Now in its seventh year, the State of Sustainable Fleets 2026 Market Brief delivers a comprehensive, technology-neutral assessment of an industry building resilience through powertrain and fuel diversification amid an extended period of uncertainty. The Market Brief was unveiled at ACT Expo in Las Vegas. It was authored by TRC Companies, a WSP member company and construction, engineering and consulting firm.
The Market Brief arrives as commercial fleets face a convergence of pressures that industry analysts are calling the most complex operating environment in modern trucking history. A prolonged freight recession now in its third consecutive year has been compounded by sweeping federal policy reversals, tariff-driven cost increases of up to $35,000 per new truck, and geopolitical volatility affecting global supply chains and energy markets. The rollback of federal greenhouse gas (GHG) vehicle standards, the expiration of zero-emission vehicle (ZEV) tax credits worth up to $40,000 per eligible medium- and heavy-duty (MD/HD) vehicle, the cancellation of federal clean transportation funding, and the nullification of California’s clean truck regulations have restructured the policy landscape from a federally driven system to a decentralized patchwork of state policies and market-driven factors.
Yet across all this disruption, the data reveals a picture of an industry in structural adaptation rather than retreat. TRC estimates that more than $5 billion in state, local, and utility program funding remains available annually through 2028 supporting clean fleet investment. Fleet technology markets are maturing across nearly every fuel and drivetrain type. Artificial intelligence has moved from pilot projects to mainstream fleet operations. And the central strategic finding of this year’s Market Brief is clear: fleets managing total cost of ownership (TCO) across a portfolio of powertrain technologies — rather than concentrating on a single solution or waiting out the uncertainty — are demonstrating measurably greater resilience. In a freight economy where external shocks can rapidly change the economics of any single technology, including conventional diesel, powertrain diversification has become both a financial strategy and a risk management imperative.
Penske Transportation Solutions and Volvo Trucks North America serve as title sponsors of the 2026 State of Sustainable Fleets Market Brief. Exelon Companies and S&P Global Mobility serve as supporting sponsors. Each sponsor contributes expertise and data that enhances credibility of the findings.
The 2026 Market Brief identifies key findings shaping the sustainable fleets landscape.
Artificial Intelligence and Autonomous Trucking: From Pilot Projects to Commercial Operations
- AI-powered fleet management has moved from experimentation to mainstream operations: approximately half of fleets in the annual survey report using AI for route optimization, dispatching, predictive maintenance, and maintenance diagnostics — with users reporting measurable cost savings, greater vehicle uptime, and improved fleet utilization.
- Fleet AI adoption is expected to accelerate rapidly: survey respondents project that 35% of their fleets will be AI-enabled by 2027, nearly doubling from an estimated 20% across the fleet in 2025. Among respondents, 49% reported that none of their fleet had been AI-enabled as of 2025, signaling a significant near-term adoption runway.
- Autonomous freight is advancing from Sun Belt pilots to commercial-scale operations: driverless light-duty vehicles have logged millions of miles, and HD autonomous trucks entered commercial freight service in 2025. Broader heavy-duty rollouts across more routes and regions are expected by end of 2026.
Policy and Funding: Federal Cuts Reshape the Landscape; States, Markets, and New Biofuel Mandates Take the Lead
- Federal clean transportation funding has been substantially reduced: zero-emission tax credits of up to $40,000 for eligible MD/HD vehicles expired; DOE’s Vehicle Technologies Office budget was cut approximately 90%; $2.2 billion in hydrogen R&D funding was rescinded, including so-called “Hydrogen Hubs”; and the DOT’s National Electric Vehicle Infrastructure (NEVI) program was suspended for six months.
- Despite federal cuts, available funding for clean fleet projects remains well above pre-2022 levels: more than $5 billion in state, local, and utility programs is estimated annually through 2028. California maintained over $1 billion in active grant funding for on-road trucks and buses in 2025. Low-carbon fuel standards (LCFS) in California, Oregon, Washington, and New Mexico continue generating meaningful revenue streams supporting multiple clean technology pathways.
- The EPA finalized record-high Renewable Fuel Standard (RFS) volume obligations for 2026 and 2027 in April 2026, requiring approximately a 60% increase in biodiesel and renewable diesel production and use compared to 2025 levels — a major structural tailwind for renewable fuel adoption. Regulatory responsibility for GHG and criteria pollutant standards is also increasingly shifting to the state level, though significant questions remain for fleets and their partners.
Diesel Vehicles: Efficiency Gains and Drop-In Renewable Fuels Displace Conventional Diesel at Scale
- New Class 8 tractor registrations declined 16% in 2025 according to S&P Global Mobility data amid the prolonged freight recession, tariff-driven cost increases, and economic uncertainty. Fleets and OEMs have focused on diesel fuel efficiency: more than one-third of survey respondents reported using efficiency technologies, with leading heavy-duty adopters in the logistics sector achieving 8.5+ mpg and best-in-class operations demonstrating 11.5 mpg or higher.
- Renewable diesel (RD) and biodiesel (BD) — drop-in fuels that work in existing diesel engines and infrastructure — are displacing conventional diesel at scale: the two fuels combined to replace 74% of conventional diesel used in California transportation in 2024 and 71% in the first three quarters of 2025. More than half of annual fleet survey respondents now report using RD or BD, with near-100% B99 biodiesel adoption expanding in 2025.
