Drivers who buy new cars from July 1 will be able to get taxpayer-funded rebates of almost $8700 for a new electric or plug-in hybrid car, and about $3,500 for used cars.
But those who buy petrol vehicles will cop the cost under the Government's plan announced today – from January 2022, buyers of new petrol cars will have to pay a fee of up to $5875 while those buying newly imported used cars face fees of up to $2875.
That fee would be based on emissions – for example, it would add $2,900 to the cost of a new Toyota Hilux, $1230 to a Kia Sportage, and $830 for a Nissan Navara.
It is expected to raise between $125m and $188m in its first year - and the revenue from the fee was expected to fully fund the rebates on electric vehicles.
Petrol cars with lower emissions – such as a Toyota Rav 4 or Suzuki Vitara – would not face fees.
The measures were announced by Transport Minister Michael Wood and Climate Change Minister James Shaw today, and are a rejig of the controversial "feebates" scheme which was scuttled by NZ First last term.
It offers rebates of $8,625 for a new electric car and $5750 for a plug-in hybrid car – but will not be given on cars that cost $80,000 or more. Cars must also have at least a three-star safety rating to be eligible.
Rebates of up to $3,450 will be given to those who buy used electric cars and $2,300 for plug-in hybrids. From January, smaller rebates will also be offered to buyers of other low emission cars.
The rebates will only be given for newly imported new and used electric cars which re registered after July 1, not those already in the New Zealand market.
Fees on higher emitting vehicles will start from January 1, 2022.
As with the rebates, Wood said those fees would not apply to cars already in the country, which meant low-income families who relied on cheaper second-hand cars would not face the fee.
The AA described the package as "well-balanced and positive," saying it was pleased that safety standards had been included in it.
AA Policy and Research Manager Simon Douglas said the emissions levels used to set the fees for imported petrol and diesel vehicles were pragmatic, and would mean that high-emittting vehicles faced the charge while a good range of lower emitting cars would not.
National Party transport spokesman Michael Woodhouse said his party did agree with financial incentives for people to buy electric vehicles, "but does not agree with financially punishing those who can't."
He said National had supported moves to exempt EVs from fringe benefit tax, extend road
user charge exemptions, allow EV users access to bus lanes and free parking, and provide more funding for development of low-emission technologies.
However, a fee on those who bought petrol cars amounted to a tax, which would punish those for whom an electric vehicle was not a realistic or affordable option.
"The people who benefit will be higher-income earners who now don't have to pay as much for a Tesla. We don't think it's fair to make tradies pay more for a Hilux so wealthy executives can get a discount on their next electric car."
Act leader David Seymour also said the 'feebate' scheme amounted to "taxing the tradies to subsidise Teslas."
Under the scheme, somebody buying a $75,000 Tesla Model 3 EV would get a $8625 discount – although the higher-end Tesla and electric cars which cost more than $80,000 do not qualify for it.
A farmer buying a Toyota Hilux would be stung with a $2,900 fee.
Seymour said it amounted to a new tax on tradies, farmers and others who needed bigger vehicles for which there were limited or no electric vehicle options. He said that would include those with large families.
"The social justice wing of the Green Party should ask why the party is prepared to tax people who drive cheap, reliable cars, just so the well-off environmental wing can buy a Tesla."
He said drivers of petrol cars already effectively subsidised electric car drivers through petrol taxes, the emissions trading system tax, and road user charges.
"Motorists pay 77.3c a litre in petrol taxes, plus an ETS tax of 9c a litre. In Auckland, there's a further 10c regional fuel tax. GST is charged on top, taking total tax to around 99.3c a litre (and 110.8c in Auckland). That means EV owners get a subsidy of at least 99.3c a litre in taxes."
Wood said New Zealand's uptake of electric vehicles was well behind that of most other countries:
"Our monthly registrations of EVs are around half the global average and sales are well below the 50 per cent of monthly sales seen in some European countries."
Wood said a discount on low-emission vehicles funded by a fee on higher emitting vehicles was the best way to persuade people to invest in electric or hybrid cars.
"It's a common policy overseas, a recommendation of both the Climate Commission and the Productivity Commission, and is supported by the likes of the Motor Industry Association – it's time to get moving with it."
The funding was set aside in the Budget and is part of the Government's efforts to push down transport emissions, which currently make up almost half of all New Zealand's emissions.
Last week's Climate Commission report recommended banning imports of petrol and diesel cars by 2035 at the latest, and a boost in the proportion of biofuels used in New Zealand.
The inaccessibility of electric charging stations has been put forward as one obstacle to increased use in electric cars - Wood said there were already electric charging stations every 75km along most state highways, and the Low Emission Transport Fund was getting a boost to add more, as well as biofuels capacity.
The Government was also consulting on a Sustainable Biofuels Mandate, which was aimed at further developing New Zealand's biofuels industry and reducing emissions from cars, trucks, ships and planes by 1.3 tonnes until 2025, while zero-emission policies were worked through.
An electric vehicles advisory group would be set up soon to advise the Government on policy.
Energy company Vector welcomed the feebate development, saying it was already doing work on how to cope with the extra demands on the electricity network, including using 'smart' charging and trying to soften after-work loads on the system when people arrived home and plugged in their cars.