The light EV RUC exemption was introduced in 2009 by then Environment Minister Nick Smith - at a time when there was a single electric vehicle on the New Zealand market (the Blade Electron) - then renewed by then Transport Minister Simon Bridges in 2016, as one of several measures to encourage people to buy electric cars.
After being rolled over several times, the exemption was due to finally expire in 2021. But then Transport Minister Michael Wood extended it until March 31, 2024 (for light EVs, or those under 3500kg; heavy EVs will be exempt from RUCs until December 31, 2025).
Now it seems there won’t be another stay of execution. “Changes to the current rules around RUCs are not being considered at present”, a spokesman for current Transport Minister David Parker told the Herald earlier this week (although today he also conceded that logistical difficulties could potentially lead to a further extension; see below).
Nor will there be a reprieve from National, should there be a change of Government in October. Last week, leader Christopher Luxon said EV owners should pay road user charges.
The party’s Transport spokesman Simeon Brown confirmed that policy this week. Brown said there was no inconsistency with Bridges’ policy, which was always meant to apply only until EVs hit 2 per cent of NZ’s fleet.
Brown said EVs were now at 1.8 per cent - and that was before new vehicle sales figures for a record June were revealed.
As owners raced to buy EVs before the Clean Car Discount reduced on July 1, new vehicle registrations hit a record 23,560 for the month, according to the Motor Industry Association. Of that total, a new high of 47.7 per cent or 8240 were electric-powered vehicles (2643 pure battery electric vehicles, 1318 plug-in hybrid EVs, and 4297 hybrids.) All up, electric vehicle sales were close to double that of June last year.
AA sees double-charging or ‘skip out’ risk
Hybrids (such as Toyota’s Prius) will not be subject to road user charges, but plug-in hybrids will be. Plug-in hybrids (or PHEVs) have a battery that can be charged from the wall, plus a standard petrol set-up.
When Wood was Transport Minister, he said some kind of system will have to be developed so that owners of plug-in hybrid cars are not double-charged, being hit up for both petrol tax and RUCs.
AA climate change spokesman Simon Douglas - a PHEV owner himself - said there was also the danger that plug-in hybrid owners could “skip out” of paying RUCs altogether, due to the difficulty of tracking when they used petrol or electric.
“Work is under way on improving the general functioning of the road user charge system for end users, including measures need to smoothly transition owners of light EVs into the RUC system when the current RUC exemption for light EVs expires. This work will include measures to address any double billing of fuel excise duty and road user charges for plug-in hybrid EVs,” a spokesman for Parker’s office said.
“As part of this work, Cabinet will also consider extending the current light EV exemption date.”
Logistical challenges
The AA’s Douglas said there would also be considerable logistical challenges involved in bringing 80,000 EVs under the RUC system by March 31 next year.
The project needed to be under way now but, as with the PHEV question, the AA had seen no evidence of substantive work.
The Herald has asked Parker for updates on both points.
From what he can see, Douglas says the Government “might have to kick the can down the road again”, simply because of the technical difficulties of monitoring the EV fleet by March next year.
Regardless, Douglas said the AA backed the Government reviewing EVs’ road user charges exemption.
“Currently, we have two forms of incentives - the Clean Car Discount and the RUC exemption, and one has clearly worked more effectively than the other.”
$2 billion hole
Green Party transport spokeswoman Julie Anne Genter argued it was too soon to scrap EVs’ RUC exemption.
“We’re making great progress in converting our fleet to low-emission vehicles, which is making a huge difference to reaching our climate targets and it’s clear that National has no interest in continuing that,” Genter said in a statement.
“A National Government would send our progress on climate change back decades.”
Douglas said that as well as going toward roading, funds from petrol tax and RUCs helped to subsidise public transport and cycleways.
The two measures brought around $4 billion a year into Crown coffers (roughly half from petrol tax, half from road user charges). If EVs remained exempt as NZ’s fleet electrified - and most car makers have said they will cease making petrol-powered light vehicles by 2030 or earlier - then the Government would have a $2b hole in its books. EV RUC revenue could also go toward upgrades to NZ’s power infrastructure.
National: Unspecified alternative incentives
“National does not intend to extend the road user charge exemption for electric vehicles which ends on March 31, 2024,” Brown told the Herald.
“National put the exemption in place to encourage early adoption of EVs but with tens of thousands of EVs on the road now it is important that all road users contribute towards the maintenance of our roads.”
While the party also opposes the Clean Car Discount, Brown said “National continues to support increased EV uptake and will be announcing further policy closer to the election to support greater uptake of EVs”.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
