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Vehicle Leasing Association of Ireland (VLAI) calls for changes to BEV business model for corporate sector

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The Vehicle Leasing Association of Ireland (VLAI) is encouraging the transformation and transition from ICE (Internal Combustion Engine/diesel) vehicles to full Electric Vehicles (EV) among it’s business customers for both passenger and commercial vehicles. As the cost of an EV is substantially more expensive than a comparable ICE vehicle, the cost to business and individual company car drivers is far more expensive in terms of Benefit In Kind (BIK).

To achieve its emission reduction targets, the Government aims to have 181,000 electric vehicles on the road by 2025.  The VLAI recently outlined a plan to Government in its pre-budget submission to gain momentum towards achieving this target.  Then VLAI believe s it can deliver an additional 25,000 electric vehicles in the next 3 years if the supports to businesses are granted.

In support of this, VLAI has proposed the following regulatory changes for business to bring the cost of running EVs on their fleets closer to the traditional options:

  1. Full VAT reclaim on Zero emission vehicles – (full Battery Electric Vehicles) or Zero VAT rate the lease of BEVs
  1. BIK clarity for 5 years and clear incentive for BEVs over ICE vehicles for drivers

BIK is currently at 0% for EVs under €50,000 but from 01.01.23 the rate changes up to 22.5%. VLAI believe it should be at 8% for the next 5 years and then increased incrementally after that with a clear picture for drivers so they can make an informed decision.  The current BIK structure encourages company car drivers to do more KMs in their diesel cars, in order to achieve a lower rate of BIK.  A new BIK structure for EVs would rectify this and reduce our carbon emissions.

The pre-budget submission has the full support of Climate Action (Department of Transport) with a letter of recommendation accompanying it to the Department of Finance. In a recent meeting with Finance Minister Paschal Donohoe and the VLAI, he said that his Department would give this submission some consideration in the upcoming Budget.

*Established in 1972, the Vehicle Leasing Association of Ireland (VLAI) is the Irish trade body for companies engaged in vehicle finance, leasing and fleet management. VLAI members are responsible for a combined fleet in excess of 75,000 cars and vans on Irish roads, The vehicle leasing industry supports the Irish retail motor industry and helps maintain jobs by purchasing over 13,000 new vehicles each year and spending over €50m in service departments throughout Ireland.