Neeraj Lala: Toyota NZ warns Government's electric dreams are not realistic

Toyota NZ chief executive Neeraj Lala says a ban on petrols and diesel cars by 2035 is over-ambitious and unrealistic. Photo / Supplied

OPINION

In its quest for zero carbon emissions, the Climate Change Commission's proposed ban on petrol and diesel cars by 2035 ignores the reality that EVs will be in short supply for years to come and EVs do not offer the versatility that Kiwi drivers have come to rely on.

EVs are not the versatile ferry-the-kids, tow-the-boat, carry-the-tools SUV or ute that Kiwi drivers love and use every day. Unfortunately, EVs can't do everything yet. They are essentially small passenger cars, as were hybrids 25 years ago.

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As hybrids are transitioning into bigger, more functional vehicles, so will EVs - eventually.

As the developer of the hybrid Prius more than 20 years ago, Toyota has a long history of reducing emissions and continues to support the pathway to a zero emissions world.

Yet a possible consequence of the Climate Change Commission's draft advice to the Government is the appearance in New Zealand of zero-emitting yet potentially zero safety-rated electric vehicles in an attempt to make EVs affordable. In the short term, low-emission powertrains, new technology and advanced safety comes at a premium. But it becomes affordable over time, as have hybrids.

Rod Carr, chair of the Climate Change Commission. Photo / Michael Craig

As a result, because of the proposed ban on internal combustion engine imports, New Zealand could well end up with more vehicles on the road, rather than the intended reduction. I see Kiwis opting to own both an EV and keep their utes for business or SUVs to tow a boat.

And we will have to accept that it could be decades before your average hardworking Kiwi, let alone more vulnerable citizens, will be able to afford an EV. We will not have access to thousands of affordable and reliable pre-owned EVs from Japan for a long time.

As local policies are introduced in Japan, the small selection of EVs circulating in the domestic market will also carry a significant premium and be difficult for New Zealand importers to purchase. Most Kiwis will continue to drive ageing high-emitting cars or not drive at all due to high carbon taxes on petrol and imported cars. This will place significant pressure on our public transport infrastructure.

These are just some of the unintended consequences that many of us in the motor vehicle industry see as realistic scenarios if the Government takes on the narrow advice of commission.

Prime Minister Jacinda Ardern and Climate Change Minister James Shaw announcing the draft advice of the Climate Change Commission in January. Photo / Greg Bowker

The commission's approach to reducing transport emissions ignores commercial and economic realities and tries to solve the problem of transport emissions by advocating an outright ban on combustion engines. This will not deliver the intended results.

In fact, we believe there will be some unpleasant and undesirable outcomes if the commission's advice is adopted.

There are three key points that Kiwi car buyers and the Government need to think about when considering our pathway to low-emitting transport.

The first is supply. The second will be affordability, and the third could be a potential trade-off between human safety and cheap electric vehicles if they even exist.

Let's deal with the first. The commission thinks that 40 per cent of our national fleet of light vehicles will be electric by 2035.

As the EV revolution accelerates and more manufacturers announce new investment into research and development, we will have a far greater number of EVs on our roads in 2035 than now. But who can say in what proportion? There are too many supply questions to conclude it will be 40 per cent by 2035.

Your next new car will be a smarter solution. It will be more fuel efficient. It might well be a hybrid or even an EV.

But it is important to understand that the global production of pure EVs and hybrids is still only a fraction of total vehicle manufacturing. Raw materials for batteries are in short supply and global manufacturers will allocate new stock to bigger and closer markets than New Zealand.

Cost is another issue. New technology costs money. The cheapest new EV on the market in New Zealand today is around $60,000. We sell the very popular Toyota Corolla hybrid for $33,690. There is no pure EV Corolla on the horizon for that sort of money.

The logical, affordable option for many will be to buy an imported used hybrid or EV.

This is going to present problems for Kiwi drivers and the country.

There is not, and won't be in the foreseeable future, a massive pool of used EVs in Japan for us or other used importers to buy at the markets and bring to New Zealand. Less than 1 per cent of Japan's total light vehicle sales last year were EV.

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Importers will be forced to look elsewhere to meet local emissions standards.

The obvious market will be China, which is making more EVs right now than the rest of the world put together. Most, of course, are left hand drive, super small city cars with potentially zero safety features. So that rules out bringing in used EVs from China.

But there will be a supply of new, and potentially, cheap Chinese-made EVs. But therein lies the problem. Chinese cars are not designed for New Zealand roads and very few, at present, are ANCAP safety tested and rated.

It will come down to a choice or a trade-off between driving a well-built, safe and low-emitting car designed for New Zealand roads or an affordable but dangerous one- or no-star rated zero emissions vehicle.

I don't know about you, but I would not want my kids driving around this country's roads in a one-star rated vehicle, electric or not. I support the Ministry of Transport's view that safer cars save lives – zero-star vehicles in my opinion should not be sold in New Zealand.

How the country will power all these new EVs is another problem. The country has enough renewable electricity to power more EV cars and trucks. When we get to the commission's target, however, it gets expensive. We will have to increase electricity generating and distribution capacity substantially when the EV fleet gets to 15 to 20 per cent of the national fleet.

Neeraj Lala. Photo / Supplied

So, what is our solution? We have a 20-year history of developing and selling electrified cars and this will continue to grow at a rapid pace.

New Zealanders are buying affordable hybrids now – demand is already outstripping supply; we can't get enough hybrid stock ourselves from Japan - and will eventually buy EVs when they become less expensive and more capable.

Toyota will introduce two new EVs within the next 12 months, and I would love for them to be affordable and available for everybody. But this won't be the case as new technology carries a high cost of development and production when introduced which needs to be recouped.

I support ambition to move to a low-emission economy, and I admire the passion of wanting to move at a brisk pace. However, lots of things will need to happen to get to a decarbonised transport market. There needs to be a realistic transitionary period so we can, affordably, shift to lower emission vehicles.

• Neeraj Lala is chief executive of Toyota New Zealand.