Why is there a decline in EV purchases?
A dip of over 14% in EV purchases as compared to the previous year has been noticed, even though the sales of new vehicles are surging. Similar trends have been evident in many western markets recently.
Early adopters of EVs were initially ardent enthusiasts, now the challenge lies in promoting electric vehicles as a preferred option to the mass market – a significantly more complicated endeavour. This demographic also keeps an eye on the resale value of used EVs previously owned by these early users.
Values have seen significant swings, with ruthless price reductions often observed at auctions. This experience isn’t unique to Ireland but has been observed on a global scale. As a result, many car traders are tentative about taking used EVs as part-exchanges, further damaging the image of EVs.
What induces this uncertainness?
Concerns ranging from battery longevity, nationwide charging networks, resale values, upcoming superior technology, and the government’s tax plans seem to be the primary cause of the uncertainty. A multitude of inaccurate information regarding these and other concerns has made potential buyers remain cautious about investing in EVs.
Recent surveys have identified that the central issues revolve around the lifetime and capacity of the battery. Although cost is a factor, according to the latest AA Ireland survey of 1,000 customers, only 11% consider “running expenses” as their main worry when purchasing their next vehicle. This compares to 34% who are apprehensive about the lifetime of the battery in EVs.
What’s the problem with the lifespan of an EV battery?
Since the moment electric vehicles entered the market and even before they became crucial for contemporary transport, there have been worries about the durability of EV batteries and the high cost of replacement if there was a malfunction.
It appears that a significant number of early generation EV battery packs, which already had limited range when new, are experiencing severe degradation possibly because they lacked features such as active cooling.
Battery management systems have become significantly more refined over time and are designed to prolong battery life for more than a few years.
The AA survey revealed that 53% of participants held a belief that the lifespan of EV batteries is less than 100,000 kilometres, equivalent to about six years of driving for an average motorist in Ireland. It’s not surprising that potential buyers are apprehensive on investing upwards of €40,000 on an EV, when the impression is that the critical component, the battery pack, will only last six years before requiring a costly replacement. Regardless, it is worth noting that newer models utilise modular battery packs, often allowing for the replacement of individual modules rather than the entire pack.
Alternative technologies such as hydrogen or e-fuels are also being considered. While hydrogen is a sensible choice for sectors where electrification isn’t practical, such as aviation or freight, it is not seen as a suitable replacement for personal vehicles. Hydrogen fuel can be generated sustainably (green hydrogen) from renewable electricity or from natural gas (blue hydrogen), with both types undergoing the same fuel conversion process.
That said, the lion’s share of car manufacturers are shifting their focus towards creating EVs, indicating a transition away from traditional petrol or diesel internal combustion engines.
Although championed by the government as a means to reach environmental objectives, half of the respondents of the AA Ireland survey disagreed with the premise that EVs are more environmentally friendly. Furthermore, there is uncertainty over how the government plans to make up for the significant decrease in tax revenue resulting from the switch to electric motoring. As per the Irish Fiscal Advisory Council (IFAC), it is predicted that by 2030, the treasury stands to lose at least €2.5 billion annually in tax revenue due to the disappearance of excise duties, VAT, motor tax and vehicle registration tax (VRT). This is liable to result in a reformed tax system, potentially leaving EV owners facing a larger tax bill than they currently encounter, impacting the total cost of owning an EV in the future.