It’s been a tough year for proponents of electric vehicles.
From January 1, the Clean Car Discount ended and rebates were no longer available to purchasers. From April 1, electric vehicles and plug-in hybrids started to be charged road user charges.
Now, ACC levies are set to increase from $42.09 in the current year – the same as a petrol car – to $109.05 in the next financial year.
By the 2027/28 year, the levy for electric vehicle owners will be $122.24 – twice the petrol rate. Until now, electric car ACC rates have been discounted as the Government tried to boost EV ownership rates.
But this Government is generally unwinding those incentives. Petrol cars also pay ACC levies on petrol they buy at the pump.
Kirsten Corson, chair of Drive Electric, which represents the sector, said it had been “really hard”. She said while the changes to the clean car discount scheme and the road user charges had been communicated before the election, the ACC levy was a surprise.
“It is sending a message to the market which isn’t as positive as we would like.
“Obviously from a Drive Electric perspective, we want to see fair and equitable policies put in place.
“The average petrol car in New Zealand is 15 years old, the average EV is less than four. They are a lot safer cars with newer technology, the risk of accidents is a lot lower with EVs… in the bigger scheme, it’s a small impact but these all add up.”
Motor Industry Association chief executive Aimee Wiley said the Government wanted to maintain consistency in policy settings.
“However, the timing of this change could be better for both the new vehicle industry and motorists. The MIA strongly urged the Government to carefully consider the broader implications – timing, impacts and outcomes – of such policy decisions before determining when to proceed.
“Effective policy changes must strike a balance and consider consumer affordability and economic, social, and environmental factors affecting New Zealand.
“The MIA does not support the timing of this decision, which we believe is premature. We are deeply concerned about its impact on the already fragile EV market.
“A decline in consumer demand for EVs will significantly hinder the industry’s ability to meet the increasingly stringent CO2 targets set for January 1, 2025.”
Infometrics chief executive Brad Olsen said the incentives were never going to last forever.
“Now we’ve got a good proportion the Government is going, ‘They need to pay their way just as much’ – but it does feel like [the charges and levies] have come through all at once.
“It comes at a time when everyone has got a much-heightened focus on cost after going through the most intense inflation our country has had in a generation.”
The fuel excise duty probably “undercooked” the cost that petrol cars should be paying, Olsen said. This was calculated on the basis that a car that used a certain amount of petrol would have driven a typical amount.
“As cars got more fuel efficient it takes less fuel to do the same distance and for the same hit on the road. So cars are using less petrol and paying less fuel excise duty – all else being equal.
“If or when we can get better use charging on vehicles, if you got rid of fuel excise duty and petrol cars had to pay road user charge, we would probably see something quite similar between EVs and petrol cars.”
Registrations of new, full-battery electric vehicles were down 55% in the year to November compared to the same time a year earlier, Olsen said.
Plug-in hybrids were down 51%. Petrol vehicles dropped 5% and diesel 22%.
“The challenge here is you’ve got much more difficult economic times… [but we’ve seen] a much greater hit to those vehicle types.”
EVs cheaper post-rebate
Wiley said the messaging to consumers had changed and that made it seem as though EVs were not as affordable as they used to be.
“What consumers don’t necessarily know is that EVs are cheaper now than with the rebate. We knew over time the price of technology would come down anyway but the price of technology hasn’t come down, it’s more because of a sudden change in consumer demand.
“What used to be two or three months of stock became one or two years because no one was buying. You can’t sit on EVs – they don’t like to just sit still, the batteries need to be used or refurbished if they’re not used.”
This had led distributors and manufacturers trying to clear stock, Wiley said.
“There’s never been a better time to be buying [in] terms of price point but the problem is once they’ve cleared their stock the prices won’t stay like that forever.”
Some distributors were making massive losses this year, she said.
If people could charge their cars at home they would cost the equivalent of 40c a litre to run, Wiley said.
“The messaging to the consumer has been heavily dominated by policy this year rather than features. EVs are newer, safer, cleaner but it’s a new technology and that comes with hesitation for some people to want to adapt. When the ACC changes hit, that’s going to have as similar impact in the short-term as road user charges on EVs did.”
Corson said EVs still stacked up from a running perspective. “They’re still the most cost-effective option for Kiwis to drive. If you’re charging at home after-hours, it’s a massive saving. If you’re charging overnight it’s about $3 per 100km.”
This worked out to about $20 per 100km in a typical car.
The future
Wiley said the industry needed to consider how it could communicate more strongly how the move to EVs was less about policy change and more about opportunities for consumers.
“What’s best for the consumer, what’s best for the environment. What do we want our fleet in New Zealand to look like in the future?
“The sentiment around electric vehicles feels negative but I don’t think it should. They’re a really impressive product… I don’t think we should be playing one type of power off against another… when it comes time to buy our next vehicles, if we all buy the cleanest, safest newest car we can afford, it will have the biggest meaningful difference for human safety, human health and air quality and the environment long-term. If people thought about that it would make a big difference.”
Corson said it would take a while for New Zealand to “flip its fleet” to the point where more cars were electric.
“In the likes of Norway, where they’ve had a lot of incentives, over 90% of new car sales are electric. The reality is it takes decades to be able to flip your fleet. They’re sitting at over 35% of the total fleet but they’ve been working on it since 1990. If you look at New Zealand, we’ve got one of the oldest and dirtiest fleets in the OECD. It’s going to take a bit longer.”
Corson said she would like the government to consider whether the ACC levies were equitable.
Policies to encourage homes and businesses to adopt smart charging infrastructure would also be welcome.
“That’s set to save us billions of dollars – as opposed to doing it retrospectively, which will cost twice as much.”
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