-electric vehicles expect their BEV use to grow in the next five years. (Greenlane/DTNA)

More than 12,000 people attended the 2023 Advanced Clean Transportation (ACT) Expo in Anaheim, Calif., in May. Attendees heard a multitude of viewpoints offered by experts from commercial-vehicle manufacturers and suppliers, energy providers, government agencies and other stakeholders. While those views differed on technology and timing, a clear point of consensus was that adoption of cleaner solutions must accelerate — be they renewable fuels or fuel cells, battery-electric vehicles or hybrids.

As Drew Cullen, SVP of Fuels and Facility Services at Penske Transportation Solutions, said during a session highlighting the 2023 State of Sustainable Fleets report: “Nobody is waking up in the morning trying to figure out ‘How do I pollute more today?’ They’re all trying to do the right thing.” Penske, Shell and Daimler Truck North America served as title sponsors of this year’s Sustainable Fleets market brief, with Dana a supporting sponsor.

The CEO of clean-technology consultant Gladstein, Neandross & Associates (GNA), Erik Neandross, presented at ACT Expo the key findings of GNA’s fourth annual report, which was informed by input from 225 fleet operators and decision-makers, along with secondary data.

“Regulations are out there pushing to make diesel engines much cleaner, but also likely more expensive and more complicated,” Neandross said. Increased warranty requirements add to the expense. “To provide that warranty coverage to 600,000 miles, that’s going to be expensive,” he said. “The price tag on these rules could easily add $30,000 to the cost of the new diesel tractor, plus or minus 25-30%.”

The report states that most heavy-duty OEMs will join Daimler and Navistar with announcements that portend the sunset of the diesel era. “We believe that 2027 could very well be the last of the major diesel-engine development programs that we see,” Neandross said. While diesel vehicles will continue to lead for many years, he added, manufacturers increasingly will shift investments into clean-drivetrain development and production.

Unprecedented incentives also are driving interest in clean-fleet technologies and fuels. Funding is expected to average $32 billion annually for the next four to five years, compared to previous averages of around $3 billion per year. Though, as Cullen said, “No really good CFO is going to bank on subsidies to create the ROI or the TCO.” In other words, these programs can kickstart things, but eventually the total cost of ownership must stand on its own.

Domestic production of renewable diesel (RD) doubled in 2022, according to the report, from 600 million gallons in the first 10 months of 2021 to 1.2 billion gallons during the same period in 2022. Private-sector fleets in the survey increased RD use by nearly 10% compared to 2021. Renewable natural gas reportedly has replaced fossil-based CNG for fleets in California for the second year in a row, and growth is strong nationally, the authors stated.

Interest in BEVs continues to increase among fleets of all types, though on average they comprise only 4% of a fleet’s population; six fleets reported a 10% or higher penetration rate. Every fleet with more than 100,000 vehicles that responded to the survey now is using BEVs, with 78% of fleets with 10,000-100,000 vehicles and 84% with 1,000-10,000 vehicles reporting BEV use. Eighty-five percent of yard truck fleets reported using BEVs, followed by 73% of fleets for logistics-urban/last mile and 72% for logistics-regional haul under 250 miles (400 km) per day.

Manufacturers and fleets reported fewer heavy-duty FCEV (fuel-cell electric vehicle) orders in 2022 compared to 2021 (fewer than 100 vs. 140), but commercial demonstrations continue to ramp up. Analysis within the report suggests that hydrogen fuel-production projects announced in 2022 will add more than 900 metric tons per day of H₂ capacity by 2023, with “most projects” planning to leverage renewable feedstocks, the report states.

So, are there too many clean-tech options for fleets to pursue? Ari Silkey, general manager of North America Surface Transportation at Amazon, replied, “We need to take multiple paths. I’d love more options, and then narrow them down over time.” Until infrastructure, scalability and costs help whittle the field, options will abound.