The Government’s proposed scrappage scheme is a canny PR move but it is not policy. A €5,000 scrappage offer on top of the current €3,500 EV grant, all from a pilot fund of €10 million on a first-come, first-served basis, will support the sale of 1,177 new electric cars in an overall new car market of 130,000 this year. That’s not really going to move the dial in terms of climate change.
Instead, it serves two purposes. First, it gets more motorists to consider changing to an EV. Secondly, and more cynically, it distracts from the decision to cut the current price cap of the existing Sustainable Energy Authority of Ireland (SEAI) EV grant from €60,000 to €50,000 from July 31st. According to motor trade estimates, 20 per cent of current EV sales fall into that price bracket.
With the existing grant scheme – separate from the vehicle registration tax relief on EVs – requiring additional funding due to the increased popularity of EVs, the Government is clearly seeking to focus its funding on specific areas and make EVs more affordable to the mass market.
In terms of driving interest in EVs, the pilot scheme is likely to be a hit. With an estimated 738,000 cars more than 13 years old currently on our roads, according to Central Statistics Office (CSO) data, the €10 million pilot project will almost certainly run out of funding in a matter of months, allowing politicians to hail the scheme a success.
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From a consumer perspective, schemes like these have a proven track record. Motorists are led by their pockets, as evidenced by the changes to the tax regime from engine size to emissions-based back in 2008 and past scrappage schemes.
Car firms are well versed in price discount promotions via similar schemes. For example, Tesla offers a €2,000 “trade-in bonus” on top of the value of the used car being traded in. Similar deals have been offered by brands like Toyota and Nissan. Some dealer networks also offer their own promotional scrappage allowances.
Combined with these deals, the EV market is seeing a wave of new, smaller, more affordable models. European car makers will have several small cars on the market for €25,000 or less by the start of next year, competing with the fleet of Asian models already here. However, many of these will land at the end of this year, when the pilot scheme fund is likely to have run out given it is open from July.
Is the grant really going to make a difference for the 1,200 or so drivers of a car with a 131 registration or older? It will certainly help. Foregoing a higher annual motor tax bill and the rising cost of fuel by opting for an EV will help with household bills, particularly if you have access to off-street parking and a home charger.
Then there is the added reassurance of a new car warranty, plus the additional safety features that simply were not on offer 13 years ago.
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However, it still requires a sizeable outlay. It’s worth remembering that most of those driving 13-year-old cars are not doing so out of nostalgia for older cars. They are doing so because a new car remains beyond reach.
A handful of EV city cars are on offer for €20,000, but in most instances, you are looking at a list price closer to €30,000 for a mid-sized family car.
An extra €5,000 off that price will certainly help, but where do you source the rest of the cash? Cars carry a big-ticket price – often requiring an interest-bearing loan. Add on a layer of the unknown about life with an EV, and you can see why many motorists are reticent about making the leap to electric.
Then there is the issue of size. New cars have certainly grown, and anyone getting out of a 2013 VW Golf will be pleasantly surprised with the cabin space on offer in the upcoming VW ID Polo, landing in showrooms towards the end of this year and starting at just under €20,000. However, it’s a different matter if you are getting out of a 2012 Hyundai Santa Fe.
Finally, there is the format. A first-come, first-served structure is likely to benefit a buyer who is ready to make the change anyway. The motorist who needs time to consider the lifestyle changes and charging options, and to sort out finance will miss out.
Where the pilot scheme will likely succeed is in planting the seed in motorists’ heads to consider moving to electric, and what that might mean to their daily lives. It also distracts from the Government’s decision to lower the price cap for the current EV grant.
