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Ireland’s general election delivered an early surprise on Friday as Sinn Féin, the pro-reunification party, emerged with a narrow lead in an exit poll.

But the country’s main opposition party, which had rattled business leaders in the campaign with promises of policy changes, tax cuts and spending pledges, looked set to struggle to form a government, compared with the combined forces of outgoing partners Fine Gael and Fianna Fáil, who were only slightly behind.

Sinn Féin won 21.1 per cent of first preference votes under Ireland’s proportional representation system, according to the exit poll conducted by Ipsos B&A; the conservative Fine Gael was on 21 per cent and centrist party Fianna Fáil had 19.5 per cent in the same survey.

Matt Carthy, Sinn Féin’s director of elections, called it a “phenomenal result” for the nationalist party, which won the most first-preference votes at the last election in 2020, but has plummeted in the polls in the past year.

“Sinn Féin may emerge from these elections as the largest political party,” he told Irish public broadcaster RTÉ.

The result was unexpected since Prime Minister Simon Harris’s conservative Fine Gael — which has been in office since 2011 and is seeking a record fourth consecutive term — had been falling in opinion polls after a series of campaign mis-steps, and had been in third place going into the election. Fianna Fáil had been seen as being ahead of Sinn Féin in first place.

Longtime rivals before teaming up in government in 2020, Fine Gael and Fianna Fáil had warned voters of the dangers of turfing them out given the risk of transatlantic trade shocks under a new term for Donald Trump.

Ireland has built its economic model on attracting foreign investment, including major US tech and pharma giants, whose huge corporation taxes have delivered eye-popping surpluses that could be at risk if the US president-elect follows through on tax and tariff threats.

Both Fianna Fáil and Fine Gael have vehemently ruled out any coalition with Sinn Féin, which was once the mouthpiece of IRA paramilitaries in Northern Ireland’s Troubles conflict. This would make its path to power complicated even if it emerges as the country’s most popular party.

Gary Murphy, politics professor at Dublin City University, said “on these numbers, a continuation of Fianna Fáil and Fine Gael and one other looks the most likely”.

But Aidan Regan, a professor of political economy at University College Dublin, wrote on social media platform X that “It will take four parties to form a stable government” given Ireland’s increasing political fragmentation.

Fianna Fáil’s director of elections, Jack Chambers, looked unperturbed.

“It’s all in the margin of error,” he told RTÉ. “It’s a three-way race now.” The exit poll had a margin of error of 1.4 per cent.

Damien English of Fine Gael called his party’s result “a very solid performance . . . Hopefully tomorrow will bring us even better news.”

Vote counting begins on Saturday.

Under Ireland’s proportional representation system, voters rank candidates according to their preference. As such, the way that lower-preference votes are transferred between parties will determine the final outcome.

According to the exit poll, which was carried out on behalf of the Irish Times, broadcasters RTÉ and TG4 and Trinity College Dublin, Fianna Fáil and Fine Gael both scored 20 per cent of second-preference votes, ahead of Sinn Féin on 17 per cent.

Carthy said that if Sinn Féin’s lead was confirmed, there would be an “obligation” on other parties to “reflect on the new make-up of the Dáil [lower house of parliament]”.

Sinn Féin had campaigned to oust the two parties that have dominated Irish politics for a century and deliver sweeping change to end the country’s housing crisis.

But Fianna Fáil and Fine Gael will be eyeing potential junior partners among the smaller parties in a bid to secure the 88 seats needed to form a government.

The small leftist Social Democrats party scored 5.8 per cent; Labour had 5 per cent. The Green party, the junior member of the outgoing coalition, had 4 per cent, according to the exit poll. Independents also polled strongly.

Social Democrats leader Holly Cairns was unable to vote after giving birth on election day.

Canadian Prime Minister Justin Trudeau met with US President-elect Donald Trump at the latter’s Mar-a-Lago estate in Florida on Friday.

The meeting came days after Trump said he would slap a 25% tariff on imports from Canada and Mexico, until both countries clamped down on drugs, particularly fentanyl, and illegal migrants crossing their borders with the US.

Trump’s threat sparked worries in Canada, whose economy is deeply intertwined with that of the US.

Over three-quarters of Canadian exports, worth $423 billion (€400 billion), went to the United States last year. And about two million Canadian jobs are dependent on trade.

Economists say imposing hefty tariffs would harm the economies of all countries involved.

Tricky time for Trudeau

The threat of US tariffs comes at a time when Canada’s economy is already slowing. That, coupled with the rising cost of living, has already hit Trudeau’s popularity.

