Guide to Government Incentives for Fuel-Efficient Commercial Trucks

The benefits of increased fuel economy in your heavy-duty truck fleet are numerous–and so are the equipment costs. And now, there are government financial incentives to help you fit new trucks and equipment upgrades into your budget.

To that end, we’ve put together this comprehensive guide to provide all of the information and resources you need to get started. It explains the benefits of implementing fuel-saving technologies, the types of financial incentives available, eligibility requirements and how to start the process to obtain funds. It also provides a comprehensive breakdown of all programs offered at a federal, regional and state level, complete with important details, contact information and where you can learn more.

Benefits of Fuel-Efficient Fleets

When speaking to buyers evaluating transportation management and dispatch systems, a commonly requested application is a module to better manage fuel costs. But while fuel management technology can help control fuel spend for some organizations, it may simply be time to sunset older, inefficient trucks.

A fuel-efficient truck fleet lessens negative impacts on the environment, improves your company image and, most importantly, boosts your bottom line. A November 2012 Carbon War Room report found that purchasing new or retrofitting existing trucks with fuel-saving technologies can cut fuel costs by 30 percent and result in savings of up to $167,000 per vehicle over 10 years.

This report also found that employing a full suite of fuel-saving technologies generates annual fuel savings of $26,400 per tractor-trailer. When you consider that the upgrades pay for themselves in fuel savings in just 18 months, you have numbers you can’t ignore.

Don’t forget the non-financial perks fuel-efficient trucks afford. The same report estimates that Class 8 road freight emissions will increase by 29 percent in the next decade, releasing four gigatons of CO2 greenhouse gases (GHGs) in the process. With shippers and consumers increasingly concerned with the environmental impact of their goods, curbing your fleet’s GHG output and “greening” your image could give you an important edge over your competition.

Furthermore, the Environmental Protection Agency (EPA) has adopted GHG emissions regulations, so it’s in your best interest to bring your emissions output in line with new standards to avoid non-conformance penalties.

The long-term cost benefits of adopting fuel-efficient fleets are clear. But adding up the cost of a new tractor-trailer, top-of-the-line battery, aerodynamic fairings, advanced cruise control and a fuel-efficient transmission brings the price tag to nearly $130,000 per truck — a hefty upfront cost and tough sell for buyers.

Types of Incentives

Incentives are available at federal, regional and state levels. There are five types of incentives to assist you with purchasing fuel-saving upgrades:

1. GRANTS require the most paperwork and planning, but provide significant funding — sometimes up to 100% of project costs. Most grant programs require progress reports and recordkeeping after funds are awarded. As long as your project and records are in compliance, the funds don’t need to be repaid.

2. REBATES AND VOUCHERS are available when you purchase a specific vehicle or piece of equipment and use it for a specific purpose by a specific date. For example, if you purchase tires designed to decrease rolling resistance, be sure the brand is accepted by the rebate or voucher program. You may need to provide receipts, purchase orders, and original equipment manufacturer (OEM) certificates.

3. LOW COST LOANS help smaller companies with less-than-perfect credit ratings obtain financing for heavy-duty vehicle fuel-efficiency projects by offering low interest rates and down payments. You must pay back the funds you receive, plus interest and fees, within a specified timeframe.

4. TAX CREDITS directly reduce your tax liability. Many states offer alternative fuel vehicle (AFV) tax credits when you purchase or convert a vehicle to operate on an alternative fuel. Credits are typically available one time per vehicle and range from a few hundred to a few thousand dollars. These credits are then claimed on your tax return. You don’t need to supply receipts and purchase orders to the IRS when you file, but do retain them in your records, should the IRS request them.

5. TAX EXEMPTIONS are available at the point of purchase on qualified items, such as fuel and idle reduction equipment. You aren’t required to file paperwork to receive a tax exemption, but it’s good practice to retain receipts and purchase orders for your records.

Who Qualifies for Financial Incentives

To take advantage of funding opportunities, you must meet eligibility requirements. Incentive programs commonly stipulate the following:

• Vehicle type

• Fuel type

• State or region of operation

• Vehicle weight limit

• Fleet size

• Company revenue

Let’s look at the Texas Natural Gas Vehicle Grant Program as an example. Let’s say you want to add a new truck to your fleet. You operate out of Williamson County, Texas; 90 percent of the truck’s power is provided from compressed natural gas (CNG); the GVWR is 14,000 pounds and over 75 percent of miles will be accrued on Texas roads. Your truck is eligible for this incentive if it will replace an old truck in the same weight class, which you must destroy within 90 days of receiving funds.

With any program, carefully read the full details to determine your eligibility.

How to Apply

If your records are organized and easy to collect, the application process is a simple four step process:

1. Choose a federal incentive from the list below, or search the Alternative Fuels Data Center (AFDC) database to find incentives available in your state.

2. Confirm your project or purchase meets all eligibility requirements.

3. Gather necessary documentation.

   1. Most grant, rebate/voucher, and loan programs require:

      • Completed application forms

      • Application fee (if required)

      • OEM certifications

      • Financial records

      • Project/equipment descriptions

      • Other required form or documentation

   2. To claim a tax credit or exemption, you may need:

      • Purchase orders and receipts

      • Certificates

      • Special licenses

4. Submit your application or claim according to program instructions.

For grants, rebates and loans, it’s important to confirm approval of your funding request before making vehicle and equipment purchases.

It’s also important to note that some grant programs require follow-up documentation, such as proof of destruction of an old truck or mileage records for a specified amount of time. Be sure you supply all necessary follow-up records to keep your project in compliance and good standing with the program.

Fleet Incentive Programs

Locate available financial incentives below. For complete incentive details, follow the link or contact the program’s administrator.

You can also search for government incentives here.

Federal Incentive Programs

Regional Incentive Programs

State Incentive Programs

Additional Resources

• To learn about heavy-duty fuel economy and emissions standards, go here.

• To calculate your fleet’s emissions and set emissions goals, go here.

• To learn about Clean Cities programs helping fleets and consumers reduce petroleum use, go here.