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Electric vehicles: why are sales falling?

Uncertainty, misinformation and lack of awareness about generational improvements in EV technology are all part of the issue

Concerns over battery life and replacement costs have been a particular concern for prospective electric vehicle owners. Photograph: iStock

Michael McAleer's face
Michael McAleer
Tue Apr 2 2024 - 16:18
Why are EV sales falling?

EV sales are down more than 14 per cent on last year despite an overall increase in new car sales. Similar falls have been witnessed in other western markets lately.

The first wave of enthusiastic EV owners were early adopters: now the market is facing the challenge of convincing the general public that electric is the way to go. These are a harder target market, who are also closely watching the trade in value of those early adopters’ used EVs.

Prices have fluctuated wildly, with some savage price cuts, particularly at auctions. And that’s not just in Ireland; globally used EV prices have plummeted. Many dealers are now reluctant to accept used EVs as trade-ins, further undermining the message.

What’s driving the uncertainty?

Apprehensions about battery life, the national charging network, resale values, talk of better technologies on the way and the Government’s tax intentions all seem to feature. There is also plenty of misinformation out there on all these topics and more, making the wary car buyer think twice before investing in EVs.

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From recent surveys, the biggest issues are about battery life and range. Price is also a consideration, although the latest AA Ireland survey of 1,000 of its customers indicates only 11 per cent of motorists cite “running costs” as their primary concern when buying their next car. That compares with 34 per cent who say battery life is their biggest concern about EVs.

What is the issue with EV battery life?

Ever since electric cars first broke on to the market, and long before battery power became the be-all and end-all of modern motoring, there were concerns raised about how robust EV batteries would be, and how expensive they would be to replace if anything went wrong.

The problem seems to be that quite a number of the early-generation EV battery packs – which didn’t have great range even when they were new – are suffering the worst degradation, partly because many didn’t include features such as active cooling.

Over time, the battery-management systems have become far more advanced and aim to extend the life of the battery far beyond a few years.

The AA survey found 53 per cent of respondents believed EV batteries last less than 100,000 kilometres. That equates to six years’ motoring for the average Irish driver. Understandably, buyers are concerned that the new EV they might buy for €40,000 or more – the biggest cost of new EVs being the battery packs – will only have a working life of six years before they face a massive battery replacement bill.

However, more modern battery packs are made up of modules and in many cases you would replace the module and not the entire packs.

What about new technologies such as hydrogen or e-fuels?

Hydrogen makes sense for transport where electricity isn’t a viable option, such as aviation or heavy goods. However, the experts suggest it doesn’t make sense for private cars. Green hydrogen is made from renewable electricity, while blue hydrogen is made from natural gas. Both undergo the same process in its conversion to fuel.

As Fergus Sharkey, head of business supports and transport with the Sustainable Energy Authority of Ireland (SEAI), explained to The Irish Times in an article in 2022: “You have to produce it and then store it and transport it ... and then you have to put it into the vehicle and burn it back to electricity.” This process is highly inefficient, he says, losing 70 per cent of the energy throughout.

That’s why the vast majority of car makers have chosen to focus on EVs as they move away from normal petrol or diesel combustion engines.

What about the environmental argument?

The Government’s primary target in EV adoption is to hit climate goals, but this is not striking a chord with the public: half the respondents to the AA Ireland survey don’t agree that EVs are better for the environment.

Uncertainty over the Government’s plans to recoup the vast lump of tax revenues it is going to lose in the move to EV is also likely to be a factor. The switch to electric motoring will cost the exchequer at least €2.5 billion in lost tax revenue a year by 2030, according to the Irish Fiscal Advisory Council (IFAC). That fall in revenue is mainly driven by loss of excise duties, VAT, motor tax and vehicle registration tax (VRT). Clearly it is going to need to be offset by changes to the tax system.

And that’s likely to mean a heavier tax burden on EV owners than they face right now, changing the cost of ownership in the years ahead.

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