Fleets Facing Challenges with Upcoming ACF Rule Find Alternative to EV Ownership

October 24, 2022

The big transition to zero-emission commercial vehicles is accelerating, fueled by increasing vehicle commercialization coupled with historic funding and incentives in states like California. While the transition is an important key to reducing emissions, some fleets are at risk of missing upcoming regulatory deadlines due to vehicles delays, long infrastructure timelines, and lack of internal resources to plan and execute an electric vehicle (EV) transition.

California’s Advanced Clean Fleets (ACF) Rule, which is in the final rulemaking stage now and would require quick action, is at the top of the list of concerns for fleets in the Golden State. The California Air Resources Board (CARB) took public comments and discussed the ACF Rule at their recent October 27th board meeting. The rule is likely to be enacted in the coming months. In the interests of helping fleets understand ACF compliance, EV provider Zeem Solutions recently offered some analysis and insights into fleet electrification.

Deploying ZEVs requires staff to plan and navigate funding paperwork, as well as design, build, and energize charging stations. Fleet operators must also navigate significant supply chain challenges affecting availability of all fleet vehicles, especially electric trucks, shuttles, and vans, which is impacting price and availability. Then fleets must gain operational experience with these electric vehicles and the new process of “fueling” a fleet of EVs. Additionally, a fleet operator’s maintenance team knows its vehicles well, but EVs are a paradigm shift, and the related learning curve is steep, even for the most advanced technicians.

These challenges should be considered as soon as possible, because the proposed ACF Rule is poised to mandate quick action to meet compliance. Private fleet operators subject to the rule have two paths to meet compliance — they can either choose to buy only zero-emission vehicles (ZEVs) starting in 2024 or opt for a percentage target of ZEVs in their fleet. If the fleet operator has at least 50 vehicles or $50 million in revenue, they would be subject to the rule.

Choosing the latter option (percentage target) would mean that fleets operating vehicles such as vans, box trucks, two-axle buses, and light-duty package delivery vehicles would be required to operate 10% ZEVs by 2025. However, installing or upgrading charging infrastructure for 10% of your fleet in the short term is difficult because many utilities require a five-year electrification plan before they approve infrastructure incentives and site plans. As the ACF Rule rachets up ZEV requirements to 25% of the fleet by 2028, 50% by 2031, and 100% of the fleet by 2035 (in draft language), realistically, meeting a 10% requirement in the short-term means building and planning for a higher percentage of fleet electrification up front.

This becomes daunting when working backwards from the 2025 deadline, since fleets would have a little more than 24 months to get this completed to be compliant. Considering that electrification projects can take up to 18 months or more, fleets in this category have a short window to get started.

The good news is that a new and different service offering is giving fleets some much needed help. The new EV fleet-as-a-service (FaaS) business model helps solve these problems with a simple concept — rather than purchasing vehicles, a fleet signs up to operate a fully charged EV for one low monthly price, for less than the cost of gasoline or diesel. This eliminates long, expensive planning cycles and massive upfront capital expenditures. Through this service agreement, fleets meet ACF’s ZEV compliance while gaining the experience they need so they are better informed to select their own vehicles and charging equipment when planning their own facility upgrades over time.

This service is not available everywhere yet, but one of the first locations is near LAX airport in Los Angeles, operated by Zeem Solutions. Available EVs include Class 2-8 cargo vans, box trucks, and passenger shuttles. Under this new operational model, fleet drivers show up at the depot, park their personal cars, drive out in a fully charged fleet vehicle to work their routes, taking advantage of driver amenities, truck cleaning, porters, regular maintenance, and secure overnight vehicle parking, which is all included in the monthly agreement.

Zeem Solutions’ FaaS model provides a cushion for fleets planning for ACF compliance, giving them operational experience and the benefit of reserving these vehicles before all have been committed to operators who are moving quickly to secure EVs. In addition to getting ahead of regulatory deadlines and delivering real environmental benefits, fleets will also save money on fuel costs and can offer their clients the zero-emission options they are seeking.

Zeem Solutions is providing a high-level overview of the Proposed ACF requirements for awareness purposes. Comprehensive information on the ACF Rule is available on the California Air Resources Board’s (CARB’s) website. Because the ACF Rule is pending adoption by the CARB, the requirements are subject to change.