Electric trucks are becoming more cost-competitive than diesel models in key markets, opening opportunities to reduce oil dependency, improve air quality, and enhance productivity. However, capital-constrained businesses may be unable to switch to electric vehicles even when their total operating cost is lower than that of diesel vehicles
A new EEIST modeling study explores which policies most effectively leverage this transition. Findings are presented globally, with specific insights for China, India, the United States, and Germany.
In many regions, electric freight vehicles have already reached—or are nearing—cost parity with their diesel or CNG counterparts when measured by total cost of ownership, largely due to significantly lower operating costs. This trend is especially evident in China. However, high upfront purchase costs remain a major barrier for firms seeking to adopt electric vehicles.
Regulatory policies, such as fleet-wide emissions standards or zero-emission vehicle (ZEV) mandates, are particularly effective in accelerating cost reductions and increasing market penetration of electric trucks. These measures are especially impactful in the early stages of the transition, as they help create a stable and growing market for low-carbon freight vehicles. While national ZEV mandates are important, city-level zero-emission zones—successfully implemented in parts of China—can also act as powerful catalysts.
In contrast, price-based instruments such as purchase subsidies or carbon pricing are less effective when used in isolation. With total ownership costs of diesel and electric trucks already comparable, these measures do little to address current supply shortages or provide the market certainty needed to stimulate large-scale investment in charging infrastructure.
Key findings include:
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Regulatory measures—especially zero-emission vehicle (ZEV) mandates and fleet-wide emissions reduction standards—are generally the most effective tools for accelerating electric truck adoption and driving down costs quickly.
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Price-based instruments, such as purchase subsidies and taxes, are less effective alone. However, subsidies can be critical in expanding the ZEV market during the pre-parity phase, when electric trucks are still more expensive than their diesel counterparts.
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Policy combinations yield stronger results. Early deployment strategies, including city-wide zero-emission zones and ZEV mandates, are particularly effective in stimulating market growth and enhancing the long-term impact of carbon pricing.
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International coordination, particularly on regulatory standards in leading markets—such as the EU, China, India, Canada, California, and other U.S. states—can accelerate cost parity by up to 2.5 years. This would lower transition costs globally thanks to positive feedback from learning curves and economies of scale.
The transition to electric trucks has not progressed far enough for there to be much empirical evidence of which policies are effective in moving it forward. The modeling likely understates the effectiveness of subsidies because the researchers do not represent constraints on the availability of finance often faced by companies that purchase vans and trucks. Real-world experience suggests that capital-constrained businesses may be unable to switch to electric vehicles even when their total operating cost is lower than that of diesel vehicles, and subsidies can help overcome these constraints.