With electric vehicles, all of a sudden it is BIK to the future as Minister for Finance Paschal Donohue announced, post-budget, that company e-cars will be exempt from benefit-in-kind taxation for the next “three to five years”.
And with electric cars often looking no different to any other car, except for what is under the bonnet, there is a growing number of well-heeled punters ordering EV versions of their favourite vehicles. This year, for example, Jaguar unveiled the E-type Zero, which is based on the 1968 Series 1.5 Jaguar E-type roadster but which has an electric powertrain that gives 0-62mph in 5.5 seconds – that's better than the original model.
Back in the day, a company car was a standard perk for anyone who was doing well in their career and climbing up the corporate ladder. But as part of wide-ranging tax reforms in the 1990s, there was a major crackdown on ‘Mercs and Perks’ and, unless you were doing a lot of work-related road miles, it no longer became desirable to have a set of business wheels.
To date, until the special exemption for electric vehicles, BIK on company cars for taxation purposes is calculated at 30 per cent of the original market value of a company car – and that’s the list price, not the discount price your fleet manager negotiated for a bulk buy.
Having a set of company wheels could cost you well over €5,000 a year, if you are in the higher-rate tax band and you’re driving something halfway decent, with a bit of walnut and alloy wheels. It was no wonder the company car phenomenon declined enormously, with most business drivers reckoning it was better value to own their own cars and to charge their companies for any business mileage accrued.
But now that is set to change. All of a sudden, thanks to the special exemption for EVs, a company car is a nice little perk – especially as the running costs are significantly lower. Not only are electric cars in the lowest – only €120 a year – motor tax band, there are significant savings to be made on fuel. In comparison to the owner of a diesel-powered car, the ESB reckons an EV driver could save up to 80 per cent on their annual fuel costs, if they are charging their vehicles at home, at night, using a night-saver meter.
So as we enter the annual performance-and-pay-review season, HR directors can expect their canniest employees will be asking what the electric company car options are and CFOs should start doing a bit of number crunching.
At present, a commercially-bought EV with a list price of more than €18,000 is eligible for an SEAI grant of €3,800. And ESBCars will, up to the end of this year at least, install home-charging points for free. If you want to install charging points at your workplace, that will cost you about €900, says ESB spokesperson Susan O’Connor.
Certainly, if its “electric cars for everyone” at your workplace this Christmas, your employees will want you to install charging points in the company car park. In another of his post-budget announcements, Paschal Donohue says recharging on employee premises will also be tax-free.
Before Donohue's announcement, some in the car industry, such as Brian Purcell of Nissan Ireland, were predicting the electric car market in Ireland would be "transformed" if a BIK exemption was put in place.
That said, at most car dealerships there hasn’t been a noticeable stampede of directors, executives and managers coming in the door looking for their own electric vehicle. “It is a move in the right direction,” says Barry Aldworth of AA Ireland. “But something more is needed. Ireland has a very low uptake of electric vehicles because to date the incentives have not gone far enough. Maybe they should make better grants available or better advertise the grants that are available. But if they really want to get diesel cars off the road, what they should be doing is operating a diesel-to-electric scrappage scheme.”
Hard shoulder
Indeed, when it comes to adopting electric cars, to date, we have been stuck on the hard shoulder. Back in 2008, the government set a target of having 10 per cent of the country’s vehicles powered by electricity by 2020 – with a total of 2.5 million vehicles on our roads that would mean we should have 250,000 EVs in three years’ time. In 2014, “to better reflect the microeconomic climate”, that target was slashed to 50,000 EVs by 2020 – but we are nowhere near that. There are only 3,700 licensed electric vehicles registered in the Republic of Ireland, most of them battery electric but some of them being plug-in hybrids, which is 0.148 per cent of the national fleet. Compare this with Norway, the country with the highest proportion of vehicles, where 5 per cent of all vehicles are plug-ins and where a third of all new cars sold are EVs.
Certainly, EV sales are accelerating, ESBCars expects there to be 1,500 new registrations this year – that’s more than 40 per cent of the entire Irish electric vehicle fleet. It’s a similar story worldwide: global sales of street-legal EVs passed two million in 2016, with 38 per cent of those vehicles sold that year.
It’s early days yet and there is a certain wariness among most of us about switching from something as tried and tested as the internal combustion engine, but the move to electric cars is inevitable. France and Britain have both announced they hope to ban the sale of petrol and diesel-powered cars by 2040, but more aggressive targets are being set elsewhere – India has announced plans to support having all vehicles electrified by 2030.
“As with any new technology, it takes time for consumer acceptance and that is why Government intervention is necessary to kickstart the market,” says O’Connor. “Registrations are increasing year on year and we expect that to continue as prices come down and more vehicles come on the market.”
Indeed, there are now 58 EV models eligible for an SEAI grant – there were only two listed when the grant scheme was launched five years ago. And as we continue into 2018, the list is set to grow even bigger.
One model that many would like to roll into their personal executive parking place is the Jaguar I-Pace, which is due to go on sale in the second half of next year. This is a five-seater, 400hp SUV with 4WD capability and which handles like a sports car because its lithium batteries sit between the front and rear axles and give it an astonishingly low centre of gravity. If you ever thought environmentally friendly EVs were for vegans only, be assured the Jaguar I-Pace will appeal to meat eaters.
Other EV models on the SEAI grant list have a more familiar look about them, not least the Volkswagen eGolf, which is an EV iteration of the hot hatch first launched in the mid-1970s.
“We are on the cusp of a significant change in the way we use cars and the type of cars that we choose,” says Volkswagen Group Ireland head of communications Paddy Comyn. “Ireland is well-placed, because of its size and its technical prowess, to embrace this change and this is why it will serve as a very good test-bed for the transfer over to alternative methods of propelling both our vehicles and ourselves. Volkswagen is embracing this change through its range of electrically-powered vehicles, which range from the two plug-in hybrids to the new longer-range eGolf. These will all give our customers an introduction into this new technology before the full I.D range arrives in 2020, marking the culmination of a multi-billion euro investment by Volkswagen into this technology.”
The latest version of the eGolf he is referring to is a second-generation electric vehicle, so it comes with a more powerful 136hp engine and an extended range of about 200km on average in real-world driving conditions over the course of a year.
But if you want a real vintage looking eVW, there is a company in California, Zelectric, which specialises in putting electric motors into restored Minivans, Beetles and Porsche 911s.
Unfortunately, Doc, apart from one model with a flux capacitor, there is no sign yet of an electrically powered DeLorean motor car.