Right now, assuming the electric car you’re buying costs less than €40,000, you qualify for the full hit of grants and rebates, which include a maximum €5,000 rebate on Vehicle Registration Tax, and a €3,500 EV purchase grant from the Sustainable Energy Authority of Ireland (SEAI).
Both incentives are tapered according to price. Above €40,000 the VRT rebate is reduced, up to a maximum price of €50,000, at which point there’s no VRT rebate at all, although it’s worth remembering that right now, all EVs fall into the lowest possible category for VRT, which is just 7 per cent of the pretax price. So there’s still a benefit to going EV in that respect, even if your car’s price exceeds €50,000.
The SEAI grants are also technically tapered, but in the other direction, dropping from €3,500 to €1,500 in stages in line with the price of the vehicle. However, this is for the moment a moot point, as once you’re above a list price of €18,000 (and that’s before you factor in the VRT rebate) the SEAI grant is worth the full €3,500, and there are currently no EVs with a new list price of less than that.
So that’s a useful, notional, maximum possible €8,500 taken off the price of your new EV – with the caveat that few cars will benefit from the full €5,000 rebate as they won’t have that much VRT applied to them in the first place.
And what’s going to happen when the grants are gone?
Take those grants away and you will see a rise in new EV prices. But already in the past year we’ve seen more than that figure taken off the price of several new EVs as it is. For instance, the Polestar 2 electric fastback saloon – one of the best new EVs you can buy, as it happens – is some €10,000 cheaper than it was when it was launched in 2022, outrunning the combined grants by €1,500.
It’s true that when governments tinker with the incentives for electric cars, sales of electric cars fall. It’s precisely what Norway – still the poster-child for electric car buying in Europe, although it’s worth remembering that Norway has paid for all of its EV incentives and infrastructure with money made from selling oil to other countries – warned us about several years ago.
If you want to increase EV sales, set out your incentives stall and don’t muck about with it in the long term. As soon as the Irish Government reduced the SEAI grant – which was trimmed from €5,000 to €3,500 last July – EV sales started to slip in Ireland, albeit that was also part of a broader global trend. The current VRT rebate is locked in until the end of 2025, after which it’s anyone’s guess what the Government will do.
So EVs will become more expensive then?
So, yes, take away the grants and the cars will become more expensive to buy, but we’re already into a period of new EV prices coming down anyway, as battery tech and production becomes more affordable, and with ever-tougher competition on prices thanks to the influx of cheap Chinese electric cars (new EU tariffs notwithstanding).
What about the running costs?
When it comes to running costs, right now the picture is far more black and white – EVs are way cheaper to run than a petrol or diesel car. According to the SEAI, even at current electricity prices, you’re going to pay about €600-700 annually to keep an electric car, such as a Renault Megane, an Opel Astra, or a Hyundai Ioniq 5, topped up (that’s assuming you charge pretty much exclusively from home, and get a decent discount for night-rate electricity).
By comparison, a diesel-engined VW Golf, one of the most economical combustion-engined cars you can buy, will cost you more like €1,300 a year to keep fuelled up, assuming average Irish annual mileage and diesel at €1.85 per litre.
If you’re reliant on public charging, that does change rather dramatically. Owing to the spikes in the prices of electricity since Russia’s invasion of Ukraine, public charging has become very expensive indeed, with the cost per kWh often hitting almost 80c, a figure that makes a long journey in an EV actually more expensive than using diesel.
That cost can be reduced by signing up to subscriptions with the likes of ESB and Ionity, and ESB has recently announced a round of long-awaited reductions in the cost of public charging, but it’s still very expensive. Thankfully, according to research, EV owners will do 90 per cent of their charging at home, so the cost savings still apply.
What does the future hold?
For now, EV drivers will continue to enjoy the lowest rate of annual motor tax (€120) and you get 50 per cent off motorway tolls (although that does require a somewhat laborious registration process).
All of which is good, but it does come with a big, flashing warning.
Right now, EVs get lots of discounts and rebates, but that can’t continue indefinitely into the future. Governments, and the Irish Government in particular, just make too much money from motoring and motorists, whether that’s VRT on new cars, fuel duty on petrol, or VAT on everything. So the cost of running an electric car will, unquestionably, rise in the coming years.
Over how long a period? And by how much? That’s impossible to say, although generally speaking the EU mandates that such societal changes are supposed to be cost-neutral for the consumer in the long run, so it could be that the Government will be pegged to bringing taxes and charges on EV buying and driving up only to an average level relative to the cost of running a petrol or diesel car.
Equally, there are imponderables such as how do you tax the electricity going into a car instead of the electricity going into a toaster? Will VRT be replaced by a tax on vehicle weight? If someone uses home solar panels to charge their car, do they have to pay fuel duty on that? And if pay-per-kilometre driving comes in to replace all of our current motoring taxes, how will that be managed and what will the privacy implications be?
While there is certainly a debate over the costs of electric motoring, we could end up looking back and thinking that 2024 was the salad days of battery driving ...
