The "ute tax" drew its share of controversy. Photo / Tania Whyte
Sales of passenger EVs (electric vehicles) will be up by a nearly a quarter next year according to an economic consultancy, despite the removal of subsidies under the new National-led Government.
This is partly thanks to the arrival of new affordable EVs from China, including a long-awaited EV ute, which the consultancy thinks will be popular with New Zealand’s ute-obsessed drivers.
A report from BMI, a unit of Fitch, the ratings agency, expects the vehicle market to roar back into life next year, after facing headwinds this year as potential car buyers stayed home, wary of nasty economic conditions. The report notes that even with the subsidies removed, the arrival of cheaper EVs will see the pace of electrification quicken from this year.
Passenger EV sales were expected to grow by 16.9 per cent this year. This will accelerate to 24.3 per cent next year.
The report said that cooling inflation and the removal of the Labour Government’s “clean car discount” scheme will “serve as tailwinds to vehicle sales in 2024 as consumer’s purchasing power strengthens”.
The same report said demand for utes would surge once the so-called “ute tax” had been repealed.
The report reckoned that battery-electric vehicles would comprise 14.83 per cent of passenger vehicle sales next year, rising to 34.83 per cent by the end of the decade.
The report remained “upbeat” about EV sales because of National’s promise to invest in an EV charging network, building 10,000 EV chargers by 2030.
“In our view, this development will be crucial to sustain EV demand over the medium and long term, as it will diminish ‘range anxiety’ concerns, which is a common issue among potential EV buyers,” the report said.
It said that new Chinese EVs from the likes of BYD, a large Chinese EV manufacturer, would “continue to support the country’s shift towards e-mobility”.
“This is because many of the new Chinese EV imports are expected to be well-equipped and offered at competitive prices, hence offering a strong price-value proposition to consumers,” the report said.
Next year, BYD plans to launch a new electric SUV in both plug-in hybrid and battery electric models, as well as an all-electric ute.
BMI said the ute could “significantly boost EV demand” in New Zealand “given the high popularity of utes... within the New Zealand consumer market”.
Santiago Arieu, BMI’s automobiles analyst, told the Herald “we remain upbeat on EV adoption in New Zealand, despite the potential removal of the EV scheme”.
“We believe that the arrival of new EV models, priced at competitive levels, will play a key role to further boost the adoption of EVs. Our optimism also relates to the arrival of the first electric ute model to the country, manufactured by BYD,” Arieu said.
Labour’s “clean car discount” became one of the most contentious policies of its last term in office. The policy works by charging a fee on the sales of polluting vehicles of up to $6,900 which goes to funding a discount of up to $7,015 on “clean vehicles”.
The level of fee and subsidy depend on the level of a vehicle’s emissions.
National and Act strongly opposed the scheme, as did New Zealand First, which killed a similar idea when it was first proposed during the Labour-NZ First-Green Government.
The scheme has led to massive EV uptake. Sales of passenger EVS grew by 306.6 per cent in 2021 and 146.3 per cent in 2022. BMI thinks this will fall to 16.9 per cent this year, but rise to 24.3 per cent next year as cheaper models flood the market.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.