Pictured at the launch of the report (L-R) Terry Lee-Williams, ARUP, Brian Cooke, Director General SIMI, Gillian Fanning SIMI President and Jim Power Economist Pic : Lorraine O'Sullivan

New report: Government’s electric car targets not very realistic

Well, knock me down with a feather at this news from the Society of the Irish Motor Industry (SIMI):

In a relatively small right-hand-drive economy many of the options available to other countries are harder to achieve at the same rate as in the rest of Europe. Ireland has a slower and smaller supply chain with around 120 000 new car sales per annum (pre-Covid) and an average car fleet age of 9 years (2021).

With currently three times as many used vehicles being sold, there is an insignificant second-hand electric vehicle market. Electric vehicles account for just around 8% of annual new car sales and dealers are selling every electric vehicle landed in the country. Plug-in hybrid electric vehicles (PHEVs) which until recently were supported with rebate benefits captured a similar proportion of the market.

To sell nearly a million electric vehicles by 2030, in line with Government policy, is unlikely.

It should be noted, of course, that SIMI is an industry lobby group, and, as such, they have a vested interest. And therefore, it is not necessarily a surprise that the independent report they commissioned indicates that perhaps with much more “investment”, the target might be achieved after all, despite all the challenges. These reports always have to offer a little bit of carrot, and a little bit of stick.

But reading the document, the evidence that SIMI provides overwhelmingly points in the direction of the Government’s electric vehicle target being unachievable.

The report points out that as of today, electric vehicles make up just 0.1% of the nation’s vehicle fleet. Hybrid cars – with an internal combustion engine supported by a battery – make up just another 1%. The overwhelming majority of people own a car that runs on petrol, or diesel.

The other problem is that the rate of car replacement is very low. That is to say, there just are not that many new cars sold every year. In 2021, for example, just over 100,000 new cars were sold – the vast majority of them diesel or petrol. But the total car fleet was 2.2million. In other words, only about 5% of the fleet was replaced last year, or less, accounting for natural expansion (new drivers getting their first car). Only 8.5% of new cars sold last year were electric.

The report’s most optimistic scenario for the Government projects new car sales almost doubling in the decade to come – to 200,000 per year – and the percentage of electric cars sold rising to half of that total in the later years of the decade. Meaning that by 2029, we’ll be adding 100,000 electric cars a year. If the projections are right.

And it won’t be anything like enough to meet the Government’s targets.

And of course, all of this assumes fair weather sailing. What happens, for example, if there is an inflationary-driven recession, or some other downturn?

In such a situation, second hand car sales rise, and new car sales fall. And, since the fleet is already massively diesel and petrol, second hand car sales means many fewer new electric motors.

The report proposes that the Government accelerate the process by putting emphasis on the state fleet first: In other words replacing Government vehicles with electric to kick start the process. A cynic might note that it’s a very convenient solution, if you are the motor industry, to advise the Government to buy thousands of new cars.

But it also is about the only solution that makes sense, if you want to hit the target.

But then: it’s just a target. The Government does not actually need to meet it, and probably never intended to. The point of it was so that it could be announced, and would sucker green types into thinking that the day of radical action had arrived.

This report by SIMI is a fascinating document, if you’re interested in policy, and it systematically takes the Government’s declared policy apart, in an authoritative, and convincing way. Well worth a read, if you want to understand this segment of the economy a little better.

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