Electric Cars – Costs and Incentives

Electric cars are on the increase in Ireland.  Many drivers are choosing this option in order to reduce both their motoring costs and carbon footprints.  Considering the incentives and grants available and the likelihood of long-term savings, this could be a wise move.

In the Irish Times recently, Fionna Reddan outlined how an electric car can save us money. Synopsis below.

There are Government incentives behind the increased uptake in electric car ownership, measures which can diminish the costs of going electric – for now, at least. So if you’re tempted to join the growing number of electric car owners, it might be time to do the sums.

Electric cars are undoubtedly more expensive than their diesel/petrol equivalents.  The cars are so expensive because the technology is so new.  A huge proportion of the cost of an electric car is the battery but as technology advances, costs should come down.

You can also buy an electric car in the second-hand market, but the technology on older models can be significantly different to that of the newer versions.

Grants
You can, however, cut the cost of purchasing a new car by availing of a grant on a new vehicle. The Sustainable Energy Authority of Ireland (SEAI) offers a grant of up to €5,000 on the purchase of an electric vehicle (either a battery electric vehicle or plugin hybrid electric vehicle). The size of the grant depends on the value of the car, and starts at €2,000 for a car with a list price of €14,000-€15,000, rising to €5,000 on cars worth €20,000 or more.  If your employer is buying the car for you, the top grant available is €3,800.

Such cars are also subject to vehicle registration tax (VRT). Plugin hybrids can get a rebate of up to €2,500, while VRT of up to €5,000 can be paid back on fully electric cars, so you’re typically looking at a Government incentive of about €10,000 on an electric car.

The grants and VRT rebate effectively work as a rebate against the cost of the car, as the dealer will sell you the car for the reduced price, and apply for the cashback themselves.

So the prices you see advertised are typically inclusive of these reductions; the e-Golf, for example, has a list price of €45,995, but the price you’ll typically see advertised is €35,995, after Government incentives are included.

BIK Relief
Typically, if your employer offers you a company car, you will be subject to BIK on it. This works by calculating 30 per cent of the original market value of the car and applying tax to this, with a reduction for business travel in excess of 24,000km. So, for example, a car worth €30,000 will cost an employee €2,000 a year in tax for lower-rate payers, and cost €5,200 for those on the higher rate.

First introduced back in October 2017, there is an exemption on benefit in kind (BIK) from electric cars. Be warned, however – this doesn’t include hybrids and it is currently due to last only until the end of December 2021.

A cap of €50,000 now applies to the relief. That means that, provided your employer buys you a car in this bracket, you will qualify for the full relief.  However, you are not constrained by this cap – you’ll just have to pay tax on any excess.  If, for example, your employer is offering you an Audi e-tron (€101,750) or a Tesla, you will still benefit from the BIK relief.

The 0 per cent rate is beneficial both for employees and employers. It means the employee can avoid tax, and the employer won’t have to pay employer’s PRSI of 10.95 per cent on the vehicle.

As mentioned, most dealers advertise the price after the grants/rebate have been deducted.  However, from Revenue’s perspective, BIK relief works on the original market value.

For example, a BMW i3 may cost a buyer €35,760 off the forecourt but, for the purposes of BIK, it is regarded as a €45,750 car. Should you add more than €4,250 of optional extras to the car, the price will exceed the cap and BIK will start to apply.

The good news is that if you bought in 2018, the €50,000 cap won’t apply, following an Amendment in the Finance Bill, 2018. So, if you bought a Tesla for €100,000 last year, you will continue to benefit from tax savings of about €20,400 a year.  If you’re only buying this car now, you’ll have a tax bill; although, at about €12,600, it’s still significantly less than it would have been without the relief.

Running Costs
While it’s likely to change imminently, you can currently run an electric car largely for free (well, apart from maintenance), thanks to the network of free charging stations that have sprung up.  Obviously, you have to be near one to make this work, but there are currently more than 1,000 public charge points available across Ireland, with a further 70 fast chargers available which can charge your car to 80 per cent capacity in as little as 25 minutes.

You can apply to ESB ecars for an access card which gives you free charging at the points.  You can also get a charging point installed at home, and there is a grant available to help defray the costs. A charging point currently costs about €149 with Electric Ireland, after the grant of €600 from the SEAI is deducted. Bear in mind that, according to the SEAI, the grant does not apply if you get a company car.  While you will have to pay for the electricity through this point, it should be a lot cheaper than the petrol or diesel alternative. According to ecars, it will cost someone driving 200km a week just €2.54 to charge their car using their at-home charger at night; this compares with €21.60 for a petrol car, and €15.74 for a diesel.

Moreover, employees with company cars can also avoid BIK on the cost of fuel for their electric vehicles, by charging them through a company-owned charge point.

Motor tax is also cheaper on an electric car, at just €120 a year, compared with a rate of between €199 and €1,809 for a standard car, while toll operators are also running an incentive for electric cars until end-2022. This gives discounts on the cost of a toll for both fully electric and hybrid cars – up to 75 per cent for electric cars on the M50 and 50 per cent on other roads.

In addition, you should expect to save on your servicing. According to Comyn, it costs about one-third less to service an e-Golf than a standard car, because there are fewer moving parts such as spark plugs, oil filter etc.

Worth considering? At Stuart Insurances (South East) Ltd, we have bespoke insurance cover for Tesla and other electric cars.  Contact us for a quote today.