EXPRESS #3 - October 2, 2018
EVs will cost Irish exchequer hundreds of millions – but they won’t come unless there are more models
As the number of EVs on the roads is growing, governments will have to start thinking about the consequences for their tax revenues. Currently ICE cars and the oil they consume are of course a great cash cow for most governments.
For Ireland, researcher Eamonn Mulholland of the Centre for Marine and Renewable Energy at University College Cork (UCC) collaborated with researchers from The Danish Technical University and The University of California, Davis, to find out the consequences of implementing the government’s EV ambitions.
Minister for Transport, Tourism and Sport (DTTAS), Shane Ross, announced an ambition last year in the National Policy Framework for Alternative Fuels that by 2030 all new cars and vans sold in Ireland will be zero-emissions capable, notes UCC in a press release. In the same report, an ambition of having 800,000 electric passenger cars on Irish roads was declared, which is challenging considering that just 882 electric cars were sold in 2017, covering 0.7% of total sales, bringing the total stock of electric cars up to 3,580.
The researchers found that “achieving the targets set out by the DTTAS, although technically possible, would lead to revenue losses of up to €340 million by 2030.”This is because the current rate of Vehicle Registration Tax in the country is based on the CO2emissions of the vehicle sold, meaning considerably less revenue will be taken in under the current system if there are a large amount of low-emitting electric vehicle sales. In addition there will be losses from VAT, annual motor tax, and excise fuel duty.
No doubt the Irish government will take notice of this result.
The researchers also build a model “capable of understanding why the uptake of electric vehicles in Ireland has been so low, despite a €5,000 grant from the Sustainable Energy Authority of Ireland alongside an exemption from Vehicle Registration Tax up to €5,000.”
“The model found that the concept of range anxiety –the fear of not being able to get to your destination because your car runs out of charge –had a role to play in this slow uptake, but an even greater barrier identified was the lack of variety of electric vehicles currently available for sale in Ireland.”
“Car buyers in Ireland are all different, some may want a family car in a particular type of red, while others may want a dark blue car adept to city driving“, said Mulholland. “If you start looking for a particular type of car, you have hundreds of options of petrol and diesel cars to buy, so you’re likely to find what you’re looking for. If you restrict your search to electric cars, you are much more limited in your choice. If we’re to see more electric cars on the road, there needs to be more choice in the type of electric cars available“.
The model built by Mulholland and his colleagues showed that “achieving 800,000 electric cars on Irish roads by 2030 would be technically possible, only if there is a substantial increase in varieties of electric cars available in the coming decades complemented by a continued reduction in the cost of batteries.”
If you are involved in policy in another country, do take note because Mulholland and his team “believe their model could be used to assist national policy makers to understand what is the best way to encourage the sales of electric vehicles, and to enable a smooth transition with minimum loss to the exchequer.”