A general election must be held in the country by late October 2025 and polls show the premier’s party is lagging behind the opposition Conservative party.

Trudeau this week pledged to stay united against Trump’s tariffs threat.

He called a meeting with the premiers of all 10 Canadian provinces to discuss US relations.

While some say Trump’s tariff threat is just a bargaining tactic, Trudeau rejected those views.

“It is important to understand that Donald Trump, when he makes statements like that, he plans on carrying them out. There’s no question about it,” Trudeau said.

sri/ab (Reuters, AFP)

Catherine Michaux and her husband Jean Yves seem to fit squarely into the target consumer group for electric vehicles.

A retired lawyer, she no longer needs to commute. The couple own a home where they could charge an electric vehicle on their own time, at lower cost. They have tried out electric car rentals in their small French village near Nice last year and enjoyed the experience.

Even so, the couple says they are put off by the cost of buying an EV. “People will never be able to afford electric cars. It’s impossible,” Michaux says.

The challenge is to kick off old habits, her husband adds. “We’ve always lived with engine cars. Those are the reflexes we have. We know there are gas stations all along the highway. Here, you have to think about your journey and plan it out a bit, and download a mobile app.”

Fifteen years after Nissan released the world’s first mass-produced electric vehicle in 2010, consumers in much of the world are still stubbornly reluctant to switch away from combustion-engine vehicles to fully electric.

What carmakers initially embraced as a necessary evolution has increasingly become an existential crisis for an industry that has spent tens of billions of dollars to develop electric vehicles and the batteries that power them with the hope that consumers will buy into the technology.

This week, Northvolt, Europe’s leading battery champion, filed for bankruptcy, throwing the continent’s entire industrial strategy under question. Vauxhall owner Stellantis on Tuesday announced plans to shut its van factory in Luton, putting about 1,100 jobs in the UK at risk, only weeks after Volkswagen warned of unprecedented plant closures. Ford also recently unveiled plans to cut about 4,000 jobs in Europe to address slower than expected demand for EVs.

Mathias Miedreich, former chief executive of battery materials maker Umicore which will join German automotive supplier ZF Friedrichshafen in January, says European carmakers and suppliers are likely to continue focusing on getting leaner next year instead of building capacity to expand EV sales. “The year of the rebirth of the electric vehicle is probably 2026, and not 2025,” Miedreich says.

America is also likely to fall further behind in its green transition, given president-elect Donald Trump’s promises to kill the generous subsidies for electric vehicles. Despite President Joe Biden’s ambitious target of having EVs make up half of all new cars sold in the US by 2030, they were only 10 per cent of the market last year.

The industry’s capacity to build EVs is expected to fall further next year with carmakers having revised their EV production plans by 50 per cent in the US and 29 per cent in Europe, according to Bernstein estimates. The penetration of EVs is expected to reach 23 per cent in Europe, 13 per cent in the US in 2025.

“The EV production forecast for 2025 has seemingly only gone one way — down,” Bernstein analyst Daniel Roeska wrote in a report.

The reasons for the slowing growth in EV sales range from the high upfront costs combined with concerns over driving range and charging infrastructure. The promise of lower energy prices faded with the war in Ukraine while high interest rates globally have pushed up monthly lease payments.

According to analysis by NGO group Transport and Environment, the average price of an EV in Europe was around €40,000 before taxes in 2020. Today, the price is around €45,000.

A separate study by the European Commission suggests that the median price European consumers are prepared to pay for an EV is €20,000, including new and secondhand sales.

But car executives also blame government policy in various countries which has not been consistent despite having the common longer-term goal of decarbonisation.

Matthias Schmidt, an independent car analyst, estimates that EV volumes will decline by 29 per cent this year in Germany, Europe’s largest market, after Berlin abruptly pulled purchase subsidies for EVs in late 2023. France is planning to slash EV purchasing subsidies by as much as half for some families next year.

Michael Leiters, the chief executive of McLaren, says the government subsidies for EV purchase in recent years had created artificial demand that was not sustainable. “We pushed too hard on battery electric vehicles,” Leiters says in an interview. “I think incentivisation is not healthy and so we have seen an unnatural acceleration rate, and then we go through a dip.” 

The industry and analysts are divided on what the right mix of incentives and inducements are to kick-start sales again. Car executives feel that governments in Europe are pulling back the incentives before consumers have fully warmed up to EVs — but governments are also aware that keeping sweeteners for too long can be risky and costly.

In China, a statewide project to electrify its car industry conceived almost two decades ago is bearing fruit.

