Most of what you buy has been on a truck at some point.
According to the American Truckers Association, trucks move 72.6% of the nation’s freight.
But now the trucking industry is facing some tough choices.
And you can blame California.
The Golden State has long been known for leading the charge in passing climate and environment laws.
These rules set tough standards on pollution and force people to use more clean and renewable technologies.
And in 2024, truckers working at California ports will only be allowed to buy zero-emission vehicles that run on batteries or hydrogen.
There’s just one big problem: the technology and infrastructure aren’t ready yet.
Ports in California bring in over 40% of the country’s imported goods. So this new rule could affect deliveries not just in California, but all across the nation…
Today I’ll explain why California’s rules are causing a crisis in the trucking industry, and share how you can profit from the new technology they want the trucking industry to adopt.
A Crisis in the Making
According to the Department of Energy, a battery-powered semi-truck costs more than $450,000.
That’s nearly three times more expensive than a traditional 18-wheeler running on diesel.
So when California’s new law kicks in, trucking companies will have to start shelling out a lot more money to upgrade their fleets… when their old trucks are no longer functional.
That is, if they can even find zero-emission trucks to buy.
Right now, there’s not enough capacity to produce electric trucks to replace the diesel-powered trucks that will be retired.
And to save themselves from this massive cost in 2024, some truckers have stocked up on diesel trucks to delay having to buy zero-emission trucks next year.
But eventually, they’ll have to adopt the newer technology.
And this leads us to another problem – charging.
There aren’t enough charging stations to support a large number of electric trucks.
Even though today’s battery-powered trucks can travel about 300 miles, some truckers say they’re barely getting more than 150 miles before having to recharge. That’s a process that takes several hours.
This means trucking travel times will be delayed by hours if not days – a crisis in the making, which will affect hundreds of industries and their supply chains.
At the moment, truckers are finding that battery-powered trucks are only useful for shorter trips less than 100 miles.
That’s why some are betting on a different technology: hydrogen.
The Case for Hydrogen Trucks
Hydrogen-powered trucks have a longer range of up to 500 miles. And they can be refueled in about 30 minutes.
Plus, they are lighter than battery-powered trucks. That allows them to haul more freight. And they cost about $265,000 – still more expensive than diesel, but much cheaper than battery-powered trucks.
But hydrogen trucks are also limited by a lack of production capacity and refueling stations.
To resolve this issue, the federal government is investing $7 billion in “Clean Hydrogen Hubs” around the country to promote the technology. And it’s offering generous tax credits to companies that produce hydrogen.
So hydrogen trucks may win out in the end.
And although California may be taking the lead in pushing truckers to adopt cleaner technology, other states are following as well.
Washington, New York, and New Jersey have also passed “Advanced Clean Truck” laws that force manufacturers to sell more zero-emission trucks.
Those states are home to ports that bring in 22% of the country’s imports. So combined with California, nearly two-thirds of all U.S. imports go through states promoting cleaner trucks.
And with 2024 less than one month away… and the proper infrastructure and technology still unavailable… I am predicting a major crisis on the horizon for the trucking industry and supply chains.
But we can prepare for this now and potentially profit from this major trend…
Two Ways to Prepare for This Crisis
First, if you need something specific shipped to your door, order it now. Especially if it’s something urgent. With supply chain backlogs, it’ll be hard to get items in a timely manner.
Secondly, prepare your portfolio in advance. And one way we’ve identified to profit from this major trend is to invest in Sempra (SRE).
Sempra is an electric and gas utility company that serves parts of California and Texas. It will benefit as demand for electricity and charging infrastructure increases.
It’s also involved in more than 20 hydrogen projects.
Two of these are hydrogen hubs that each recently got $1 billion in funding from the Department of Energy. So regardless of whether trucking companies choose battery or hydrogen-powered trucks in the future, Sempra will be ready to profit.
Sempra currently yields 3.4% and is trading at 15x earnings. That’s an 18% discount from its fair value.
That means it’s a great time to build a position while it’s cheap.
This way, you’ll be churning profits in the years to come as these regulations go into effect in 2024… and the demand for hydrogen trucks increases.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily