While many people grumble about the relatively high cost of electric vehicles (EVs) the fact remains that things could be worse. A lot worse, in fact. If not for quite generous grants and tax breaks they could be up to €10,000 more expensive than they are at present.
“Depending on the nature of the purchase, a private or business customer, there can be a number of incentives available to support the purchase of an electric vehicle,” explains Rodolfo Calixto, brand director with Volkswagen Ireland.
“For both private and business customers, there is Vehicle Registration Tax (VRT) relief available, depending on the open market selling price (OMSP) of the vehicle,” he adds. “For battery electric vehicles (BEVs) with an OMSP of up to €40,000, a VRT relief of up to €5,000 is available. Vehicles with an OMSP of greater than €40,000 but less than €50,000 receive a reduced level of relief. Any electric vehicle above €50,000 OMSP does not qualify for VRT relief.”
Polestar head of Irish market Kieran Campbell explains how the relief works. “VRT on passenger BEV cars is 7 per cent. “This is the lowest band in the VRT range. The top range of VRT is 41 per cent. VRT is based on C02 emissions at present. A BEV has no C02 emissions, but the bands start from 0 — 50 grammes of C02 per kilometre. VRT is an extra tax on all vehicles and should be scrapped entirely on BEV vehicles to support the government’s ambitious plans for 1 million BEVs on the road by 2030.”
The grants are available on a sliding scale starting at €2,000 for vehicles costing €14,000 with the maximum €3,800 payable for those valued at more than €18,000
In addition to the VRT subsidy, there are direct grants from the Sustainable Energy Authority of Ireland (SEAI). “A maximum grant of €5,000 is available for qualifying new M1 (passenger car) BEVs when purchased privately,” says Campbell. “Approved EVs with a full price of more than €60,000 and less than €14,000 will not receive a grant.”
These grants rise incrementally from €2,000 for BEVs valued at €14,000 up to the full €5,000 for those costing €20,000 or more.
Campbell explains that there are also grants available for commercial vehicles. “A maximum grant of €3,800 is available for qualifying N1 category BEVs when purchased commercially. Approved BEVs with a list price of over €60,000 or less than €14,000 will not receive a grant. Large Panel Vans with a price, excluding all grants, rebates incentives and inclusive of all optional extras, delivery charges, metallic paints, and so on of €90,000 or less will be eligible for this grant.”
Again, the grants are available on a sliding scale starting at €2,000 for vehicles costing €14,000 with the maximum €3,800 payable for those valued at more than €18,000.
Business can also avail of other tax breaks. “For cars coming under the category of electric and alternative fuel vehicles, Accelerated Capital Allowance is available which allows a business to write down the cost of their qualifying vehicle by the lower of either the actual cost of the vehicle or €24,000, as opposed to depreciating it 12.5 per cent per annum over eight years,” Calixto points out.
And then there are the benefit in kind (BIK) tax benefits for employees. In essence, employees pay no BIK on a company BEV as long as its OMSP is less than €50,000. Normal rates of BIK kick in for the value in excess of that. This is about to change, however.
That €50,000 threshold is going to reduce progressively to zero by 2026 with a new rate of 22.5 per cent being applied instead of the 30 per cent used for internal combustion engine vehicles. And the rate for commercial vehicles is also going up from 5 per cent to 8 per cent in 2023.
“With the proposed removal of these incentives, BiK will increase so business will slow the pace of BEV adoption,” Campbell notes. “This reduction needs to be reviewed and stopped if we want 1 million BEVs on the road by 2030.”
Finally, do these various grants and supports bridge the cost gap between EVs and their internal combustions equivalents? The answer can be yes, according to Calixto.
“At present, when considering the Volkswagen range, an electric car can have a higher up front cost, yet a lower running cost when compared to an equivalent internal combustion engine vehicle,” he says. “On our latest running costs internal analysis for a private customer, we found on an all-electric ID.3 is approximately 10 per cent more expensive than a Golf petrol in terms of monthly costs before fuel consumption is considered.
“However, after fuel consumption is considered, the ID.3 is approximately 10 per cent more affordable per month so about a €59 per month saving when fuel is calculated based on 18,000km travelled per annum.”