Incentives needed to reach EV uptake goals

Most electric vehicle owners think increased financial incentives are needed for New Zealand to achieve its long-term goals for low emission transport.

Three quarters (79%) of the 542 EV owners who participated in the latest Flip the Fleet survey either ‘strongly agree’ or ‘agree’ that financial incentives will be needed if more than half of new vehicle registrations are to be electric by 2025.

“EV owners are in a good position to know what stops others from switching,” Flip the Fleet co-founder and Otago University sustainability centre professor emeritus Henrik Moller says.

“We are constantly fielding questions about costs and the practicality of EVs. The higher cost of buying an EV puts many people off, even though their running costs are a lot lower than for a combustion vehicle of about the same size and power.

“Finding a way to subsidise the initial purchase and further reduce EV running costs would be a game changer in New Zealand.”

Subsidisation of new EVs is the key, the survey shows.

“There will be huge scramble for the EVs around the world in the coming decade, so our relatively small market is unlikely to compete unless we subsidise the manufacturers, dealers and purchasers to buy electric vehicles,” Moller says.

New Zealand has built its EV fleet mainly by importing second-hand cars from Japan and the United Kingdom, the only readily available sources of right-hand drive EVs.

Kiwis have thereby indirectly benefitted from subsidies paid to the original owners by the Japanese and UK governments.

“Reliance on second-hand EVs means we get the new EV technology late and the manufacturer’s warranty is voided when it is exported from its country of origin,” Moller says.

“We are soon going to have to pay our own way by subsidising purchase of new EVs for sale in New Zealand if we are to secure an adequate supply of the latest high quality EVs with full manufacturers support.”

A system of ‘feebates’ where highly emitting combustion vehicles are penalised by having to pay higher registration fees is favoured by most EV owners. This additional fee is then transferred and distributed across the lower emitting vehicles like hybrids and electric vehicles.

“It’s just another form of the polluter pays principle. Feebates could be set to be fiscally neutral, so the tax payer is not subsidising uptake. Instead, those choosing bigger and less fuel-efficient cars are subsidising others that choose low emission vehicles,” Moller says.

Other proposed interventions include a revision of the Fringe Benefit Tax rules, higher depreciation rates for tax write-offs of EVs, removal of GST on new EVs, reduced or even free electricity at off-peak times, low interest loans for buying EVs, lower insurance costs, more stringent warrant of fitness checks for emissions, and increasing road user charges on higher emitting vehicles.

“Some of our members think this survey put the cart before the horse,” Moller says. “A rethink of the government’s current EV target, to have 64,000 EVs registered by 2021, is needed first.”

“We don’t know what that target was based on, nor whether it will be enough to put us on track to deliver New Zealand’s zero carbon economy ambitions and meet our international obligations for combating climate change.”

Moller says a thorough cost benefit analysis can follow to identify how much public money is needed.

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