Hybrids, e-cars and PCPs

All your questions answered on choosing that motor

IT’S the big motoring question for thousands: should you switch to an electric vehicle (EV) this year? And if you do decide to, should you go the PCP route to pay for it?

To help tease out pros and cons, here are six reasons for switching and six for sticking with your petrol, diesel, hybrid or plug-in.

And these are followed by five reasons to go PCP – and five not to.

FOR SWITCHING TO AN EV

1. The volume and variety of electric vehicles (EVs) is increasing exponentially each year as car-makers significantly speed up supply. That means you have a much greater choice of model, price and size than has been the case.

Increased range and better charging infrastructure mean you shouldn’t have to worry about the battery running out of energy. Research suggests people no longer find ‘range anxiety’ a deterrent. You quickly become accustomed to regular charging and plotting your journeys. 3. Lower-cost versions of current pricier EVs are on the way or here now. And as the cost of producing each EV will fall significantly as volumes soar, you will benefit from lower prices.

4. The Government wants around 850,000 ‘electric’ cars on our roads by 2030, so you might as well bow to the inevitable switch and enjoy the benefits of major incentives. There are up to €10,000 in grants and VRT rebates to encourage you. The VRT system has been overhauled, so low- and zeroemission cars benefit most. There are also benefitin-kind concessions, reduced toll charges and a €600 installation grant for home charging. It comes to a lot of money.

5. It is estimated by the Sustainable Energy Authority of Ireland (SEAI) that you’ll save €2,300 over 10 years on a compact EV costing €35,400 compared with a similarly sized family hatch costing €28,000 when all benefits are taken into account.

6. Research indicates that as soon as you take a test drive in an EV, the mystique is dispelled and you will feel quite at ease.

AGAINST

1. It is early days. Wait for things to settle, choice to broaden further and for prices to fall.

2. If you have, and need, a diesel car or 4x4 that you require for heavy work/ mileage, an EV is a step too far too soon.

3. Yes, it is possible to do 30,000km and more per year in an EV, but for most people the reality will be to wait until the battery range improves. Diesel remains a big-mileage must.

4. Some rural parts of the country have really poor public charging infrastructures. Best to wait until you have comfortable back-up for the longer journey when you can’t charge at home.

5. Many EVs are far too expensive, too small or too large for many families.

6. Buying a plug-in or conventional hybrid instead of an EV gets you on the road to electrification but gives you the reassuring back-up of having an internal combustion engine (ICE) on board.

PCPS: WHAT’S SO GREAT ABOUT THEM? AND WHAT ARE THE DOWNSIDES?

Quick recap. PCPs let you lease a car over a (usual) three-year period. You pay a deposit/trade in your current car, or both. You agree monthly repayments and how many kilometres you’ll drive.

You agree what the car will be worth after three years – the Guaranteed Minimum Future Value (GMFV). At the end of the deal you can use ‘equity’ in the car towards a new deposit and start all over again. Equity is the difference between the GMFV and what the market will pay when the car is three years old.

A properly set-up deal will provide for a difference of enough or nearly enough value for you to go PCP again with a similar level of repayments without having to stump up extra cash.

However, if the car is worth only marginally more than the GMFV you’re in trouble and will have to find the money somewhere.

Don’t forget, you can also decide to pay the GMFV in full after three years to own the car outright. Most people don’t. They go for a new deal.

Or you can hand back the keys and walk away – not a realistic option.

PCP: FOR

1. It puts the use – I’m stressing use – of a new car within reach of many who could not otherwise afford to countenance such a prospect.

2. Properly done, you know exactly where you stand on repayments and minimum value.

3. Properly done, that should mean you move into a new car every three years without angst and with minimal additional outlay.

4. Interest rates are often keener than those prevailing for a bank or credit union personal loan.

5. A new car every three years reduces the risk of major repairs.

AGAINST

1. If your GMFV falls short you have to find the money to fund a rollover.

2. Never forget: you don’t own the car unless you foot the balloon lump sum waiting for you at the end of three years. And if you do decide to pay up, you’re effectively buying a three-year-old car with a higher risk of repair costs and lowering value.

3. The balloon payment can distort the real interest-rate cost of repayments.

4. If you take a bank or credit union loan, you own the car unless you default. There is no balloon payment waiting for you.

5. You have to agree to a certain mileage. If you exceed it there can be penalties.