EV RUC exemption extension likely?
The EV exemption from road user charges (RUC) is due to expire on December 31 this year, but transport minister Michael Wood says he’s asked for advice on extending it.
Wood expects decisions on that and the possible extension length will go to the cabinet later this year.
“I expect to make an announcement on this matter in the next few months,” he says.
Wood says the Government recognises that climate change is one of the biggest threats faced, and it is taking the opportunity to show leadership in this area to reduce emissions and deliver other benefits.
Reducing carbon emissions is a key priority for this Government, and the transport system has a critical role to play in the transition to a net-zero carbon economy, Wood explains.
“To reduce vehicle emissions, New Zealand needs to rapidly increase the proportion of fuel efficient and electric vehicles on our roads.”
EVs don’t currently pay RUC, saving an EV driver on average about $800 annually compared to a diesel vehicle.
Wood says that unless existing legislation is changed, EV owners would pay RUC from January 1, 2022 at the same rate as all other light vehicles ($76/1000km).
“Increasing the uptake of electric vehicles is vital if we are to reduce emissions in the transport system,” Wood says, adding that officials are also following RUC-related ‘EV tax’ developments in Australia with interest.
“We are aware that the introduction of new charges on EVs, especially in the US, has seen subsequent declines in sales of EVs, so we don’t want to see that occur here.
“However, the situation is not exactly the same here as with Australia as they have a very different approach to vehicle taxation,” Wood says.
“For example, all fuel taxes and RUC in New Zealand are hypothecated to spend on roads and do not go into the general account, and vehicle licence and registration costs are significantly less.
“We also have a range of other proposals, including the Clean Car Import Standard and installation of EV chargers to support EV owners.”
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NZ RUC’s amount to 7.6c/km. What they are proposing in Victoria Australia is 2.5c/km. Where NZ’s RUC’s are set they would make operating an EV more expensive than an efficient petrol vehicle. Say a Nissan Leaf at 10,000km/year at 24c per unit of power and 86% charge efficiency and 6.6km/kWh would cost $422.80/year, add RUC’s at $760/10,000km, and you get $1182.80 variable cost to operate. Take a Toyota Corolla hybrid with a combined fuel efficiency of 4.2l/100km, or 23.8km/l. It would consume 420l of fuel per 10,000km, at $2.06/l, that would cost $865 variable cost to operate (excluding servicing). For a more efficient car like a Prius this would be about $700 or less than an EV would pay in RUC’s. With about 1/3 of this going into the NLTF an EV would be paying about 3 times as much road maintenance tax as an efficient petrol car and as a result would cost significantly more to operate. The situation becomes even more bizarre when you consider that electric motorcycles and scooters (the large road registered ones) would also be subject to RUC’s. People have been able to justify EV’s significantly higher up-front cost by using its lower running costs. As much as this doesn’t balance out anyway, this argument completely evaporates once they become subject to RUC’s. Then there are the vehicles that fall in between EV’s and petrol cars to consider, the PHEV’s and REX EV’s. If these vehicles remain exempt from RUC’s while pure EV’s don’t, they will introduce even more distortions. Running two different parallel tax regimes to collect road maintenance funds is becoming increasingly untenable. Most all of the distortions come from having two systems. Subsequent governments have studied this problem but have not put a solution in place. I think an EV exemption was a way of kicking the can down the road so to speak. I expect Wood to kick the can down the road some more and eventually it will be someone else’s problem. As an EV owner I can’t say I’m unhappy about that.
Definitely think EV owners should be paying RUCS!
Hmmm beginning to have doubts. Trying to do our bit here.
We have a 2016 Mitsubishi Outlander, brought new. When new it could easily do 50km’s to a charge. Meaning it could easily travel to a work place & back on a charge. 4 years & 35000km’s it will go 20-25 kms on a full charge meaning it is using petrol albeit not much. Mitsubishi NZ say this is normal & there is nothing wrong with it.
For me I brought a 2017 e bike for my transportation. 3000km & 3 & a half years later the battery died. $1200 for a new one. The old one will end up as land fill I guess.
Just saying