More than half of new cars sold in China today are EVs or plug-in hybrids, while electric cars in Chinese showrooms are nearing price parity with petrol vehicles.

For Beijing, the policy to electrify the auto sector was conceived to help China rid cities of choking pollution and tackle crippling dependence on foreign oil. But it is now seen as a means to support decarbonisation and also give Chinese companies a path to global domination.

Government officials had concluded by the late 2000s that local carmakers would not be able to compete against western rivals in the realm of petrol vehicles.

But they saw the chance to beat the likes of General Motors and Volkswagen in EVs since the country had built a supply chain to produce lithium-ion batteries for mobile phones in large volumes at low cost. As a producer of rare earths, it also had strength in electric motors. 

Beijing began pilot programmes in 10 cities across the country to promote the use of electric vehicles in 2009 with an ambitious target to invest Rmb100bn ($13.8bn) in “new energy vehicles” over the next decade. 

Two years later, the World Bank came out with a set of recommendations urging China’s policy to move beyond purchase subsidies for EVs to include more comprehensive measures to develop charging infrastructure and investments in technology development and manufacturing capacity. 

“In the long run, consumers will only commit to EVs if they find value in them,” the World Bank said as it called for the creation of a vehicle finance market and leasing scheme as well as a secondary market for batteries to bring down the upfront cost of buying a vehicle.

China’s entire EV supply chain . . . is joined up from end to end. Europe has nothing that looks anything like that

When the State Council, China’s cabinet, came out with a plan for the automotive industry in the summer of 2012, Beijing had incorporated most of the World Bank’s recommendations with a strategy to develop the entire automotive supply chain from components and batteries to materials and charging facilities, with smart grids as well as renewable energy, according to an analysis by law firm Akin Gump. 

“China’s entire EV supply chain has been sewn up in an industrial strategy, which is joined up from end to end. Europe has nothing that looks anything like that,” says Andrew Bergbaum, managing director at AlixPartners.

But Europe’s free market cannot — and does not wish to — compete with China-style state capitalism. EU member states have agreed to impose tariffs of up to 45 per cent on imports of Chinese electric vehicles, arguing that heavy subsidies to local carmakers are making it harder for European rivals to compete fairly.

Shawn Xu, chief executive of Omoda and Jaecoo brands at Chinese carmaker Chery, argues that the success of the country’s automakers was not a result of government policy alone.

“All of the Chinese brands, especially the top brands, put a lot of investment to develop new technology,” Xu says, noting that consumers are now purchasing EVs and hybrids as much on in-car tech as any other aspect of the car. “This kind of technology innovation can bring benefit to consumers and this can also happen in the UK and the European markets.”

The potential and pitfalls of lavish incentives can be seen in Norway, the one country in Europe to successfully make the electric transition.

In October, 94 per cent of cars sold in the Nordic country were electric, putting it on course to hit a target of no new fossil-fuel passenger vehicles next year. 

But the country, whose wealth is based on fossil fuels, has achieved this boom with tax breaks and spending far beyond anything offered elsewhere in Europe.

94%Proportion of cars sold in Norway that are electric

As well as lower parking fees and road tolls, Norwegian drivers have been offered generous tax incentives to choose electric over petrol vehicles. Charging infrastructure is also ubiquitous, thanks in part to government support.

Yet even in a country with a colossal sovereign wealth fund, this level of support has proved unsustainable.

With the cost of electrification subsidies topping $4bn in 2022, Norway began to roll back benefits from last year but the government has continued to struggle to wean consumers off the big incentives.

Even as some in Europe are removing carrots, others are reviewing the use of sticks.

In the UK, the government is considering easing requirements for carmakers to hit sales targets of electric vehicles. European automakers are lobbying the EU to extend compliance periods to meet CO₂ reduction targets.

But some in the car industry remain optimistic that an EV revolution is still within reach, even without dramatic changes in government support.

Executives hope the industry outlook may change as companies from Renault, Stellantis to Volkswagen, Toyota and Hyundai plan to aggressively roll out dozens of electric vehicles next year to meet tougher new emissions rules in the EU. Some of the new models will be far more affordable with price tags under €25,000.

Surveys have shown that consumers are unlikely to return to petrol vehicles once they make the electric switch. EVs are also much quieter, accelerate like sports cars and can save money in the long run.

In the short term, the focus will be on developing cars at affordable prices, even if that means relying on Chinese battery manufacturers to bring down the cost of batteries. “Now, consumers want to buy a good car and don’t care if it’s electric or not,” Miedreich says. “So what all the car manufacturers are looking for now is the cost.”

Additional reporting by Edward White in Shanghai