Urgent action needed on electric vehicle subsidies

Slipping electric vehicles sales in February should set alarm bells ringing for climate targets, Geotab warns.

The acceleration in demand for electric cars in Ireland may hit a speed bump due to the reduction in subsidies for these vehicles, according to fleet management software firm Geotab.

Evidence from around Europe has shown that the withdrawal of financial supports in countries like Denmark contributed to a decline in electric vehicle sales.

“The Government needs to urgently intervene if there is any chance for its target of having 945,000 electric vehicles on Irish roads by 2030 to be achieved”

New data from the Society of the Motor Industry in Ireland (SIMI) indicates that the new car market is up 18.3% so far this year. Of these 33% were petrol, 24% were diesel, 23% were hybrid and 9% were plug-in hybrid.

Alarmingly, however, sales of electric vehicles were up just 1.4%, with the electric vehicle share of new car sales at 12.5% compared to 14.5% in the first two months of last year.

Hit reverse on subsidies

Geotab vice-president for the UK and Ireland David Savage said that slowing vehicle sales should be a cause for concern in terms of the Government’s stated targets for a transition from fossil to electric.

“February’s year-on-year decline in electric vehicle sales is an alarming moment and highlights the damage that reducing EV subsidies has done to the market given that overall vehicle sales are up 25%,” Savage warned.

“The Government needs to urgently intervene if there is any chance for its target of having 945,000 electric vehicles on Irish roads by 2030 to be achieved.”

Savage said that SIMI’s figures should not come as a surprise given that the Government was provided with a report by the Parliamentary Budget Office published in 2022 noting the fall in EV sales in Denmark when financial supports were withdrawn.

“Now is the time to reverse course, not only returning subsidies to their previous level, but going above and beyond that by putting supports in place to boost EVs’ popularity. Specific initiatives could include a scrappage scheme for older, high-polluting vehicles; enabling free tolls for specific EV owners and tailored subsidies for lower-income households as zero-emission vehicles remain out of reach for many people.

“The decision to reduce subsidies last year could prove to be a crucial mistake in terms of timing due to the lack of affordable electric models coming onto the market, with high prices resulting in EVs being out of reach for many households.”

He pointed to recent research by Transport & Environment that highlights that European car manufacturers are prioritising the sale of large SUV and premium model electric vehicles, with the average price of a battery electric car increasing by 39% since 2015.

“At a time when we need to see sales of approximately 12,000 EVs a month in Ireland to have a snowball’s chance in hell of hitting the Government’s 2030 target, we have to face the reality that only 42,000 new BEVs priced below €25,000 will be produced for all of Europe in 2024. 

“Minister Ryan has described the electrification of the national fleet as the biggest policy lever available to the Government within the National Climate Plan. Yet the latest EV sales are so far off the pace that it begs the question of how the Government’s ambitions will be achieved unless the decision to reduce EV subsidies is reversed. 

“It has been apparent for some time now that it is a mathematical impossibility for the Government to reach its 2030 target, unless the entire passenger car market switches to electric vehicle purchases overnight. The figures released today should be setting off alarm bells within Government and hopefully we will see them changing course by plotting out a new strategy for EVs in Ireland,” Savage urged.

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