Clean Vehicle Standard survives review as Government commits to retention

The Clean Vehicle Standard will stay, with the Government confirming this afternoon it will retain the policy that shapes the flow of low-emission vehicles into New Zealand, ending months of uncertainty over whether the scheme would be scrapped entirely.

Transport minister Chris Bishop says the first stage of the Government’s first-principles review found the standard to be the most cost-effective way to increase the availability of lower-emissions vehicles in New Zealand, with most vehicle industry stakeholders who took part supporting retention.

“In feedback on the review, industry noted that the Standard is now well established in New Zealand, with importers accumulating credits and charges over time. Removing it at this stage would be highly disruptive for the vehicle industry,” Bishop says.

Officials will now work with the vehicle industry on recalibrated settings, including separate targets for used imports, reporting back early next year ahead of new settings taking effect from 1 January 2028.

The decision matters for the EV sector because the standard is the last remaining supply-side lever pushing importers toward electrified product. Since the Clean Car Discount was repealed at the end of 2023, the standard has carried the load alone, and it was weakened substantially last November when the Government slashed charges by nearly 80%, dropping the top rate from $67.50 to $15 per gram of CO2 for new vehicles and from $33.75 to $7.50 for used, for 2026 and 2027.

Those reduced rates expire just as the new settings take effect, and the Government has not said where charges will land from 2028, leaving that question to the industry engagement now underway.

Abolition was a live option. Stage one of the review directly asked submitters whether the standard should be scrapped altogether, prompting Drive Electric to write to Bishop in July urging a public commitment to retention. Chair Kirsten Corson said an Official Information Act review of the consultation responses showed a clear majority supported keeping the standard, and called for its targets and penalties to be aligned with Australia’s New Vehicle Efficiency Standard, where penalties run at AU$50 to $100 per gram against New Zealand’s $15.

Industry reaction was quick, with BYD Auto New Zealand general manager Warren Willmot saying the decision sends an important signal to global manufacturers.

“For OEMs making decisions about where to introduce new technologies, policy certainty matters. This decision helps ensure New Zealand remains a priority market, giving local consumers access to the latest electrified and low-emission vehicles sooner rather than later,” Willmot says.

“Ultimately, that’s good for competition, customer choice and the country’s emissions reduction goals.”

The used import change is significant for the affordable end of the EV and hybrid market. The Government has agreed to set different targets for used vehicles, recognising they carry different and older technology than new vehicles. Used imports currently work toward the same target trajectory as new vehicles, at half the charge rates.

The standard sets annual carbon dioxide emission targets for vehicle imports that tighten over time. Vehicles that exceed their target incur charges, while vehicles that perform better earn credits. Importers remain free to choose the mix of vehicles they supply but must offset higher emission vehicles with sufficient lower emission vehicles to avoid paying net charges.