Lawrence Yule: Electric car subsidy a flawed plan

Subsidising electric cars won't work, writes Lawrence Yule. Photo File

COMMENT:

The Government recently announced a "Feebate Scheme" to help purchase electric vehicles to help us reduce emissions produced by cars.

The motive behind this policy is to tax the larger, less efficient vehicles while subsidising smaller, electric and hybrid vehicles.

This means that larger vehicles will attract a new tax of up to $3000 and electric vehicles will see a subsidy of up to $6000, applying to both new and used vehicles.

National supports incentivising people to buy electric vehicles, providing their lifestyle can accommodate them. From the surface this looks like a concept that is worth exploring, I have found however after investigation that it is unlikely to work.

The demand for electric and hybrid vehicles has increased enormously. Using the law of supply and demand, when the market does not have enough cars to meet supply, the cars currently go to the customers willing to pay the most.

At the moment those customers are predominantly in Asia and Europe. Due to these countries paying more, New Zealand cars are rationed. The delivery time for a reasonable fleet of electric vehicles can be over a year. In such a market, a $6000 subsidy is likely to be built into the pricing model, which means the listed price by the retailer will actually be increased to compensate for the subsidy.

For many of the comparable family vehicles and SUVs, the price differential for petrol/ diesel and electric is often around $30,000. Many families will simply not have the resources to change despite a desire to do so and the $6000 subsidy being provided by this Government.

There are a limited number of options available when it comes to having a large electric vehicle. This would be problematic for those who require utes or vans as there would not be as much range or power. These same vehicles are at the hub of the production trade and farming sectors. Equally, many of the new petrol and diesel utes are extremely fuel efficient compared to their predecessors.

Electric vehicles also possess negative issues which are not as publicised. They are built using rare and precious minerals, and the battery life is limited.

A replacement battery can cost up to $10,000 and there is currently limited options for disposal of old batteries. I am very confident that technology will allow recycling and reuse measures, however that is not available in a mass capacity yet.

The Government announced this new package without any reference to the National Opposition, despite a genuine attempt across Parliament to lead climate change in a non-partisan way. National is trying to support sensible legislation that depoliticises the very important climate change challenge we face.

National sees the latest announcement as a new tax on the production, trade and farming sector, without any significant lift in electric car ownership.

National had set a target of 40 per cent of the Government fleet being electric by 2021. While in Government, National was on track to achieve bringing in at least 9000 vehicles.

Taking this into consideration, it was disappointing to learn that under the Labour coalition Government only 135 new electric vehicles have been added to the Government fleet.

Dealing with climate change will require massive change, however, it needs to be done in an agreed upon way, which should be supported by science and which takes measures that will actually work.

* Lawrence Yule is MP for Tukituki