What began as an apparent anomaly has now developed into a significant descent. In the latter part of 2023, Ireland’s fresh electric vehicle sales, having surged ahead consistently for over a full year, began showing signs of relaxation.
The decision of the Government to downscale the electric vehicle grant from €5,000 to €3,500 in July is a plausible factor for this slowdown. Although a €1,500 difference may not be a significant point of consideration for purchases exceeding €30,000 financed majorly, it undeniably appears that the public’s enthusiasm for EVs diminishes around the extent of the considered governmental incentive.
This slackening has intensified over the course of the subsequent months to the degree that, by the onset of autumn 2024, EV sales have plummeted significantly compared to 2023, experiencing a 26 percent decrease until the conclusion of July.
The troubling aspect is this decline in the attraction towards electric cars arises during a period when a minimum of two presumed significant obstacles for EV acceptance seem to have been eliminated. The first of these impediments was the lack of diversity – early EV models could have been viewed as monotonous, if not somewhat bland, but presently an extensive assortment of electric cars are available from compact hatchbacks to opulent saloons and extensive SUVs, along with a select few sport variants.
The second constraint is the cost, which is undoubtedly a more complex issue to address. Certainly, the rates of new electric vehicles have been reduced – significant price drops of up to €10,000 for some brand-new variants have been observed since 2022. This price reduction can be attributed to the decreased cost associated with battery production (continuing to be the heftiest expense for any EV) and the realization amongst renowned European, American, Japanese, and Korean manufacturers of the need to compete price-wise with Chinese competitors. Although, these price reductions have resulted in falling used car values, establishing a new obstacle for their general acceptance. No individual is likely to invest their hard-earned income on a new car whose used value is, at most, volatile.
With the recent introduction of significant tariffs by the European Union on Chinese-made electric vehicles (including those produced and labelled by European brands), we may face fresh complications in this sphere. The tariffs, which vary from 17.4% up to a striking 38.1%, are expected to alter the competitive landscape. The EU suggests that this tax increase will not translate into higher customer prices, however, considering Tesla has already elevated its prices for vehicles manufactured in China and shipped to Ireland, this assertion seems questionable.
Some critics, including the environmental advocacy group Transport & Environment, have contested these tariffs. They highlighted that major Chinese firms are already eyeing up constructing car manufacturing plants in the EU or countries with existing low-tariff trade arrangements with the bloc. Alongside, they brought attention to China’s near monopoly over the production of electric car batteries, suggesting that Europe is not making adequate strides to boost battery development and manufacturing locally.
These proposed tariffs await final approval in November following an interim period. There’s a glimmer of hope for a possible trade pact between the EU and China that might lower or remove these tariffs, however, there’s no sign of such an agreement yet.
Does this indicate that the rise in electric vehicle (EV) prices is here to stay? Optimistically, not. Brands like VW, Renault, and Dacia are all pledging to release more affordable models with prices anticipating around the €20,000 mark or even less. Nonetheless, if these tariff alterations go into effect in November, it could trigger yet further instability in the electric vehicle market. The present decrease in interest and sales of EVs may be a temporary part of a sales and adoption cyclical pattern that all novel technologies must navigate.
The current instability is far from desirable. Everybody would benefit from a spell of calm steadiness, but it seems that’s not on the cards. Car manufacturers across the globe, particularly in Europe, are being urged by governments to produce more electric vehicles, but their changing policies on taxation and incentives are hindering the process by creating confusion amongst consumers, thus making them reluctant to convert to electric. As alerted by researchers at Norway’s Institute of Transport Economics, it is not advisable for countries to continually alter their policies on tax benefits, grants, etc., as it destabilises the growth in sales of electric vehicles seen so far.
Permitting independent electric vehicle governments to establish and alter their own rules and incentives may have been a monumental error; perhaps implementing regulations on a bloc-basis could have been a more effective course of action and may still be worth considering to revitalise sales of electric vehicles. Clearly, you can witness substantial leaps in electric vehicle sales in countries – such as Italy, the Netherlands, and France – where incentives have been upgraded or augmented, and substantial decreases – particularly in Germany – where such incentives have been completely abolished. It’s evident that we still require incentives to encourage electric vehicle sales.
But is this true? There’s an argument that the current decline in interest and sales of electric vehicles may just be a normal phase in the product lifecycle that every novel technology endures. Take mobile phones as an example- despite their technological introduction in the 1970s, it wasn’t until the early 1990s when the cost, technology, and desire for the product finally merged.
According to Dell Technologies, we’ve now arrived at a sales point where the initial growth – fueled by early adopters seeking technological novelty – has concluded, and we must now patiently wait for the ‘early majority’ and ‘late majority’ consumers to get onboard with the idea.
The switch to electric vehicles (EVs) might be a more lengthened process than expected, given the considerable consumer segments involved. Both early majority and late majority purchasers collectively account for 68% of the whole market, as per Dell’s findings. Dell explains these early majority buyers as having demanding ease-of-use standards beyond even those of the initiators or early users, and not among the fastest or the slowest to adopt new innovations. The key takeaway is that they may take their time to embrace new technologies in their everyday routines.
Yet, we might not have the leisure to let the natural course of EV adoption take place considering the escalating concerns of carbon dioxide emissions which are further damaging our environment. A major share of these emissions arise from the transport sector. Therefore, a mass shift to EVs, though not an immediate solution, can drastically help in reducing the crisis.
One of the most pivotal actions government bodies can undertake to promote EV sales is ensuring the efficiency and reliability of the charging infrastructure. Unfortunately, Ireland lags in this aspect as it has achieved only 35% of its obligation to the Alternative Fuel Infrastructure Regulation of the EU, a directive stating the necessary minimum charging infrastructure.
Interestingly, other countries like France outshine Ireland in this regard, boasting an impressive array of high-powered fast chargers throughout its highway network, eliminating any apprehensions about running out of charge. In comparison, Ireland’s charging setup stands meagre, experiences slow growth, and often unreliable. A substantial improvement in the charging infrastructure, if established, could catalyse EV adoption. If motorists of diesel and petrol cars witness an abundant and reliable charging network, they might be more motivated to transition to electric vehicles.
The International Energy Agency (IEA) strongly recommends that governments maintain their support for the establishment of public charging infrastructure until there are sufficient electric vehicles (EVs) on the roads to uphold a charging network. The continued backing of the government, whether through regulatory measures to build charging stations or through financial strategies and aid, is key to ensuring equal charging access for all communities, thus avoiding the risk of leaving anyone behind during this transition. The IEA also highlights the crucial nature of providing incentives and making it easier to install home chargers in existing parking spaces.