Fixing a Broken Market: A Plan for Cheaper Freight, Cleaner Air, and American Truck Leadership
Americans are paying too much for almost everything, and a major driver is the cost of moving freight by truck. While other countries modernize their freight systems, more than 70% of freight by weight in the United States is transported via aging diesel fleets: an expensive habit that’s hitting Americans hard. A first set of costs comes at pumps and registers. Diesel’s a notoriously volatile commodity, and when prices spike – as they did after Russia invaded Ukraine and as they’re doing again right now – freight carriers pass the increases through, hitting Americans hardest on essential goods like food, beverages, and building materials. A second comes at homes and hospitals. Diesel dependence directly drives higher rates of childhood asthma, heart disease, and respiratory illness in those living near warehouses, highways, and ports, as well as the extreme weather that’s becoming unnervingly common in communities nationwide. Using EPA data, the Clean Air Task Force estimates that diesel pollution causes roughly 8,800 premature deaths, 3,700 heart attacks, and $100 billion in monetized health damages each year in the United States.
The key to breaking the freight sector’s diesel dependence lies in innovative economic policy. Electric trucks are a direct hedge against diesel price volatility, produce zero air and climate pollution, and can perform as well or better than diesel trucks even in difficult real-world conditions. Yet progress towards a modern electric trucking system has been substantially derailed by the high upfront costs of electric trucks in the United States. Let’s dwell on that emphasis, because electric truck pricing is really an us (with a capital “U.S.”) problem.
The Broken Truck Market
The United States has long treated its trucking industry as an artifact to be preserved rather than as an opportunity for innovation. The government’s support for, and deference to, legacy manufacturers on policy and program design has made it difficult for trucking startups to gain a toehold in the domestic market. Agencies and advocates focused on the benefits of electrification as a pollution-control strategy while underweighting the arguments for electrification as a geopolitically strategic imperative. We’ve leaned in on rebate programs for individual electric trucks, not comprehensive, sector-wide initiatives needed for long-term transformation.
That’s not to say we haven’t taken any steps in the right direction. Under the Biden administration, federal government and states tried to weave together regulations and initial incentive programs with an eye towards supporting deployment of electric trucks. But those efforts are now stalled out, and even while active were geared towards commercialization rather than comprehensively fixing the truck market – they still treated electric trucks as delicate new tech rather than something capable of being the standard on the road. The absence of that market focus meant that even otherwise ambitious regulatory strategies ran hard into an incumbent oligopoly.
The U.S. Class 8 market (the market for the big rigs that do most on-road long-haul freight transport) is hyper-concentrated. Four manufacturer groups — Daimler, Paccar, Volvo, and Traton — control roughly 99.9% of sales across seven brands, with the Freightliner brand alone accounting for more than a third of domestic market sales. These companies are deeply invested in diesel; having built an oligopoly on legacy technology, they’re understandably loath to relinquish it. As such, we’ve seen the “Big 4” lobby heavily against pollution rules that would drive electrification and slow-walk development of their own electric models.
We’ve also seen them inflate and obscure electric-truck prices. An independent ICCT analysis found that as battery-pack costs fell from 2020 to 2025, prices of electric Class 8 tractors in the European Union fell by 32%… while prices for comparable big rigs in the United States rose by 27% (about $87,000). Another investigation found that legacy manufacturers are pricing electric trucks well above what’s justified based on underlying production costs.
Indeed, the vast majority of new trucks in the United States don’t even have posted public prices. In a concentrated market, price obscurity reduces competitive pressure to lower prices.
The resale (“residual”) value of used electric trucks is also unknown. Lenders, unable to value the collateral, have sometimes set it at zero, making affordable commercial loans nearly impossible even for fleet owners eager to electrify. Against this backdrop, it’s little wonder that even ambitious states like Oregon have delayed electric-truck rules, citing market dysfunction.
Restoring Order: Market Innovation as Durable Truck Policy
Policy caused today’s truck market issues; policy can also fix it. Governments are fundamentally market-shapers. When they get economic policy right (e.g., by funding innovation, supporting competition, and checking incumbent power), it paves the way for new ideas and technologies to beneficially spread as the economy evolves.
Yet there’s no comprehensive national plan to modernize freight in force, courtesy major rollbacks of Biden-era policies. On the contrary, the Trump administration and this Congress have made legally questionable moves to eliminate federal greenhouse-gas standards for trucks, delay remaining pollution rules to 2029, and revoke the waiver for California, and the states that follow it, to set their own truck rules: exactly what you might go for if you wanted to chill investment in next-gen technology and keep U.S. trucking stuck in the past.
Under prevailing policy, the United States will be badly adrift by 2029. Rebuilding old regulatory frameworks would take years – years that our climate and health can’t afford, and years in which American consumers, workers, and communities continue to shoulder the costs of a creaky and dirty freight system. Even if time was less of an issue, there are opportunities to improve decades-old environmental laws to drive a rapid, equitable, and durable transition to modern clean technologies.
These laws, in conjunction with rebates and other direct incentives, have helped commercialize electric vehicle technology. But getting to a new regulatory (ideally statutory) framework that builds on and extends those policies is going to require a broader political base of support than we had when the last rules were repealed, as well as repairs to the broken market that let electric truck prices spike while legacy companies delayed progress.
It’s time for the United States to lean in on economic and industrial policy as powerful levers for modernizing the truck market and paving the way for heavy-duty electrification at scale. Electric trucks now make economic sense. Over their lifetime they can save fleets tens of thousands of dollars in fuel and maintenance, and independent modeling finds battery-electric heavy trucks reaching total-cost-of-ownership parity with diesel around 2030 in most states – sooner where electricity is cheap, like in Texas. But that value only materializes if our markets and financing systems unlock it fairly and competitively. As we’ve seen above, today’s don’t.
