What started as a seeming blip has turned into a full-scale rout. In the second half of 2023 the sales of new electric cars in Ireland, which had been racing ahead like a bolting horse for more than a year, started to soften.
Perhaps unsurprisingly, that softening came in the wake of the Government’s decision to reduce the electric car grant from €5,000 to €3,500 last July. While €1,500 isn’t or shouldn’t be a major decision breaker when you’re talking about cars costing north of €30,000 and largely bought on finance, it certainly seems that people’s ardour for EVs decreases in line with how much of a Government freebie they think they’re getting.
That softening has become ever more precipitous in the intervening months, to the point where, as we enter the autumn of 2024, EV sales are falling precipitously relative to 2023 – down by 26 per cent to the end of July.
The worrying part is that this fall in interest in electric cars is coming at a time when at least two of the major perceived barriers to EV adoption have apparently been lifted. One of those barriers was variety – early EV models were perhaps a bit predictable and even slightly dull, but now there is a full range of available electric cars, from small hatchbacks to luxury saloons and large SUVs, and even a handful of sporting models.
The second barrier is price, and that’s a trickier one to lift. Certainly, the prices of new electric cars have been coming down – we’re seen falls of as much as €10,000 in the price of some new models since 2022 – and that’s due partly to the lower cost of manufacturing batteries (still the biggest cost of any electric vehicle) and the recognition among the big European, American, Japanese and Korean players that they’re going to have to compete on price with rivals from China. Those chopped prices, though, have led to tumbling values for used electric cars, which has placed a fresh, new barrier to their widespread adoption. No one is going to lay out their hard-earned on a new car for which the used value is, at best, unpredictable.
Complicating that area further is news that the competition factor may now be altered, as the European Union has introduced a range of hefty new tariffs on Chinese-made electric cars (even the ones made and badged by European brands) ranging from 17.4 per cent to a whopping 38.1 per cent.
The EU’s stated aim is that this increase in taxes won’t see consumers paying higher prices, but it’s hard to see how that would be possible – Tesla has already raised its prices for the cars that it builds in China and imports into Ireland. Equally, it’s unlikely to insulate European car makers from Chinese competition. Environmental campaign group Transport & Environment has rubbished the tariffs, pointing out that most of the big Chinese companies are already planning car factories either in the EU or in nations which already have low-tariff trade deals with the bloc.
Beyond that, Transport & Environment has reminded us all that China has a virtual stranglehold on electric car battery production, and that Europe simply isn’t doing enough to stimulate battery design and manufacture on these shores. The tariffs have to be finally rubber-stamped, after an interim period, in November. There are hopes of a negotiated deal between the EU and China before that to reduce or eliminate the tariffs, but so far no such deal has materialised.
Does that mean higher prices for EVs are here to stay? Hopefully not – VW, Renault, Dacia and others are all promising lower-cost models with prices heading for €20,000 or even lower, but the EU’s tariff changes – if fully enacted in November – could spell yet more turmoil for the electric car market.
There is a possibility that the drop in EV sales and interest which we’re currently seeing is actually just part of a natural cycle of sales and adoption through which any new technology must pass
Turmoil is the last thing needed. In fact, the best thing for everyone would be a period of quiet stability, but that doesn’t appear to be happening. Governments around the world, and especially in Europe, are pushing car makers to design and make more electric cars, but those same governments are moving and changing the taxation and incentive goalposts, which confuses buyers and makes them less likely to make the electric switch. Chopping and changing the rules on tax breaks, grants, and other incentives is exactly what the experts in Norway’s Institute of Transport Economics warned countries not to do: “What we see in Norway is that when you have incentives in place and a stable political framework, then you get growth in EV sales.”
Perhaps allowing individual EV governments to set, and then change, their own EV incentives and rules was the big mistake here – a bloc-wide series of measures might have been a better idea and might yet still be a better idea if we want to stimulate EV sales afresh. Certainly, across Europe you can easily see spikes in EV sales in those countries – Italy, the Netherlands, and France especially – which have raised or otherwise improved incentives, and major falls – Germany in particular – where those incentives have been removed entirely. Incentives are still needed to sell EVs, it seems.
Or are they? There is a possibility that the drop in EV sales and interest which we’re currently seeing is actually just part of a natural cycle of sales and adoption through which any new technology must pass. Remember mobile phones? They’ve been around, technologically speaking, since the 1970s but it wasn’t until the early 1990s that the Venn diagram of price, technology and desirability finally came together.
As described by Dell Technologies, we’ve now reached a point in sales where the early growth – driven by tech- and novelty-hungry early adopters – has come to an end, and now we have to wait for the ‘early majority’ and ‘late majority’ customers to come around to the idea.
This may take longer than anticipated, and these are substantial cohorts of buyers. Early and late majority buyers, combined, make up 68 per cent of the total market, according to Dell’s research. Dell’s description says early majority customers have “even higher expectations for ease of use than innovators and early adopters” and “consciously adopt an innovation and are not the early arrivals or the latecomers. Therefore, innovation takes longer to get to the target, ie taking longer to welcome new stuff into their day-to-day use.”
Of course, the big issue is that we may not have the luxury of allowing the adoption of electric car tech to take its natural course. Carbon dioxide emissions are still rising, with transport a major contributor to that rise, and those emissions are damaging the planet around us. Switching, en masse, to electric cars isn’t a magic bullet for that crisis, but it’s certainly a big step in the right direction.
Perhaps the best and most significant move that governments can make, when it comes to boosting the sales of EVs, is to ensure that the charging network is up to the task. Ireland is certainly a laggard in this regard – a report by Transport & Environment found that Ireland had fulfilled only 35 per cent of its commitment to the EU’s Alternative Fuel Infrastructure Regulation – the regulations which stipulate the minimum charging infrastructure which should be made available.
Recent personal experience has shown that France, for one, is well ahead of Ireland in the charging stakes, with ranks of ultra-high-powered fast chargers (of 300kW power and above) at such regular intervals along the autoroute network that you soon stop worrying about getting a charge as you go. Ireland’s charging network, by contrast, is small, slow to expand and frequently unreliable. Fixing that would surely be one of the biggest possible stimulants to EV adoption – if drivers of diesel and petrol cars can see that the charging network is overdelivering, then they will be more likely to consider making the electric switch.
Certainly, that’s the advice of the International Energy Agency, which advises governments to: “Continue to support the deployment of publicly available charging infrastructure at least until there are enough EVs on the road for an operator to sustain a charging network. Continued government support, either through regulations requiring the building out of charging stations or through fiscal policies and support, should ensure equitable access to charging for all communities to ensure that no one is left behind in the transition. Incentivising and facilitating the installation of home chargers in existing parking spaces is important.”
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