Incentives and Financing for Truck Replacement Provide a Leg Up

Los Angeles, CA (August 1, 2019) – For the past 7 years, California has required any heavy-duty diesel vehicle over 14,000 pounds GVWR operating in California to meet strict in-use emissions standards or face large fines and possible registration holds from DMV.

Thousands of carriers have been denied DMV registration for non-compliance with California Air Resources Board (CARB) rules with several thousand more facing a model year registration restriction starting January 1, 2020.

Over the past decade, the state of California has made millions of incentive dollars available to any carrier with California plated equipment who could meet minimum eligibility thresholds.

Carriers were expected to act prior to the regulatory deadlines in order to receive replacement grant funding for their old diesel fueled vehicles. However, even with the current standards and upcoming restrictions fast approaching, a relatively large segment of the industry still has incentive opportunities available for truck replacement.

Fleets that are based in California and operate 10 or fewer diesel-powered vehicles over 14,000 pounds GVWR currently have the opportunity to apply for a diesel truck replacement grant through their local air district. While many truck replacement grants in California require alternative fuel platforms such as Natural Gas or Battery Electric, the small fleet program allows for the replacement vehicle to be diesel fueled.

With limited opportunity for diesel to diesel replacement grants, Air Districts have been overwhelmed with applications by small fleets for truck replacement funding. Many applicants have been rejected due to non-compliance or if the applicant fleets are within one year of a regulatory deadline. If a turnover deadline is within 365 days from the day they apply, they will also find themselves ineligible for funding.

A limited amount of funding is made available to the small fleet truck replacement grant program annually, and if funding runs out, the program closes.

Unlike other grant programs that allow for a waitlist, once the money is allocated for the year the opportunity is over. Fleets must wait until the next allocation – while still having to turn over equipment to meet the standards.

The upcoming regulatory deadlines will continually restrict eligibility as the Truck and Bus rule standards become fully implemented over the next three years. While several fleet segments have already turned over to the final 2010 or newer engine standards, the remaining legacy fleet will lose the ability to apply for funding once their compliance standards are less than a year away.

Over the years, fleets have been expected to meet the in-use requirements for compliance or face violations. Since the regulatory standards were adopted by CARB in 2008, the state has made a concerted effort to educate fleets on upcoming standards and available incentives.

While the Truck and Bus Rule does not contain any flexibility for fleets who are not eligible for grants, when purchasing a truck equipped with a 2010 engine for compliance the state does offer a financing support program to the same fleet size segment of 10 or fewer.

The particular opportunities available to fleets with 10 or fewer vehicles are contingent upon continued funding from the State of California. The financing program is set to receive close to $50M for new loans in the next fiscal year. While the small fleet diesel truck grant program will see diminishing allocations as the state moves incentive investments towards transition of the California transportation fleet to zero and near zero emissions.

Currently, these two separate programs exist only for fleets that operate 10 or fewer vehicles in California. Additionally, they are the only programs that offer a clear strategy for achieving compliance without purchasing alternative fuel platforms.

The grant program is administered by local Air Districts using funding form the Carl Moyer Grant Program while the financing program is available through participating lenders such as Crossroads Equipment Lease and Finance and other approved and enrolled, California based lenders.

Recently, the financing program, formally known as the California Capital Access Program (or CalCAP for short) celebrated the enrollment of the 20,000th loan since program inception. With several lenders participating in the program, millions of dollars in loans being issued and more money on the near-term horizon, small fleets in California have a unique opportunity to receive state support now – before it runs out.

As the top lender in the CalCAP program, Crossroads Equipment Lease and Finance has issued close to 6,0000 CalCAP loans to California businesses for purchase of equipment to comply with CARB rules. Crossroads has also assisted hundreds of fleets to apply for and execute grant projects across California.

With a multitude of requirements out there, it is not uncommon for complicated regulatory standards to overwhelm many fleets both small and large; the standards are confusing and misinformation dominates most discussions. It is important that when seeking compliance assistance fleets look for reputation and expertise to ensure that no opportunity is missed.

If you’re in need of more information for the grant and financing programs available to the small fleets described above, contact Crossroads. We hold the top position as the most active lender in the CalCAP On-Road program and have administered more grants than any other lender or any other compliance assistance group out there. Our reputation speaks for itself.

Written by: Matt Schrap, President of California Fleet Solutions and VP Government Programs Crossroads Equipment Lease and Finance & Velocity Vehicle Group.