To be clear, we continue to need strong emission standards, but we recognize that a heavy-duty vehicle strategy predicated on waiting for a new administration to reinstate old standards without fixing underlying market issues could slow progress. A much better approach is to expand the toolbox, focusing on domestic innovation in truck technology today in order to build momentum for smart, effective federal regulation when there’s next political opportunity.
A Six-Point Plan
Fortunately, there’s much that states and their partners can do today to help. Tesla’s low-priced Semi (about $250,000 for the standard model and $290,000 for the 500-mile version, roughly $100,000 below comparable legacy electric trucks) shows that another way is possible. In California, stacked state incentives can already cover up to 90% of an electric truck’s pre-tax cost. But one competitor and one state’s subsidies aren’t enough.
Put the following six fixes in place, and the national American electric-truck market begins to hum on private capital. This in turn makes it possible for states (and down the road, federal government) to (i) lock in durable pollution and performance standards, and (ii) target limited public dollars such that benefits of electrification are equitably distributed and that American companies are at the global frontier of vehicle innovation, rather than relying on taxpayers to subsidize an entire non-competitive market. Here’s what’s needed:
- Transparent pricing. This is Econ 101. The industry is used to selling its vehicles through highly complex, dealer-mediated service contracts, without public prices. It doesn’t have to be this way. Truck companies could just tell people what their trucks cost. In fact, states could make them do so. California’s SB 1213, which cleared the California Senate committee with no opposition, would do exactly that: require manufacturers to disclose MSRP quarterly for any zero-emission model seeking state incentives (beginning 2027) and let vouchers cover up to 90% of cost. Other states are also making efforts to enhance pricing disclosure.
- Easy, affordable electric truck loans. Good electric-truck loans are hard to write at scale because used value is uncertain; risk-averse banks sometimes default that value, unrealistically, to zero. To solve this problem, states and leading financial institutions could provide residual value guarantees that set a floor on electric-truck resale prices. Such guarantees cost far less than subsidizing the full purchase of an electric truck, so public dollars stretch further while fleets turn profits.
- Affordability-based financing. Once prices are visible and used trucks are financeable, states can focus on driving prices down. Typical purchase incentives or rebates provide a fixed dollar amount or percentage of an electric truck’s cost, which in turn create perverse motivation for manufacturers to artificially inflate electric truck prices. The better approach is to focus on maximizing the number of electric trucks deployed per public dollars spent – which opens a wide range of tools that can include “total-cost-of-ownership (TCO)”-based incentives, wherein states cover only legitimate, documented technical cost gaps between electric and diesel trucks, along with bulk procurement supports, and other financial approaches that focus in on driving down costs and driving up volumes.
- Support for competitors, including re-shored ones. A competitive, innovative market delivers lower cost and higher performing goods and services that benefit everyone. In the absence of federal leadership and given today’s heavily concentrated truck manufacturing market, states must lead with an economic innovation and affordability agenda. States can accelerate competition by supporting trucking startups with state green-bank loans (modeled on the federal Loan Programs Office), while using their convening power to bring new capital and projects to the table. States can also push to reshore manufacturing and supply chains, including by bringing in foreign investment through joint ventures with high-road job standards and community benefits built in. States can even take equity stakes in companies they support, capturing upside for the public.
- Firm up demand. States can support rapid scale by demanding zero-emission freight services in their own service contracts, require publicly owned fleets to transition to zero-emission solutions, and help arrange financing for major procurements by large private shippers and carriers. States can lower sales taxes, registration and licensing fees so these are at least equal to if not lower than diesel. And they can set rules like a Clean Miles Standard that ensure demand for zero-emission freight does not backslide.
- Help with charging. States can make it easier for private firms to build charging networks, provide public money for key facilities, and coordinate charging around shared hubs and corridors. States can also offer purpose-built electricity tariffs to enable cost-effective charging, rewarding fleets that use their trucks as batteries to balance an increasingly renewable grid. And states can provide revenue guarantees based on installed charging capacity, expand customer access to flexible service connections, designate ‘no-regrets’ zones to accelerate permitting approvals where existing grid capacity and charging demand potential align.
These fixes don’t get us all the way there. Much else must happen to alleviate the economic and health costs of freight for Americans, including cutting pollution exposure in overburdened communities and ensuring a just transition for workers caught between the fossil and electric eras. Environmental justice groups, labor unions, and local governments have done much on these fronts in the past and will continue to play an important role moving forward.
But market fixes are genuinely necessary. Without them, it will be very hard to restart progress on truck modernization and electrification, much less to push for even greater ambition. By rooting clean-truck policy in affordability and competitiveness, these fixes also align policy with politics; by addressing factors that inflate truck prices and stifle innovation, they can win truckers, fleets, new companies, and consumers – a coalition that, added to the existing environmental movement, can win.
These fixes are also an invitation. Legacy companies have undermined progress on electrification in order to defend their diesel businesses. But they are also in real trouble as electric competition, increasingly from low-cost Chinese rivals, begins to destroy their market share. Their success in derailing clean truck rules has, ironically, left them without a supportive policy framework for changing course. The market fixes outlined above, which also address the demand side of the equation, will give incumbents a pathway for moving electric trucks from a boutique side offering to a profitable core product. Legacy manufacturers will have to compete, but they can still come out ahead. The best outcome for all Americans is a competitive market, in which transformed incumbents and new entrants alike race in the best tradition of American capitalism to build affordable, quality electric trucks, cleaning the air as they do.
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