Trouble at the pumps will see electric vehicles surge
€2 per litre has long been something of a psychological threshold for the price of petrol. Now that price point has finally been reached, the conversation is inevitably turning to electric cars.
Electric vehicle (EV) sales are on the rise in Ireland. The Society of the Irish Motor Industry (SIMI) announced recently that 2021 had been a challenging year for the Irish Motor industry, with new car sales down more than 10% on pre-COVID levels. But it wasn’t all bad news. One bright spot in the announcement was that the registration of EVs more than doubled in 2021.
When you consider the situation at the petrol pumps, it is easy to see why. While the average motorist’s annual fuel bill is predicted to be €600 higher in 2022, a fully electric car, charged at home overnight on the lower energy tariff, could cost as little as €5 for a full ‘tank.’
According to official government figures, the average EV fuel costs are around a quarter of those for a comparable diesel vehicle. For those in a position to buy a new car, it is certainly worth thinking about.
At DUAL, we receive frequent enquiries from company directors seeking to register a single EV in their company name. While technically an asset of the company, the vehicle is essentially the director’s own vehicle, parked at their home address and driven by family members rather than employees. This is a scenario we are happy to cover. For the directors, it make a lot of sense for tax purposes, especially with the current SEAI incentive of a 0% benefit in kind rate (up to €50,000, without mileage conditions).
Grants are often discussed in the media, and for vehicles of a value of up to €60,000, there is a €5000 incentive. There are some excellent vehicles that qualify for the discount, including the Tesla Model 3, which is one of the most common EVs we are seeing on proposal forms at the moment. With the discount, it is possible to pick up a brand new Tesla 3 for around €50,000, which is a great investment.
Insurance is one area where the running costs of an EV can be higher, for now.
EVs tend to be banded into higher insurance groups, due to the costs of the internal technology such as the battery, which can be up to 40% of the cost of the vehicle. And from an actuarial point of view, fully electric vehicles are an unknown quantity. The underlying technology is still in its infancy and a lot of the manufacturers are not yet into mass production of the vehicles. Many EVs are entirely new designs – on the inside at least, even if the body seems familiar. Because of this, actuarial data specific to EVs is relatively scarce. For this reason, some insurers have reduced their appetite for EVs, offering limited cover, and some do not cover them at all.
At DUAL Underwriting Ireland DAC, we have specialised in EV insurance since we began trading. Our policies provide comprehensive cover for the vehicle, all associated equipment and the third party liabilities that go with that. We also insure to agreed value, and provide like-for-like courtesy cars.
Like-for-like courtesy cars is an especially pertinent point with EVs. Many motorists will purchase them not only to save on running costs, but to make a positive contribution to the fight against climate change. Being required to spend a few weeks driving around in a courtesy car burning fossil fuels would mean unhappy eco-conscious clients – and to expect them to fill up at the current petrol price, that would be adding insult to injury.
Please do think of DUAL for EV cover. Alongside the above, we offer:
- Agreed value (important with EVs as the resale market is immature and uncertain)
- Open drive for non-household members over 30
- Full Irish and European breakdown cover (to help ease clients’ ‘range anxiety’).
As well as the running cost benefit to clients, which would make an EV worthwhile for that reason alone, there is the obvious advantage in terms of reducing carbon emissions.
Encouraging clients to ‘go electric’ during their next buying cycle is a small thing we can all do, that will have many benefits. Those of you with clients in a position to buy an electric vehicle, please do give them a nudge - and feel free to contact DUAL to discuss the insurance implications.
This article was first published in the April edition of Irish Broker Magazine.