Removing tax relief could add €4,000 to cost of an electric car

Vehicle-registration-tax relief of up to €5,000 on electric cars is to expire by the end of the year.  Picture: Larry Cummins

Incentives to buy electric vehicles (EV) should be expanded, rather than removed, in the upcoming budget, if Ireland is to meet emissions targets in the climate crisis, industry figures have warned.

The Irish Electric Vehicle Owners' Association (IEVOA) and consumer website, IrishEVs.com, jointly called for existing measures to be retained, as it emerged that the Department of Finance's Tax Strategy Group had proposed that incentives should only apply to cars that cost less than €40,000.

Vehicle-registration-tax (VRT) relief of up to €5,000 on EVs is set to run out by the end of the year. The Tax Strategy Group has recommended extending it, but reducing the threshold to €30,000. 

Despite government plans for mass adoption and evidence that consumer interest has increased significantly in recent years, EVs remain prohibitively expensive. 

IEVOA and IrishEVs.com said the removal of incentives could add  €4,000 to the price of an EV in the upcoming budget.

Even with €10k shaved off the price, because of grants from the Sustainable Energy Authority of Ireland (SEAI), the average new EV to the consumer is €47,300, the two consumer bodies said.

Editor of IrishEVs.com, Tom Spencer, said: "While there has been a 472% increase in EV sales since 2018, the incentives currently in place are not nearly enough to meet the demand for people who have lower incomes.

"Alongside sky-high rents and reduced incomes due to the pandemic, we urgently need robust incentives to make EVs more affordable to help more people to make the transition, so that they can cut their carbon footprint."

Without incentives, lower-income families will remain trapped with higher-emission, fossil-fuel-powered cars, Mr Spencer said.

"If the Government does not support the essential second-hand EV market, and lower-income families, they will worsen energy poverty for decades to come, and their current top-down approach will take far too long to deliver any meaningful trickle-down effect on the second-hand market."

Chairperson of the IEVOA, Simon Acton, said Ireland was unlike many other countries, in that it still charges €120 annually for road tax on battery electric cars.

This is despite the fact that road tax is designed to penalise carbon-dioxide emissions, which EVs do not produce, he said.

The UK car-importing boom of recent years being stunted by Brexit is also exacerbating the chance for families to buy an EV, Mr Acton said.

He called on the Government for "a set of meaningful incentives for used EVs", and to waiver Vat and import duty on all fully electric, used EV imports. 

"Without these, we will fail to deliver both on our targets and a just transition," Mr Acton said. "This means ensuring the availability of a strong supply of used electric vehicles, as most people never have the luxury of buying a new car. Used UK imports are essential, but the impacts of Brexit and the prevailing Vat rules have blunted our efforts," Mr Acton said.

Trinity associate professor in the department of civil, structural, and environmental engineering, Dr Brian Caulfield, told the Oireachtas climate committee in July that government subvention in the EV market works, and global evidence shows that when taken away, demand falls.