National gave the electric vehicle community much to chew on this week when it announced it would dump the Government’s clean car discount if elected – while promising 10,000 more EV charging stations. Jamie Morton explains the big picture.
For the better part of a decade, there’s been a succession of bold policies and schemes to try to build up New Zealand’s fleet of climate-friendly light electric vehicles.
There’s been some shift in that time, with registered battery-electric EV numbers growing from fewer than 200 in 2013 to more than 63,000 today.
As at mid-year, around half of new car sales were vehicles with some form of electrification.
Still, the 4 million light vehicles on our roads today are overwhelmingly petrol and diesel-powered – a big chunk are more than 15 years old – with a little under a decade to meet a national goal for EVs to make up about a third of the light fleet.
Policymakers trying to change this picture have repeatedly run up against the three biggest barriers for prospective EV owners: a limited driving range, a lack of charging infrastructure and a generally higher up-front purchase price.
In 2016, the National-led government tried to shift the dial with a policy package that extended an exemption for road user charges on light EVs until they made up 2 per cent of the fleet.
Three years later, the Labour-led government introduced its Clean Car Discount of up to $8000 on new purchases of zero-emissions vehicles, together with a proposed charge of $3000 for new vehicles that emit more than 250g of carbon dioxide per kilometre.
When the discount finally came into effect in July 2021, buyers of used EVs were able to access subsidies of up to $3450 – and up to $2300 for used plug-in hybrids.
The next year, the Government moved further with a Clean Car Standard aimed at reducing the average emissions of most new and used imported passenger vehicles to 145g per kilometre travelled in 2023, dropping to 63.3g/km in 2027, with financial penalties if the targets weren’t met.
Another policy to slash our aged vehicle fleet’s carbon footprint was a “scrap and replace” vehicle scheme that would have made grants to low- and middle-income households so they could discard a clunker and replace it with a lower-emissions alternative.
That programme, however, was junked amid the policy bonfire that came with this year’s switch in Labour leadership.
So what’s happened now?
National’s big pre-election announcement was a promise to build 10,000 charging stations – about 10 times more than currently exist – towards which it would invest about $257 million over four years.
Party leader Christopher Luxon said that move, which would also eliminate the need for resource consents to build new charging points, would help address the “range anxiety” he singled out as a factor stopping people from switching.
At the same time, the National would axe the Clean Car Discount – which it calls a “ute tax” - arguing that it’s poor use of public money and unfairly taxes essential work vehicles used by farmers and tradies unable to shift to EVs.
“The move to EVs will happen without subsidies as those who can afford new cars choose to reduce their personal carbon footprints and their dependence on fossil fuels,” Luxon said this week.
The announcement predictably drew a backlash from the Green Party, whose transport spokeswoman Julie Anne Genter said the discount was one of the most successful climate policies New Zealand had.
“In June 2023, one in two cars sold was an EV. Scrapping this policy makes no sense and will likely reduce the ability of New Zealanders to access EVs and increase emissions,” Genter said.
She pointed out the Government already had a plan to put charging hubs every 150km to 200km on main highways by 2028.
“It makes absolutely no sense to cancel the one policy that is doing more than any other to drive the massive adoption of EVs around the country.”
Labour’s Tangi Utikere made similar points this week on TVNZ’s Breakfast.
“The real thing is this that cost is a barrier for people to enter the market in terms of obtaining EVs,” he said.
“What we’ve seen is that the clean car discount has really provided an opportunity for folk to enter the market.”
Will scrapping the discount really make a difference?
University of Auckland senior lecturer Dr Tim Welch said the discount was a significant subsidy for EVs, which remained substantially more expensive than traditional internal combustion engine (ICE) vehicles.
“So that subsidy does appear to help. You can see in the data that there has been a bump in sales, and that’s probably attributable to the subsidy,” he said.
“Anytime you make things cheaper, you’re going to increase costs, so I think it has been successful.”
At the same time, Welch said, that bump in uptake had since been tapering off.
“I think what happened is, we captured a lot of the people that were interested but needed that extra nudge to move from traditional vehicle to EV.”
Without the subsidy – something that’s commonplace around the developed world - New Zealand might also be less of a desirable EV marketplace for automakers.
“Automakers wouldn’t normally be working at trying to sell into the market, but with that subsidy, it encouraged them to do that,” Welch said.
“So, without that additional attention to New Zealand, it’ll be more difficult to find supply of EVs as well.”
Meanwhile, Welch had plenty of his own questions about the scheme.
“The biggest issue to me that comes up when we’re talking about these kinds of subsidies, is the fact they haven’t really been means-tested,” he said.
“We don’t actually have any data on who’s been receiving the subsidies and their income levels.
“The people who need to be subsidised the most to be more sustainable in their transport modes would be lower-income people, but it’s not likely that those are the ones who have received this subsidy.
“We had the option to have an income-based subsidy, and that got nixed earlier this year.
“But that may have been more effective in moving a lot more lower-income people to more affordable modes of transport, if you want to call an EV that.”
Like Welch, the AA’s chief policy and advocacy officer Simon Douglas described the task of boosting EV uptake as complex.
“I don’t think the ending of one policy or another is going to be the death knell,” he said.
“It’s about how those policies are mixed together, along with what car manufacturers are providing to New Zealand.
“Arguably the most important thing is how quickly supply can ramp up, and how quickly different varieties of vehicle for different tasks can ramp up.”
Douglas said the AA’s position on the clean car discount was that it would run its course in time.
“Once you reach price parity, there’s no need to discount or penalise in any way, as long as we still have a Clean Car Standard in place.”
The group was happy to see that standard remain in place – but still felt the discount had more time to run.
“If there was a government in place that wanted to end the discount, it may well depend on what timeframe they put on that.
“A slightly longer timeframe gets you closer to that price parity point where the market, for want of a better term, can take over.
“The other point we’d make is that when that policy is ended, by whoever it is, we’d like to see really good consultation and dialogue with the industry.”
Douglas said the AA was pleased to see National’s pledge to boost the number of charging stations around New Zealand, which had been one of the association’s eight specific calls for the election.
Welch also agreed that boost would make an impact – and please existing EV owners, particularly.
“But there’s so many challenges with having electric vehicles as our primary type of vehicle that having a bunch of chargers around the country is only one small piece of the puzzle.”
Jamie Morton is a specialist in science and environmental reporting. He joined the Herald in 2011 and writes about everything from conservation and climate change to natural hazards and new technology.