Electric Cargo Vehicles Boosted by 'Supplementary Budget'... Accelerating Past 10,000 Units Annually

Porter EV and Bongo EV Sales Exceed 5,000 Units in First Half of Year
Additional Budget Passed in National Assembly on 3rd Expected to Reach 11,000 Units Annually

Porter II Electric (Photo by Hyundai Motor Company)

[Asia Economy Reporter Kim Ji-hee] The electric commercial vehicle market, which began in earnest with the entry of Hyundai Kia Motors at the end of last year, is showing growth beyond expectations. With Hyundai and Kia's electric commercial vehicle sales surpassing 5,000 units in the first half of this year, the passage of the Ministry of Environment's supplementary budget bill, which includes an expansion of purchase subsidies, is expected to boost sales in the second half.

According to the industry on the 8th, sales of Hyundai Porter Electric and Kia Bongo EV from January to June this year reached 5,022 units. Porter Electric accounted for 3,452 units, and Bongo Electric for 1,570 units. However, as government subsidies gradually ran out, sales of these two models last month dropped to 332 units, less than half compared to the previous month.

The biggest reason electric commercial vehicles have been able to succeed since their launch is the government's high purchase subsidies. The price of the Porter Electric is in the 40 million KRW range, which is more than 20 million KRW higher than the diesel model starting at around 16 million KRW. However, with a national subsidy of 18 million KRW and a local government subsidy of 9 million KRW (based on Seoul), the starting price drops to 13 million KRW. With government subsidies applied, the electric model can be purchased cheaper than the diesel model.

Due to increased demand, the budget was exhausted early, and as of June, the Porter Electric's backorder (pending orders) has already exceeded 13,000 units. Hyundai Kia Motors' frontline dealerships have been informing customers for months that "it is difficult to predict when the vehicle can be delivered if you sign a contract now," and "if you sign a contract first, you will be contacted sequentially after additional government subsidies are allocated."

However, with the passage of the Ministry of Environment's '2020 3rd supplementary budget bill' through the National Assembly on the 3rd, this backlog is expected to be partially resolved. The supplementary budget includes an investment of 99 billion KRW to expand the supply of electric commercial vehicles to reduce greenhouse gases and fine dust. Through this, an additional 5,500 electric commercial vehicles will be supplied, making it possible to sell a total of 11,000 units this year.

Industry analysis suggests that if only the price is adjusted through subsidies, electric vehicles will be sufficiently competitive in the small truck market by leveraging fuel costs and tax benefits at about half the level of existing internal combustion engine models. Both the Porter II Electric and Bongo 3 EV, released in December last year and February this year respectively, have secured a driving range of 211 km per charge. Especially, since sales of these small trucks, known as the "people's ride," tend to increase when the economy declines, they have struggled during the COVID-19 pandemic. Amid this, there is also hope that even a small number of small electric trucks will support the truck market. If electric commercial vehicles sell up to the support scale of 11,000 units, this will account for about one-tenth of the annual sales of Bongo and Porter.

An industry official said, "With this supplementary budget, electric commercial vehicle sales, which have been hampered by subsidies since early this year, are expected to smoothly reach the total support scale of 11,000 units," adding, "Although sales still rely heavily on subsidies, as experience is important for eco-friendly vehicles, sales will gradually accelerate."

This content was produced with the assistance of AI translation services.