- The EPA’s Clean Trucks Plan establishing MY 2027 NOx and particulate matter (PM) standards for MD/HD vehicles remains on track, with incremental per-vehicle costs expected to range from $8,000 to $18,000. Final warranty and useful-life provisions are still pending.
Natural Gas Vehicles: 15-Liter Engine Delivers Diesel-Equivalent Performance; RNG Enables Carbon-Negative Fleet Operations
- The Cummins X15N 15-liter natural gas engine completed its first full year of commercial availability in 2025 and delivered diesel-equivalent performance, range, and payload capacity alongside compelling fuel cost savings. The U.S. leads the world in commercial use of compressed natural gas (CNG) and liquefied natural gas (LNG) for trucking — a competitive advantage built on years of fleet adoption and infrastructure investment that no other market has matched.
- Total MD/HD natural gas vehicle (NGV) registrations fell 15% in 2025, driven in part by the freight recession and the fleet transition period as the market shifted to 15-liter platform deliveries. Straight trucks comprised 82% of 2025 NGV registrations, followed by transit buses (10%) and tractor trucks (7%) according to S&P Global Mobility data.
- Renewable natural gas (RNG) sourced from organic waste enables carbon-negative fleet operations and continues to grow: RNG accounted for 97% of all natural gas fuel used in California transportation in 2025. Among NGV-using fleets in the survey, 65% report RNG use, which they estimate accounts for 78% of their total fueling volume.
Propane Vehicles: Cost Savings Drive Steady Growth; New Role as EV Charging Power Source Expands Market
- The propane vehicle fleet grew 3.1% in 2025, with school bus and upfitter markets continuing as key adoption sectors. The fuel delivered operational cost savings for 39% of propane fleet operators compared to the vehicles they replaced, reinforcing propane’s role as a cost-effective, practical option in a diversified powertrain portfolio.
- Renewable propane use surged: 32% of propane-using fleets reported using it in 2025, up from just 10% in 2023 — a nearly threefold increase that reflects fleet demand for low-carbon, drop-in fuel options requiring no vehicle modifications.
- Propane is expanding into a new application as a power source for EV charging infrastructure, offering fleets an alternative to or temporary solution while awaiting utility grid connections with installation cost savings of up to 75% — a development that may accelerate BEV adoption in segments where grid access and utility timelines have been barriers to uptake at scale.
Battery-Electric Vehicles: MD Registrations Set Records as Cost Benefits Demonstrated; HD Vehicles Show Signs of 2026 Growth
- MD/HD BEV registrations increased in 2025, led by pickup trucks and delivery vans that set a new record in the MD segment. Fleets operating MD BEVs and HD yard electric tractors reported total cost of ownership benefits compared to the vehicles they replaced, confirming that fleet electrification is delivering financial returns in duty cycles where range and infrastructure align.
- Global market signals point to long-term BEV competitiveness in heavy-duty applications: BEVs now represent 22% of China’s HD truck market, and battery costs in that market have fallen to $90/kWh — a level widely cited as cost-competitive with conventional powertrains. Battery costs have fallen below $100/kWh in some markets, a leading indicator for future U.S. fleet economics.
- Near-term U.S. growth faces headwinds from the expiration of EV tax credits and manufacturer production pivots. However, data from a California funding program and other signals show that Class 8 truck deployments should exceed the 1,000 annual deployments mark for the first time.
Hydrogen Vehicles: Funding Cuts Cloud Long-Term Outlook; Duty-Cycle Fit for Long-Haul and Heavy Payloads Remains Promising
- The hydrogen vehicle sector faced its most challenging year in 2025: hydrogen fuel cell electric vehicle registrations dropped 12%, the cancellation of much of the Hydrogen Hub funding removed a critical development resource, and two prominent Class 8 FCEV manufacturers exited the market.
- Despite these setbacks, Hyundai, Toyota, Honda, and Cummins continue advancing fuel cell modules and vehicle programs. Real-world fleet operations continue to confirm hydrogen’s operational fit for long-haul, heavy-payload duty cycles where truck weight and range constraints are most acute — with some deployments achieving 400+ miles per day with faster refueling times than EVs.
- Long-term hydrogen sector viability for heavy-duty transportation is expected to depend on sustained federal investment in research, development, and fueling infrastructure that private capital alone will not provide at scale. Coordinated government investment remains the defining variable for hydrogen’s commercial future in freight.
“This year’s Market Brief accurately captures the continuing use of AI in fleet technology and how it allows for fleets to drive enhanced fleet and MPG performance and ultimately sustainability,” Paul Rosa, senior vice president procurement and fleet planning at Penske Truck Leasing, said.
“Volvo Trucks has been clear and consistent in our commitment towards zero emissions,” Peter Voorhoeve, president of Volvo Trucks North America, said. “We continue to invest across a broad range of technologies because we believe meaningful progress requires more than a single solution. By investing in multiple solutions, we’re giving fleets the confidence that they can reduce emissions with the solution that makes the most sense for their business.”
Nate Springer, vice president, market development at TRC Companies, added, “In a very short time, we’ve moved from ‘what’s the best AI-enabled drivetrain’ to ‘how do I utilize each where it works best’ to manage cost and uncertainty. Adoption of multiple advanced, clean technologies for medium- and heavy-duty fleets has emerged as the defining strategy instead of the retreat that many had predicted.”
