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The freight trucking industry is beginning its transition to electric vehicles, but it’s going to be short-haul EV trucks that are first adopted before concepts like the Tesla Semi travel longer distances on interstates.

Due to the limitations that EV truck batteries face in mileage range, they’re best suited for drayage transportation, or the movement of goods across short distances. So, trucking companies are making efforts to develop short-haul EV trucks and put them to use at ports and intermodal logistics facilities.

Schneider, a truckload, intermodal and logistics service, announced its battery-electric truck (BEV) fleet back in 2021, and the first BEV arrived at a Southern California port this year.

We’re going to be operating those in and out of railheads for intermodal customers, and so we’ll start with five taking this month and will be up to about that hundred number by the time we get through the calendar year,” Schneider CEO Mark Rourke said on CNBC’s “Squawk on the Street” on Wednesday.

While truckload volumes tumbled last year, companies like Schneider are still investing in EV trucking because of the long-term benefits that they offer, both economically and environmentally, along with increasing pressure from states to adopt electric vehicles.

The California Air Resources Board is requiring truck manufacturers to begin phasing in available heavy-duty EV technology by 2024, with expectations to have all zero-emission short-haul drayage fleets by 2035. The agency also found that trucks are the largest single source of vehicle-produced air pollution that “spew 70% of the state’s smog-forming gases and 80% of carcinogenic diesel pollutants.”

So it’s no surprise that Schneider is launching its first zero-emission fleet in the state, but the company is aware that it still has a long way to go in terms of long-hauls.

“It’s going to take time. The range right now is about 200 to 240 miles depending upon terrain. So, it’ll be a while until we get battery electric trucks, but there’s other alternate fuels, like hydrogen, that may get us there sooner with still a zero emission, but it’s going to take a little bit,” Rourke said.

How electric trucks navigate long-haul shipping is one of the main issues that the trucking industry faces as it looks to expand EV usage. Last year, San Francisco-startup TeraWatt Infrastructure announced it’s developing the first network of electric vehicle-charging centers for heavy-duty and medium-duty trucks along the Interstate 10 highway, stretching from Long Beach, California, to the El Paso, Texas, area.

In September, the Department of Transportation approved EV-charging station plans for all 50 states, Washington, D.C., and Puerto Rico covering about 75,000 miles of highways. States also have access to more than $1.5 billion to help construct the chargers.

Tesla delivered its first few production Semi trucks in December to PepsiCo Frito Lay, which is Tesla’s first customer to receive and use them. While Tesla has not said how many trucks they plan to produce this year, the company boasts that its fast-charging system and battery can allow a truck to travel 500 miles on a single charge.

Medium and heavy trucks make up only about 4% of vehicles in the U.S., but because of their larger size and greater travel distances, the vehicles consume more than 25% of total highway fuel and represent nearly 30% of highway carbon emissions, according to the Department of Energy.

Tesla CEO Elon Musk said at a company event in December that while “it seems like a small percentage,” the semi trucks represent a large portion of harmful vehicle emissions because of their size, weight, and the fact they are driven around the clock.

Due to the current range restraints of EV trucks, Volvo and Nikola Corporation, like Schneider, are focused on the Port of Long Beach and the Port of Los Angeles, two of the country’s busiest ports. Performance Team, a subsidiary of shipping giant Maersk, deployed Volvo short-haul EV trucks in Southern California for distribution facilities and warehouses starting last October.

On the other hand, Amazon and Rivian Automotive are working together to transition last-mile delivery trucks to EVs, as well as General Motors’ subsidiary BrightDrop. California’s new mandate will require and zero-emission last-mile trucks by 2040.

Regardless of how these EV trucks are being deployed to lower carbon emissions, the goal is also for them to save the trucking companies money. Nonprofit newsgroup Cal Matters found that the total cost of buying and operating an electric semi-truck could be anywhere from $765,000 to $1.1 million, while a gas or diesel truck ranges from $919,000 to $1.2 million.

This shift to EVs is taking place amid a more cautious economic environment, but Rourke isn’t worried.

“In the freight economy, we’re usually on the front end of both the cycles up and down. And right now, I think it’s pretty stable … we haven’t really seen much of a drop-off season like we normally see in the first quarter. So, it’s too early to tell, but I’m probably more optimistic than pessimistic,” Rourke said.

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