With high oil prices amplified by the effect of new models, Seoul City has already exhausted its first-half budget for electric freight-truck subsidies. The city judges that the surge in applications is not unrelated to the recent high oil prices and is reviewing a supplementary budget to secure additional funds.

According to the city on the 8th, applications for electric freight-truck subsidies reached 1,208 as of the 6th, already surpassing the planned first-half allocation of 1,200.

The city initially prepared a budget for 1,200 freight trucks in the first half and 579 in the second half, totaling 1,779. As applications flood in, it plans to pull forward the second-half budget to the first half for now.

A city official said, “We have issued a notice to deploy early in the first half the second-half subsidy allocation (579 vehicles) assigned to freight trucks,” and added, “At the current pace, applications for electric freight trucks alone are likely to exceed this year's annual distribution target by more than 1,500, so we are considering drawing up a supplementary budget.”

EV subsidies are paid with national and city funds at roughly a 7:3 ratio. The central government has decided that if a local government's prepared support budget is exhausted, it will provide national funds first and settle accounts afterward. If a supplementary budget proves difficult, the city plans, with approval from the Climate and Energy Office, to use subsidy funds still available for other vehicle types such as passenger cars and taxis.

This year's Seoul EV subsidy budget is about 140 billion won, up from 123 billion won last year. By vehicle type, it is 60.2 billion won for passenger cars, 18.4 billion won for vans and minibuses, 23.3 billion won for small freight trucks, 13.3 billion won for taxis, and 7.5 billion won for two-wheelers. A budget of 17.5 billion won has been allocated as a ‘transition support fund’ for those who scrap or sell internal-combustion vehicles and purchase EVs.

The spike in electric freight-truck applications is due to strong economics. Based on the Porter Electric (43 million won) versus the Porter Diesel (20 million won), even after receiving a subsidy of 15.98 million won, the EV's purchase price is 7.02 million won higher. By cutting annual fuel costs by 3.38 million won, the EV is analyzed to overtake diesel in economic terms after 2 years and 1 month.

For passenger cars and taxis as well, the pace of subsidy uptake is faster than in previous years. Taxis have reached 63.1% (530 vehicles) of the first-half target (840), while passenger cars have reached 49.2% (5,168 vehicles) of the first-half target (10,500). Looking at applications across all vehicle types, the numbers were 2,016 in January, 1,414 in February, and 2,898 in March, which is two to three times the same period last year.

The city believes the rise in applications is not unrelated to high oil prices. It has set a goal of distributing 22,526 EVs this year, and projects that, if a supplementary budget is possible, the total will easily surpass at least 25,000.

A city official said, “Judging by demand holding steady in April, it appears there is an impact from rising oil prices due to the war in the Middle East.” The city also sees the launch of improved new models in terms of range, convenience, and price as a factor behind the increase in subsidy applications.

Seoul's vehicle registration data for February show that the number of EVs rose by 2,708, from 102,103 in January to 104,811 in February. Hybrids increased by 4,154, from 324,620 to 328,774. Although EVs remain fewer in absolute registrations, their month-over-month growth rate was 2.65%, surpassing hybrids at 1.28%.