As the transition to electric vehicles (EVs) continues, industry experts at Mitsubishi HC Capital America expect the pace of adoption to pick up in 2024, all while continued challenges and changes in regulation, labor and the incentive, rebate and tax credit landscape are anticipated.
“OEMs are realizing that converting to EVs is more demanding and disrupting than they expected,” John Critelli, director of SDG sales, transportation finance at Mitsubishi HC Capital America, said. Critelli, a frequent presenter at EV industry conferences, directs the company’s EV initiatives while providing comprehensive, cross-functional leadership, financing and support for businesses looking to deploy clean energy mobility solutions.
“Dealers have been patient with the OEMs, but there’s a general sense that we’ve been talking about the same things for the last couple of years – and now it’s really time to start moving forward,” Critelli said. “We’re reaching a point where adoption is going to catch up with the demand to move to EVs.”
Mitsubishi HC Capital America identified the following key factors that impact the pace and progress of EV truck adoption to date:
- Vehicle availability. Investment in EV is slower than anticipated due largely to the availability of “at-scale” production. Dealers are willing to make the investment in EVs but are ordering small quantities due to limited availability. Investment would likely be greater if OEMs could produce at scale, Critelli noted, but doing so is problematic for a number of reasons. OEMs have limited institutional or industry knowledge regarding the new processes. In addition, making a design change usually results in numerous, unforeseen modifications, slowing development and delivery.
- Infrastructure installation. Installation of appropriate charging infrastructure and the associated timelines and delays have hindered adoption. Depending on which state the business operates in and the local utilities involved, installations can take as long as six to eight months or longer.
- Regulatory effects. Where adoption has occurred, it has been driven primarily by regulatory requirements. California, for example, has mandated that all new vehicles sold in 2035 and beyond must be zero-emission. As a result, OEMs, dealers and end users are moving faster than in locations without state requirements.
- OEM challenges. Along with the production issue cited above, emerging EV OEMs face challenges in attaining industry certifications and securing firm orders. Certification in Federal Motor Vehicle Safety Standards adds a layer of regulatory compliance for EV production. Securing firm orders is an ongoing challenge due to the cycle time between the initial order and anticipated delivery.
- Dealer challenges. EV availability and infrastructure-installment issues directly impact dealers. Keeping inventories in stock is a challenge. Dealers also must have chargers in the sales lots so that buyers can demo the vehicles, and in service bays to properly service the EVs. These modifications can be up to multi-million-dollar investments.
Outlook for 2024
Critelli expects the pace of adoption to pick up in 2024, as vehicles are produced more rapidly, regulatory requirements are enacted in more states and the EV process is refined and continues to mature. Still, the EV truck sector will need to be aware of these key issues impacting EV adoption next year:
- Critelli advises to “put a helmet on” because the regulatory environment is going to change “numerous times” by the end of 2024. “Everyone will need to keep on top of the continuous changes,” he said. “It almost requires a dedicated resource to track the regulatory and environmental changes from state to state.”
- Incentive, rebate and tax credit changes. OEMs and dealers need to pay close attention and be smart about incentive, rebate and tax credit changes. “There are significant rebates and credits available that make a big difference: potentially $30,000 to $50,000 off the price of an EV, or similar-sized tax credit,” Critelli said. Some OEMs provide search engines to enable identifying resources from state to state.
- Skilled labor. EVs are not just a direct replacement of internal combustion engine (ICE) vehicles. They require salespeople and service technicians with skills that are different than those required for ICE vehicles. Retraining or hiring new personnel will be needed, Critelli said.
“Overall, customers, dealers and OEMs are excited and looking forward to the changes coming to the market, regardless of the hurdles ahead,” Critelli said. “At Mitsubishi HC Capital America, we’ve prioritized EVs because that’s where the industry is headed. Through our strategic relationships, our team has the resources and capabilities to work alongside experts throughout the entire EV supply chain to provide businesses the necessary assistance as we move into the future with EVs.”