Hello again. Electric vehicles have been in the news recently and not for all the right reasons. This is a subject of interest to On The Money because, like thousands of other people, we are in the market for a car upgrade before our current model dies under us. So is now the time to make the jump to an electric vehicle?
Early euphoria around electric vehicles was driven by two significant stimuli – the endless enthusiasm of early adopters for anything new in the world of technology and the need among governments for significant early wins in the fight against carbon emissions as they chase demanding international targets by the end of the decade.
But the early-adopter market is now sated and the industry is tasked with the altogether more difficult task of persuading the wider market of the virtues of their product.
And, to put it bluntly, they don’t seem to be doing a very good job. As my colleague Neil Briscoe noted recently, ease of use is the priority for this group, not novelty.
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And the fact remains that considerable inhibitors remain in place to make these buyers think twice before making the jump to electric, even though most understand the future will be driven by electricity or some form of non-fossil fuel.
The inhibitors include a signal failure by Government to incentivise or deliver sufficient infrastructure to support the widespread use of electric vehicles.
Figures from the Society of the Irish Motor Industry, considered to be the most reliable in the sector, point to a 14 per cent decline in registrations of electric cars (year on year) – and this in a market that is growing by 8 per cent.
The figures from the Central Statistics Office, though different, confirm the trend with a 10 per cent decline in electric cars being licensed in the first three months of the year.
This is not a uniquely Irish problem: many other countries are facing similar issues but it threatens to fatally undermine Government plans to tackle carbon emissions. The aim was to have a million EVs on Irish roads by the end of the decade. That now seems a delusional aspiration, with fewer than 80,000 pure plug-in electric charged vehicles estimated to be on Irish roads.
There appear to be four distinct issues feeding into decisions around electric vehicles: purchase price, charging infrastructure, longevity and resale value.
Purchase price
Electric vehicles are more expensive than the alternatives and with budgets always a consideration for car buyers – especially in this high interest rate phase with cost-of-living pressures across the board, it means the option is simply beyond the financial capacity for many people. For others, it increases the pressure on the sector to explain why an electric vehicle is good value.
It hasn’t helped that the Government has reduced the incentive available to electric vehicle purchasers, dropping it to a maximum of €3,500 in the middle of last year from €5,000 previously. That seems a misjudgment just at the moment when the concept of electric vehicles was trying to break into the broader car buying market.
The lag in getting affordable models on to forecourts is another factor and recent speculation that Tesla is either delaying or shelving plans for a more affordable model will only confirm the view of many that EV manufacturers are not interested in their business.
There are some more affordable models coming to the market, especially from Chinese manufacturers but these are also threatened by potential action from the European Union concerned at alleged dumping by China on the European market.
Charging infrastructure
Range anxiety continues to be a major issue for many motorists. While most of On The Money’s motoring may be in and around Dublin, we would average one trip to one end of the country or other every month.
That raises two issues. Will my car get me there, and if it does, will there be charging facilities? And if I do need to top up en route, are there sufficient facilities to do so?
On the first issue, a recent study by What Car? magazine found officially approved tests for new electric cars significantly overstate how far they will get you in real-world conditions.
They found the observable range was as much as 38 per cent lower for some EVs in low temperatures than official figures would suggest. The magazine said the testing regime manufacturers are required to put their vehicles through was “completely unrepresentative of real-world conditions”.
My existing car’s heater no longer works, so I am fully aware of the joys of travelling long distance in winter in a car with no way of warming up. It’s not an attractive option.
Motorists want to be convinced that they can get from A to B in relative comfort and without stress. Juggling the variables of driving style, road type, outside weather conditions and whether I can afford to turn on the radio is not a compelling selling point.
And, as one colleague mentioned, arriving at motorway service stations to find just one or two inevitably occupied charging points available to private car owners is also not encouraging, not least because of the need to budget such unpredictable charging delays into travelling times.
It is unarguable that the charging infrastructure in Ireland is woefully inadequate at present. Expecting car owners to abandon the reliability of the internal combustion engine for the lottery that is charging an EV may work in a policy document: it won’t be persuasive on the ground when people are making their purchasing decisions. As of now, there is little convincing action from Government and local authorities on that front.
Then there is the residual concern at what such charging will cost. For those able to charge their cars at home, that is clearly the best and cheapest option, especially with the growth of smart meters and a range of billing options.
Everyone knows the Government will lose significant income if there is a mass transition to electric vehicles. Almost everyone is equally convinced that the Government will move to recover some or all of that income from the new generation of EV owners in one way or another: that is the nature of exchequers. The dramatic jump in price imposed by Electric Ireland a couple of years ago for its charging points was just a salutary reminder to potential EV owners that escaping the tyranny of the oil companies’ profit margins will not necessarily free you from arbitrary charging by fuel suppliers.
Longevity
If you can get beyond the initial price and the range anxiety, there remains the concern over just how long your new EV will serve you. Most people have heard the horror stories of batteries requiring replacement at the sort of cost many would expect to pay for a new car after just six years or very limited mileage.
My colleague motoring editor Michael McAleer noted recently that this was certainly an issue with first- and second-generation EVs. Range was poor even at the outset and they degraded more quickly than most consumers would consider reasonable.
However, he also noted that battery-management systems have become far more advanced, with the target of extending battery far beyond a few years. He also said modern battery packs are made up of modules which in many cases are replaced individually rather than having to replace the entire battery.
The thing for buyers is that, to some degree, we are taking EV manufacturers on trust that these measures will extend battery life and reduce replacement cost – the same manufacturers who seemed strangely silent on such issues until consumers found themselves with significant additional costs they had not budgeted for.
The manufacturers are also doing a pretty awful job of getting those messages out to consumers. How much does it cost to replace a module rather than the whole battery?
As a prospective car buyer I have no idea and it is not information I have come across in the myriad glossy promotional packs for electric car options.
Under what circumstances will you be able to replace just a module and when might you need to replace the whole battery? Again. I haven’t a clue and nor, I suspect, do most aspiring EV purchasers.
Resale value
Finally, we come to resale value. As someone who tends to run cars to their end life, this is less of an issue for On The Money, but most people tend to replace their cars more frequently. And they want to have some confidence in the trade-in value of their existing car. Equally, motor dealers are not going to be very interested in accepting second-hand cars, unless they believe they can get some value in selling them on.
The experience of consumers to date has not been encouraging. Yes, the cars coming to the second-hand market currently are those earlier-generation models but the concerns about battery life and replacement costs particularly have deterred many from considering the purchase of a second-hand EV.
And if there are no buyers, dealers will be reluctant to handle such models, in which case those buying new EV cars will be concerned that there is little or no selling-on value.
Might this change with newer generation EV models? Of course, but only when the real-world experience shows they do live up to industry promises on battery life and battery maintenance costs.
For now, the industry has not done enough to sell the value of EVs to many consumers and the ongoing shortfall in charging infrastructure remains a significant deterrent. Everyone makes their own choice but, for On The Money, buying a battery-only EV is not an option this time around. Perhaps when we next come to buying a car, consumers will have considerably more reassurance as they weigh the investment.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
