In our last piece, we warned fleets not to delay their electrification journey even amid pending litigation around California Air Resources Board’s (“CARB”) Advanced Clean Fleets (“ACF”) regulation. Now, we’re going to pull back the curtains on how noncompliance with California’s new EV regulations could result in direct penalties from CARB with severe financial and operational impacts for fleets.
CARB estimates that, of the 1.8 million medium- and heavy-duty vehicles operating daily in California, 532,000 will be subject to ACF fleet requirements. Now, more than ever, fleets across the state must work towards compliance to avoid penalties outlined in CARB’s enforcement policy and reach cost and operational parity with an electric fleet.
Financial impact of noncompliance
To deter noncompliance, CARB’s enforcement program is designed to “ensure regulated industries that have not met CARB’s regulatory requirements are brought into compliance,” and a key method is through monetary penalties. According to CARB’s 2022 Annual Enforcement Report, CARB had 8,293 cases it pursued and collected over $21.5M in citations.
In the case of ACF, fleets out of compliance could incur fines up to $10,000 per vehicle, per day. Given that compliance is a multi-step process, that could quickly become millions of dollars in the course of just a few short months depending on the size of the fleet. Fleets in compliance will obviously avoid those fines, avoiding unnecessary cost and stress for fleet managers and compliance officers. Moreover, these fleets will take advantage of the many financial benefits of deploying EVs today (e.g., capturing available electrification rebates and incentives, reducing operating costs)— benefits that underpin why ZEVs are expected to deliver a net savings of $48 billion to fleets.
The cost of ACF noncompliance is hefty but easily avoidable; and making the move sooner, rather than later, can be the difference between a few dollars and a few hundred thousand dollars.
Operational impacts of noncompliance
The costs are two-pronged: aside from the direct penalties, CARB has made it clear that there will be other enforcement mechanisms that could temporarily derail a fleet’s operations in California. In particular, CARB has said they can withhold registrations—meaning they can take a fleet’s vehicles off the road—and deny registration for new vehicles, as well.
Not having vehicles up and running—even just for a single day—is detrimental for any business, no matter its operating sector. Having vehicles on the road is paramount for fleets, since downtime causes fleets to lose business, customers, and profits. In fact, downtime costs a fleet an average of $448 to $760 per day, per vehicle. For a fleet of 50 vehicles, that would mean losing nearly $40,000 if the fleet were down for just a single day.
The importance of starting the electrification journey today
While it has been difficult for CARB to state specific penalties given the wide spectrum of electrification, CARB’s recent Enforcement Reports shine a light on their thorough analysis around how fleets respond to legislation and how fines are imposed.
We are confident that CARB will implement more stringent measures on those who have not made progress towards deploying ZEVs, while they will likely be more lenient with fleets that have made a concerted effort to comply with the regulation.. As ACF compliance deadlines approach, the path to compliance will become increasingly daunting for fleets who have waited to take action. However, given that CARB will likely show some discretion in their enforcement of the ACF regulation, it’s imperative for fleets to show as much progress toward compliance as possible, to minimize the risk of incurring large fines.
For all fleets, no matter where they are in their electrification journey, the reality of the situation is that ACT noncompliance will have very real and very costly consequences. Maneuvering complex regulations requires experienced partners to help plan and reduce the financial and operational complexities and risks. Revolv is here to help make the transition more seamless, helping businesses choose the necessary vehicles, infrastructure, and technology to comply with ACF and all other upcoming regulations so businesses can truly embrace the future of fleets.