(Bloomberg) -- Electric trailer startup Range Energy raised $23.5 million in new financing as it seeks to commercialize its equipment and take advantage of government incentives for decarbonizing transportation. 

The California-based company manufactures trailers with batteries and an electric motor that can essentially turn heavy-duty diesel trucks into hybrids and work with electric models, offering a key solution to decarbonizing freight transport. Range is working with large consumer brands’ fleets, which will test five of its trailers for one or two weeks, according to founder and Chief Executive Officer Ali Javidan. (He declined to name the companies.) That will be followed by 50 trailer pilots in 2025. The company plans to start commercial production by the end of next year, he said.  

Trousdale Ventures led the round, announced Wednesday, with investments from UP.Partners, R7 Partners and Yamaha Motors Ventures. The three-year-old firm had raised $8 million in seed funding.

“We have a battery and we have a control system so the trailer itself can drive,” Javidan said. The trailer’s battery pack can be powered up using standard automotive charging, he added. Range says the trailers improve gas mileage by about 40% while reducing emissions by 70%. 

The company hasn’t set prices for its trailers, but Javidan said he expects them to cost between $150,000 to $180,000 depending on the fleet and application. New conventional refrigerated trailers can cost from $65,000 to $90,000 while non-refrigerated versions can go up to $60,000, according to Canadian dealership Maxim Truck & Trailer.

The trucking industry is responsible for 7% of US greenhouse gas pollution, according to the Environmental and Energy Study Institute. A switch to electric trailers will help states meet their emission reduction targets faster, particularly given the challenges of electrifying the heavy-duty trucks that haul them. The California Energy Commission approved a $1.9 billion fund earlier this month aimed in part at speeding the adoption of zero-emission trucks as the state looks to phase out the sale of diesel-powered ones by 2036. 

Such programs are crucial to decarbonizing heavy-duty transportation as are ones helping offset the high upfront purchase costs that have deterred buyers. Customers that buy Range’s trailers can get a rebate of up to $120,000 from California’s Clean Off-Road Equipment Voucher Incentive Project, according to Javidan.

“Electrifying trailers can have a real effect in reducing trucking emissions,” particularly in the short-term, said Nikolas Soulopoulos, an analyst at BloombergNEF. He added that costs and access to charging infrastructure are among the issues that could cause risk-averse buyers to hold off, though.

--With assistance from Thomas Black.

(Updates paragraph 4 with charging information. In a previous version, the company corrected number of pilot tests in paragraph 2 and rebate details in penultimate paragraph.)

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