A new study has revealed a jump in the number of Kiwis who want to make their next car an electric vehicle (EV) and advisory firm EY says the market has reached a global tipping point.
EY's survey of 500 New Zealanders - part of a wider global study of 13,000 consumers in 18 countries - found 49 per cent of NZ car buyers intend to purchase a fully electric, plug-in hybrid or hybrid car.
That's a 19-point jump on the same survey last year, says Ashley Kearton - the head of EY NZ's power and utilities practice.
And it points to New Zealand as ninth of 18 countries surveyed.
Car buyers in Italy (73 per cent), China (69 per cent) and South Korea (63 per cent) were the most committed to buying an EV, while consumers in Australia (38 per cent) and the US (29 per cent) were the least.
The global average was 52 per cent - the first time a majority of car buyers wanted to go electric.
Kearton says environmental concerns loomed large last year, and continue to be a major factor, but the spike in EV buying intentions this year has been fuelled by the surging price of petrol combined with the new Clean Car Discount programme - which offers rebates of up to $7500 for low-emission vehicle buyers and, since April 1, has penalised buyers of higher-emission vehicles up to $5175.
In a 2020 report, national grid operator Transpower predicted the tipping point for EVs would come at some point between 2025 and 2030 as electric vehicles reached price parity with petrol cars.
But EY's survey found 90 per cent of Kiwis who wanted to buy an EV were prepared to pay a premium - and just over a third were willing to pay up to 20 per cent more.
Regardless, not all of those buying intentions will translate into sales.
But if you order a Tesla Model 3 today, the estimated delivery time is May 2023.
"That's consistent with what we're seeing across other manufacturers," Kearton says. If people want their new vehicle to arrive within a year, some will have no choice but to plump for a petrol car.
Tesla's Model 3 was far and away NZ's best-selling electric car in the year to March - a period that saw the amount Kiwis spend on imported electric and hybrid vehicles more than double to $877 million in a passenger vehicle market worth a total $6.1 billion, according to Statistics NZ figures.
In the near future, Covid supply chain disruption and component shortages - particularly lithium for batteries - will continue to crimp market growth, and some issues will be long-term. Tesla chairwoman Robyn Denholm used her Apec keynote to call on governments to coinvest in new lithum and nickel mines to help address a supply crunch in key materials.
One factor should help us out here: Kiwis' willingness to buy second-hand.
EY's survey also showed that New Zealanders are more likely to purchase a used electric vehicle than a new one - the only Asia-Pacific country where this was the case.
"Even more so than in many other countries, creating a pool of affordable, second-hand EVs will be key to making EVs accessible for all consumers and accelerating uptake in New Zealand," Kearton says.
One issue with buying second-hand is that the lithium-ion batteries in an EV degrade - just like the lithium-ion batteries in your phone or laptop that no longer lasts as long as when you bought it.
For example Tesla says with its Model 3, its battery warranty covers "eight years or 240,000km, whichever comes first, with minimum 70 per cent retention of battery capacity over the warranty period".
And a few years ago, social media was rife with war stories over the first-generation Nissan Leaf and its overheating battery - a major issue given batteries account for roughly a third of the cost of an EV (the Leaf would later improve to the point where it topped a Consumer NZ survey on EV reliability).
But experts say EV battery management systems are improving all the time, and a cottage industry has emerged for budget battery replacements.
The charging parks at Northwest used to be tumbleweeds, but rapidly filled up after the Clean Car Discount. Today, all 8 slots taken (albeit 1 by a cheeky ICE vehicle) pic.twitter.com/ExgY1zbuCO— Chris Keall (@ChrisKeall) April 25, 2022
Kearton says "range anxiety" is also becoming less of an issue.
The survey found those who already own EVs are less worried about how far an electric car can travel on one charge (a Tesla Model 3 can manage up to 640km), or charging infrastructure.
The top motivator for second-time EV buyers is that "EVs now have longer ranges", and just 27 per cent of EV owners were concerned about charging infrastructure compared to 36 per cent of those currently without an EV, Kearton says.
In New Zealand, only 21 per cent of EV drivers charge their car at home every day, the survey found.
"The old issues of worrying about charging infrastructure and the range of EVs will soon come to an end," Kearton says.
"We know that the vast majority of journeys are relatively short, and as charging infrastructure continues to grow and battery quality continues to increase, we will start to see these concerns fade. It is also clear that those who own EVs know this already. They're looking at new models with greater range, which in turn is encouraging them to buy an EV again.
"As more people buy EVs and realise this for themselves, range-anxiety will fade even further."
Long-term, a transition to EVs is a certainty, given every major car maker says it will abandon petrol car production from 2030, if not earlier.
But in the medium term, there are stumbling blocks. EVs are likely to lose their Road User Charges exemption from March 2024 as the Government looks to plug the multi-billion hole that will emerge in its petrol tax revenue, and Crown-owned Transpower and other players on the power market grapple with an anticipated 20 per cent surge in electricity demand as EVs go mainstream.