Motor trade told no grants for electric cars until after budget

Dealers fret over grants for electric vehicles and potential changes to motor tax and VRT

Society of the Irish Motor Industry accepts changes to the funding regime ‘but now is not the time to do it’. Photograph: Florian Gaertner/Photothek via Getty

Society of the Irish Motor Industry accepts changes to the funding regime ‘but now is not the time to do it’. Photograph: Florian Gaertner/Photothek via Getty

 

Motor dealers have been told grants for electric vehicles next year will not be allocated to car owners until after October, heightening concerns the scheme may be changed in the budget.

The dealers have also expressed fears the Government may also introduce changes to the motor tax and vehicle registration tax (VRT) regimes.

Current grants are guaranteed for all electric vehicles bought and registered in 2019. Grants for any electric vehicles to be purchased and registered in 2020 are not being allocated at this time, according to a letter issued by the Sustainable Energy Authority of Ireland.

While purchasers will not be out of pocket, there will be uncertainty until mid-October, according to dealers, when it is assumed a new scheme will be introduced for next year after the Department of the Environment has its budgets finalised.

Usually car dealers have four months from applying for a grant of up to €10,000 to register a car. From this week, any dealers that apply will have to have the cars registered by the end of the year.

“Just like those in the retrofit business cannot plan on State support. It is further uncertainty for the market in supplying EVs [electric vehicles] . . . considered by the Minister [Richard Bruton] to be an essential part of his climate action plan,” said one source familiar with the scheme.

The Society of the Irish Motor Industry (Simi), which represents most dealers, confirmed the notice was issued this week. It is most concerned, however, about motor tax and VRT changes which it accepts may be necessary but will hit the industry at the wrong time, amid Brexit uncertainty.

Simi deputy director general Tom Cullen said he hoped the electric vehicle notice was procedural. And his understanding is there is no immediate threat to grants.

He said he would be most concerned the climate agenda would prompt changes in tax and VRT. “We are going to go to see changes but now is not the time to do it.”

A department spokeswoman said applications for electric vehicle grants for 2020 will open in October.

She said some €27.5 million was allocated in 2019 grants for the purchase of up to 6,000 battery electric and plug-in hybrids. “Any change to the existing scheme would be a matter to be considered in the context of the normal estimates process,” she added.

Looming Brexit

Irish car dealers last month called on the Government to delay any big changes of the motor tax regime for at least 12 months because of concern it would push up prices of new cars, put jobs at risk and hit tax revenues.

Neither the motor industry nor consumers are ready for significant tax changes this October, particularly as it may coincide with Brexit, said Simi. It acknowledged the Government was trying to use the tax regime as a means to push people towards electric vehicles.

The move to electric is going to happen, it insisted, “irrespective of what the Government is going to do because the European car industry has been working towards clean air regulations for many years now”.

The most popular electric vehicles have a retail price of approximately €50,000. A €10,000 grant brings them to €40,000. The average price of a new car in the Republic is about €20,000 and the average price of a car in the Irish market, including imports and and used cars, is €15,000. On that basis, the Irish market is “way off the affordability threshold for these cars as yet”, said Simi.

The Government has signalled it plans to reform the tax regime in the October budget as part of moves to encourage electric vehicle purchases. Recently, Mr Bruton announced the roll-out of 1,000 new on-street electric vehicle charging points at locations to be determined by councils with a view to having almost a million such vehicles on Irish roads by 2030.