SEM Chart of the Week
Charging up – half-yearly Irish EV sales analysed
Transport in Ireland accounts for one-third of energy consumption and energy-related CO2 emissions. This is due to ~93% of the 2.1mn passenger cars registered at the end of 2018 being fuelled by petrol and diesel. In acknowledgement of this substantial contribution to carbon emissions from road transport, the Irish government’s Climate Action Plan 2019 sets a target to have 950,000 electric vehicles (EVs) on the road by 2030. It also targets a complete sales ban on internal combustion engine (ICE) vehicles for the same year. This means that one-third of all vehicles sold between 2020 and 2030 will need to be battery electric vehicles (BEV) or plug-in hybrid electric vehicles (PHEV).
The state of charge
In this SEM Chart of the Week, we examine the passenger car market and the uptake of EVs in the first half of 2019. At present, the wider car market in Ireland is down 7.36% on 2018 for the year-to-date (YTD). This reflects wider trends in the European market, which for the YTD is down 3.1% on 2018.
The continued downward spiral in car sales can be atrributed to a number of factors, such as the legacy impacts of the Volkswagen diesel gate scandal, which has reduced demand for diesel vehicles, and the potential ramifications of Brexit.
Despite this, sales of alternatively fuelled (BEV, PHEV and hybrid-electric) passenger cars in Ireland have shown strong growth when compared with 2018 in H119. Figure 1 compares monthly alternative fuel sales for 2018 and 2019, along with cumulative sales. A total of 9,582 alternatively fuelled cars have been sold for the YTD, a 69% increase on 2018’s total. In each month, sales in 2019 outperformed those in the equivalent month in 2018, a trend that seems likely to continue throughout the remainder of the year.
A closer inspection of YTD registrations indicates the majority of sales have actually come from petrol hybrid vehicles. BEV and PHEV sales total to 2,787, which represents 3.5% of all passenger cars sold so far in 2019 in Ireland. This is significantly short of the one-third needed to reach the 2030 target.
The Irish government has put in place a number of incentives to encourage the uptake of EVs. Vehicle Registration Tax relief up to a maximum of €5,000 is available for eligible BEVs until the of 2021. Benefit-in-Kind exemption for company car/fleet drivers and reduced Motor Tax have also been introduced.
In addition, the Sustainable Energy Authority of Ireland provides grants for privately bought EVs to reduce the capital cost of purchasing a BEV or PHEV. The level of grant available depends upon the value of the vehicle, with EVs costing over €20,000 qualifying for the maximum grant of €5,000.
Overall, the taxation policy in Ireland is comprehensive. Separate analysis from Cornwall Insight on Norway, the leading EV market globally, indicates that tax is a key tool for creating an environment for rapid EV uptake. In Norway, fiscal strategy has ensured that the most financially suitable option is an EV. This has in turn led to widespread demand and preferential supply of vehicles from global automakers to the country.
Bumps in the road
If Ireland is to achieve its 2030 EV target, a comprehensive package of tax relief and incentives, such as free parking, use of bus lanes and reduced rate toll road fees, could be key to creating demand.
However, there will be competition globally for the limited number of EVs being manufactured by automotive manufacturers. For example, KIA’s entire e-Niro quota for 2019 was sold by the end of March. The increased supply of battery packs to allow more vehicle production will be critical to achieving the transition to e-mobility.
Another factor to consider is the anticipated increase in electricity demand that electric transport will place on the grid. A study from the Sustainable Energy Authority of Ireland indicates that EV charging will increase demand by 14%. Smart charging, which enables EV charging to take place in off-peak periods through price signals, could be a way of avoiding network reinforcement. In the UK, charge points installed at homes with government grant funding are now required to be smart. One of the key reasons for this specification is that it will enable the grid to be stabilised under high EV uptake scenarios. This indicates the importance of smart charging in future energy systems which could be a crucial consideration for EirGrid in its current consultation on Tomorrow’s Energy Scenarios.
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Last week’s SEM Chart of the Week | Love Ireland : Retail market trends in 2018