Fees go up, rebates go down as Government rejigs feebate EV scheme

The Government is tweaking the settings of its Clean Car Discount policy - dubbed the “ute tax” by National - narrowing the range of cars the scheme will apply to and loaning an extra $100 million into the scheme.

The tweaks include a hike to fees and a cut to rebates paid out under the scheme. One area where the scheme is being broadened is in rebates for zero emission used import vehicles, which will increase from $3,450 to $3,507.

The Herald can also reveal that early work has begun on including trucks into a similar scheme, although this appears to be some way off.

Transport Minister Michael Wood said the changes were essential for the scheme’s sustainability, noting it was so successful that it was driving a level of EV (electric vehicle) uptake not expected until 2027.

“With over 100,000 rebates granted since the scheme came into effect in 2021, we currently have one of the fastest uptakes of EVs in the world,” Wood said.

“The scheme is successfully exceeding industry and Government projections, with 20 percent of all new passenger car sales being electric in 2022. A substantial increase from eight percent in 2021,” he said.

"Switching to an EV is like buying petrol for 40c/litre", says Transport Minister Michael Wood. Photo / Mark Mitchell

The policy works by adding a fee on the purchase of polluting cars to fund the purchase of “clean” cars, either low-emission conventional vehicles, hybrids, or full electric EVs.

The scheme was kick started with a $300m loan to cover any mismatch between the level of fees collected and the number of discounts paid out. However, the scale of uptake was so steep that the fees collected failed to match the cost of rebates.

The $300m loan was swiftly depleted, requiring another $100m to be tipped into the scheme in the coming Budget.

The Government said the scheme will nevertheless reduce 230 per cent more emissions than originally estimated by 2025, and 50 per cent by 2035.

It is also forecast to save New Zealand from importing 1.4 billion litres of petrol. At current prices the economy will save an average of $325 million a year on fuel.

Wood said the new settings would target “rebates for new and used imports emitting less than 100 grams of CO2 per kilometre compared to 146 grams under the original scheme. This will include battery electric vehicles, and plug-in hybrids”.

The Government also positioned the changes as a cost of living policy.

“Our transition away from fossil fuels to New Zealand-generated renewable energy is crucial to tackling the cost-of-living crisis long-term. Switching to an EV is like buying petrol for 40c/litre, which can make a big difference to household budgets,” Wood said.

‘Not just rich people’ - Carmel Sepuloni

Acting Prime Minister Carmel Sepuloni spoke to Newstalk ZB’s Mike Hosking this morning.

On the Clean Car Discount policy, known as the ute tax, Sepuloni said this was a successful scheme that had far exceeded what they had anticipated in terms of the take-up of electric vehicles.

”It’s important for us as a country, it’s important for us with regards to our carbon emissions and decreasing those and so I think we should be celebrating this.”

Put to her that this was simply taking a vehicle from people who cannot afford it and giving it to people who can already afford it - as well as giving them a cheaper deal - Sepuloni acknowledged that it was still worth celebrating because we need to bring more electric vehicles into the country.

”We needed to get much more widespread use of electric vehicles to bring down our carbon emissions.

“We’ve all intensely felt the impacts of climate change recently.

”And so this is a successful initiative that is helping us with regards to our carbon emissions reductions and so we should be celebrating that.”

Pushed still that this only benefited wealthy people, she said: “It’s not just rich people. There [are] lots of middle New Zealanders who, where they can, turning to electric vehicles and that’s really important.”

Sepuloni said that meant more second-hand electric vehicles would be made available down the track and therefore more New Zealanders would get access to these cars.

$80 million paid out on Teslas

National has released figures showing the number of luxury cars like Teslas that have claimed the scheme. Its transport spokesman Simeon Brown attacks the scheme as a tax on utes to fund Teslas.

More than $80m has been paid out in rebates to Tesla vehicles, subsidising just under 10,000 individual vehicles.

The discount is restricted to cars sold for less than $80,000, a feature designed to stop the scheme from subsidising too many luxury vehicles, but price decreases in the luxury EV market have meant many carmakers are offering some models within the discount’s price range.

Meanwhile the Herald can reveal the Government is looking at extending the policy to trucks and heavy freight.

A document from February, released to the Herald under the Official Information Act, shows that a “Freight Decarbonisation Unit” had been established in the Ministry of Transport with a mandate “to set the groundwork for a Clean Truck Discount”.

The unit was also tasked with laying the ground for a “a future zero emission heavy vehicle mandate and important changes needed for the transport regulatory system”.

It would also look at making sure the freight supply chain and national EV charging network could cater for clean trucks.