The Republic is doing more to encourage company car users to switch to electric power than any other European country, according to a new survey by an eco think tank.
Transport & Environment (T&E) carried out a study of all major European car markets to see which was doing the most to encourage both private and corporate buyers to switch to an electric vehicle (EV). Most would expect the answer to be Norway, but actually it is Malta.
The survey did not just look at the upfront subsidies for electric cars; it counterbalanced that with what costs are associated with a similar-sized petrol or diesel car and measured the difference between the two. This “net difference” is a critical figure, the group says, as it is the “true gap” in tax cost between buying electric or sticking with combustion.
Where compact models are concerned, it is reckoned to be the most important metric of all, as compact models are where the bulk of sales are, and the greatest levels of affordability lie.
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Averaging out the costs and tax burdens over 10 years, T&E found that Malta scored the highest for private cars as its system gives you an overall benefit of some €18,400 for buying an EV.
For company cars, Ireland comes top with a net balance of €15,500 – although most of that is to do with high company car taxation for combustion models, rather than incentives for purely electric vehicles, also known as battery electric vehicles (BEVs).
‘Governments are hampering the transition to clean fleets by continuing to offer low-tax regimes for polluting cars. Changing the incentives for corporate BEVs is the low-hanging fruit of car taxation’
— Griffin Carpenter, company cars analyst at T&E
According to T&E: “As company cars account for over half of new cars sold every year and are responsible for 73 per cent of new-car emissions in Europe, smart taxation policies that result in high EV uptake in the corporate channel are more necessary than ever.
“This is most often achieved through benefit-in-kind (BIK) schemes. When an employer provides a company car to an employee, and this car is used for private purposes, a taxable BIK arises. Higher BIK on polluting cars means more punitive taxation.
‘Incredibly beneficial’
“In countries like the UK or Norway, the company car tax regime has been incredibly beneficial for the uptake of EVs for corporate buyers. The UK applies a BIK rate that linearly increases based on car emissions – a system unique in Europe that has proven very successful. BIK rates in Norway for polluting company cars are relatively high compared to other European countries with a rate of 30 per cent of car value up to €32.960.
“In France and Germany, on the other hand, benefit-in-kind rates are too low, with only a small incentive for BEVs. As a result, electrification rates in the private channel are twice as fast as those of the corporate channel in Europe’s two largest car markets.”
Griffin Carpenter, company cars analyst at T&E, said: “Company cars pollute more because they are driven more. But governments are hampering the transition to clean fleets by continuing to offer low-tax regimes for polluting cars. Changing the incentives for corporate BEVs is the low-hanging fruit of car taxation and the decarbonisation of the whole fleet.”
When it comes to private cars, Ireland’s net difference is solidly in top 10, while Bulgaria is the worst performer.
Eastern European markets have often been in T&E’s crosshairs for poor EV incentives in recent years but Romania does well for private cars in this survey, finishing just ahead of Ireland.
Larger, more mature western markets come in for quite a bit of criticism, with T&E saying that the range of tax differentials can be explained by good and bad practices of taxation. Ten countries do not have a car tax on acquisition or ownership based on CO2 emissions. These include Poland, Czechia and Estonia. Nine countries – counting Germany, Switzerland and Romania – do not have an acquisition tax at all, while France, Italy, and Romania are the only countries which still have purchase grants for conventional combustion vehicles.
“In the midst of a climate and energy crisis, taxpayers across Europe are effectively subsidising the pollution of cars. Too many countries suffer from outdated systems, absence of taxes and lack of incentivisation for zero-emission transition,” said Mr Carpenter.
