New clean car scheme will raise more in levies from New Zealanders who buy petrol and diesel cars than it will pay out in subsidies for electric vehicles.
Bugger! Kiwis who buy a Toyota Hilux or Ford Ranger or other petrol and diesel vehicles next year are projected to pay $125 to $188 million in levies, to subsidise those purchasing electric vehicles.
That is on top of the $302m set aside by the Government to kickstart its EV rebate scheme – an initiative being described as "aggressive" by international commentators like TechAU analysis Jason Cartwright.
The scheme will contribute up to $8625 to the cost of a new EV. That's three times more than Australia's most generous scheme, in the state of Victoria.
And in what the industry says is a world-first, the scheme will also contribute to the cost of a buying a secondhand EV – $3450, so long as it's an import.
EV sales ground to a halt at the weekend after Transport Minister Michael Wood's announcement, as potential buyers put away their credit cards until the rebate scheme comes into force on July 1.
The Government hopes the rebate – available in full to anyone who buys a zero emissions EV like a Tesla Model 3, Nissan Leaf or Hyundai Kona – will help stave off a looming shortage of secondhand EVs.
New Zealand sources most of its secondhand imports from Japan, but that market is drying up as the government there dithers over whether to support fuel cell or battery electric cars.
A Newsroom analysis of light vehicles being advertised for sale on Trade Me indicates New Zealanders already face a long wait for a supply of affordable EVs. There were 665 secondhand EVs advertised on the site last week, including 162 plug-in hybrids – but the Climate Change Commission is warning that New Zealand will face constrained supply for the next 10 years as other countries build up their own new and secondhand EV fleets.
"We expect up to 19,000 new clean vehicles to enter the fleet as a result of this policy. There's a little bit of final modelling we're doing before the end of the year, just before we finalise the exact fees and discounts." – Michael Wood, Transport Minister
"Our transport emissions are the fastest growing source of greenhouse gas emissions in New Zealand so we need to start taking action now if we are going to meet our 2050 targets,” Wood said.
“New Zealand is actually lagging behind on the uptake of EVs, so we are playing catch up internationally. Our monthly registrations of EVs are around half the global average and sales are well below the 50 percent of monthly sales seen in some European countries.
"We do have a level of confidence that by working with the sector, we can ensure sufficient supply," Wood added. "We're not talking about changing the overall supply overnight. This is a scheme that will bed in over a number of years."
"But for example, in Japan over the last 10 years there have been 10 millions hybrid vehicles produced – so we do believe that there is access out there into the international markets if we do the work together and coordinate to get the access."
Drive Electric, an organisation representing electric companies, car importers and dealers, said New Zealand needed to look to manufacturers in China (like BYD, Geely and MG) and increasingly in India (Tata and Mahindra) to source the EVs it needs.
"We have now got one of the oldest, dirtiest, most unsafe fleets in the world. We vie with Lithuania and Czechoslovakia for the age of our fleet. We've got to decide at some point, is that the right answer?" – Mark Gilbert, Drive Electric
Chair Mark Gilbert said the industry had also been lobbying successive governments to relax fringe benefit tax on company EVs (which he admitted looked unlikely) and to provide for accelerated depreciation on EVs to allow companies to cycle them into the secondhand market more quickly.
These are all attempts to address the problem that the New Zealand Government has left its move into EVs very late, and other countries have placed advance orders on every EV being manufactured worldwide – leaving New Zealand facing being a dumping ground for the world's old diesel cars and utes.
Toyota NZ boss Neeraj Lala has warned this country is becoming "the Cuba of the South Pacific", a nod to that country's battered old classic cars dating back to before Castro's revolution.
And Gilbert, the former managing director of BMW NZ, echoed Lala's concern.
It was when the last assembly plant shut down that New Zealand had begun importing used cars, he said. It was meant to provide newer, cheaper cars – but instead this country had ended up with one of the oldest fleets in the world. "We have now got one of the oldest, dirtiest, most unsafe fleets in the world," Gilbert said.
"We vie with Lithuania and Czechoslovakia for the age of our fleet. We've got to decide at some point, is that the right answer?"
The EV rebate scheme has been a long time coming. Green MP Julie Anne Genter, when she was associate transport spokesperson, crafted a scheme that won support from Labour – only to have NZ First apply the handbrake at he last month.
Yet despite the policy's long incubation, Michael Wood admitted to Newsroom that much of the modelling about how much money would go in and out of the scheme was yet to be done. "We expect up to 19,000 new clean vehicles to enter the fleet as a result of this policy," he said. "There's a little bit of final modelling we're doing before the end of the year, just before we finalise the exact fees and discounts."
The Government is contributing $302m from this year's Budget, which is intended to act as a float. It will pay for the EV rebates from July 1 through to January 1, 2022, when the levies on petrol and diesel cars kick in. And thereafter the seed funding will see the scheme through its lean times until, at the end of the scheme's 10-year lifespan, it is paid back to the Government.
That, at least, is the idea. But the extent of the official modelling is to forecast that New Zealanders will pay $125m to $188m in levies (or fees, as the government calls them) into the scheme. That is on top of the $302m seed funding from the taxpayer.
At least to start with, the levies are set as high as $2780 to $5175 on the purchase of the highest-emitting utes and cars, like diesel Ford Rangers, Toyota Hiluxes and of course the notoriously dirty Rolls-Royces.
There are no figures on how much it will pay out in subsidies; nor are there any figures on how much it will collect in fees from 2023 through to 2031.
Even if every single one of Wood's anticipated 19,000 new clean cars was a zero emissions electric car claiming the full $8625 subsidy, that will still come to only $163m – only a small portion of what New Zealanders will pay into the scheme through the $300m seed funding and up to $188m in levies in the first year alone.
What officials do say is that it will cut the country's carbon dioxide emission by up to 9.2 million tonnes. But every 12 to 24 months the scheme's fees and discounts will be reviewed, in the expectation that the levy income that supports the scheme will drop away as the sales of petrol and diesel cars diminish.
Only cars under $80,000 and safer models are eligible for rebates, which will begin from July 1. For the first six months the rebates will apply only to EVs and plug-in hybrids – and Mark Gilbert says Drive Electric would prefer that's the way it stayed. Anything that doesn't have a plug isn't electric, he says.
But Wood said he intended to expand the scheme from January 2022, to include other lower emissions vehicles like old-style hybrids (such as the uber-familiar Toyota Prius) and even low-emitting petrol cars like the Suzuki Swift and Toyota Yaris.
