China looks to electric truck market

For instance, China renewed its car trade-in subsidy for 2025 after it expired by the end of 2024; a hugely popular initiative that has spurred adoption with over four million applicants registered in its first month. The trade-in subsidy gives consumers a subsidy of approximately $2,730 when they scrap an older vehicle or electric vehicle and purchase a new one. The government also mandates that 20% of all vehicles on Chinese roads in 2025 must be ‘clean’, incentivising manufacturers to ensure at least a proportion of their manufacturing output is electric.

Now it has turned its attention to electric trucks, which presents a natural opportunity for China to capitalise on given its existing infrastructure and manufacturing capabilities alongside carbon emission targets set worldwide.

Although the IEA has reported that global electric truck sales grew by almost 80% in 2024 – partly driven by sales in China more than doubling between 2023 and 2024 – historically, electric trucks have been challenging to electrify.

This is due to a number of reasons, least of all because operators are working on razor-thin margins that don’t leave much room for the cost of electric vehicles, which continue to be more expensive compared with diesel trucks due to the cost associated with batteries. Another reason includes constraints related to battery size, range, and payload as well as charging requirements.

An increase in adoption of medium-duty electric trucks in the US led the IEA to speculate that operators are prioritising electrification of lower-cost vehicles that can cover shorter routes before transitioning to long-haul routes at a later date.

However, figures provided by the IEA are encouraging. Falling battery prices have been a major driver, allowing manufacturers to extend vehicle range without inviting costs or reducing costs to narrow the price gap between electric and traditional diesel trucks. Tighter emission standards for trucks issued in July 2023 has also been another driver.

Upfront costs of owning an electric truck are higher than that compared with diesel; but long-term running costs are lower. A heavy-duty diesel truck travelling an average of 500km per day has total-cost ownership (TCO) of 10%, while for an 800kWh battery electric truck, the cost is 20% to 25%. However, the cost of diesel fuel, drivers, insurance and maintenance make up a major part of the TCO for diesel vehicles.

Battery-swapping technology has grown particularly popular in China as a potential solution to resolving expense, whereby a depleted electric battery is swapped out for a fully charged replacement. Operators can also be spared the upfront investment by purchasing vehicles without batteries installed and leasing it from a third party.