Demand for electric cargo trucks slump as local gov’t subsidies dry up

Porter2 Electric [Courtesy of Hyundai Motor]

The demand for 1-ton electric cargo trucks, which saw a remarkable increase in sales compared to the previous year, has taken a steep nosedive since August as government subsidies for electric cargo truck purchases are quickly running out.

According to industry sources on Tuesday, commercial EV trucks such as Hyundai Motor’s Porter2 Electric and Kia’s Bongo3 EV, both in the 1-ton category, were selling an average of 4,408 units per month from January to July this year. But sales dipped to 1,981 units in August, and in September, only 2,046 units were sold, a decrease of more than 50 percent in sales for these models over the past two months.

Data from the Ministry of Environment indicates that as of October 17, the number of registered electric cargo trucks with government subsidies was 35,410 units in 2023 to date, more than double the annual volume from the previous year. The execution rate of electric cargo truck purchase subsidies by 161 local governments nationwide also hit 77 percent.

In several regions, including Gyeonggi’s Hwaseong City and Namyangju City, Chungnam’s Cheonan City, and Gyeongnam’s Gimhae City, subsidies for electric cargo truck purchases have been fully executed. Additionally, there are 81 local governments where the remaining subsidies are less than 10 percent, meaning that in the coming month, roughly half of the local governments in the country are expected to deplete their electric cargo truck subsidy budgets.

Small electric cargo trucks are particularly attractive to self-employed individuals and small business owners who rely on them for their livelihoods, resulting in a higher allocation of subsidies compared to electric passenger cars. For example, the Hyundai Porter2 Electric starts at a price of around 40.6 million won (about $30,000), and the combined government subsidies amount to about 20 million won. Local government subsidies for the Porter2 Electric vary, with Seoul providing 4 million won, Hwaseong 8 million won, and Cheonan 9 million won, among others.

The current incentive system for providing EV purchase subsidies in Korea operates as a matching mechanism between the central and local governments. This means that if local government subsidies are fully depleted in a specific area, central government subsidies will not be provided.