EV incentives still needed – Drive Electric

Research shows the new government’s policy to remove the Clean Car Discount and weaken the Clean Car Standard could mean between 100,000 and 350,000 fewer electric cars on New Zealand roads by 2030, and increasing emissions by between 900 and 3000 kilotonnes, says e-mobility advocacy group Drive Electric.

It adds the policy could also increase costs to the economy by between $900 million and $3.5 billion, mainly from importing more fossil fuel.

Drive Electric says the newly released research demonstrates the need for EV incentives to maintain rates of EV uptake out to 2030 to save the economy money and increase emissions reductions, as parliament prepares to consider legislation to repeal the Clean Car Discount (CCD).

“We understand the new Government intends to remove the Clean Car Discount by 31 December 2023,” says Drive Electric board chair Kirsten Corson.

 “What this research shows is that there are costs associated with doing so, both to the economy and to emissions. The clear implication is that we need an alternative form of EV incentive.

“A new ICE vehicle bought today will stay on roads for 20 years consuming costly oil and releasing emissions,” Corson explains.

“Cumulatively, this research is telling us this will cost the economy at least $900m and probably more, and make it much harder to hit our 2030 emissions targets.

“Without EV incentives, the carbon price will need to be higher to hit New Zealand’s emissions targets,” she adds.

“This increases costs to households in terms of energy bills, and could result in more sheep and beef farms being converted to forestry to offset those emissions.

“EV incentives are simply an effective and comparatively cost-effective way to reduce emissions from transport. And they won’t be needed forever. As soon as EVs reach upfront price parity, they can be removed.

“This view is supported by the Climate Change Commission in its advice on ERP2 which says that: ‘Continued policy support is essential to encourage the purchase of new EVs at the pace needed to achieve the second and third emissions budgets. Supports to address the upfront cost barrier are especially important.’”

Corson says a range of different options could be considered in New Zealand to create a fiscally neutral EV incentives scheme to encourage New Zealanders into EVs.

These include adjustments such as a staged withdrawal of discounts that provides consumers time to adjust, reducing rebates and tightening eligibility, and exempting certain categories of vehicles such as utes from fees.

“There are other options too, including removing FBT (fringe benefit tax) and accelerating depreciation for commercial fleets,” Corson says.

“Businesses buy 50-60% of new vehicles (and 60% of new EVs), and usually only keep them in their fleets for two to five years. This could be a great source of secondhand vehicles. This model is being used in Australia, and so far is proving to be successful.

“We know the Government wants to electrify New Zealand, and intends to invest in public charging. This is essential work,” Corson adds.

”However, we’re also going to need to accelerate demand for EVs to take full economic advantage of electrification.

“We are working with industry right now on solutions to EV incentives and look forward to discussing these with the Government.”

The research was undertaken by Concept Consulting.

The government has indicated it intends to adjust the Clean Car Standard, but details of this have not yet been announced, says Drive Electric. As such, two scenarios were modelled to represent the range of possible impacts from the effect of removing the Clean Car Discount and retaining the Clean Car Standard unchanged to removing the entire Clean Car Programme