Government slashes Clean Vehicle Standard charges

The Government is cutting Clean Vehicle Standard charges by nearly 80% in response to what Transport Minister Chris Bishop describes as a ‘failing system’ that has seen electric vehicle demand drop and supply shortages emerge for cleaner used vehicles.

The changes will see charges drop from $67.50 to $15 per gram of CO₂ for new vehicles, and from $33.75 to $7.50 for used vehicles, applying for 2026 and 2027.

Bishop says the move responds to market conditions that have left the Clean Vehicle Standard “so out-of-whack with reality” that 86% of importers now face net charges rather than savings from the scheme.

“There is a supply shortage of cleaner used vehicles, and demand for new EVs has dropped,” Bishop says, highlighting the challenges facing New Zealand’s electric vehicle transition.

The Clean Vehicle Standard was introduced in early 2023 to encourage New Zealanders to buy more efficient cars by setting annual CO₂ targets for vehicle importers. Those who fall short of targets face charges, while those exceeding them earn credits.

However, the policy appears to have hit a wall as EV sales momentum has slowed and the supply of low-emission used imports has tightened, leaving most importers unable to meet passenger-vehicle targets.

“The scheme is so out-of-whack with reality that even some hybrid vehicles will attract charges rather than credits,” Bishop says.

The dramatic reduction in charges could reduce pressure on importers to prioritise electric and hybrid vehicle sales, potentially slowing the pace of New Zealand’s transition to cleaner transport.

Relief for high-emission vehicles

The charge reductions will particularly benefit importers of popular high-emission models. A Toyota Hilux SR5 Cruiser that currently faces a $1350 charge would see this reduced to $300 – a potential saving of $1050.

A Ford Everest Platinum facing an $8775 charge would see this drop to $1950, representing a maximum potential saving of $6825. Popular utes and SUVs, which have been most affected by the current charging regime, stand to benefit significantly.

Other examples include the Mitsubishi ASX LS with potential savings of $4725, the Kia Seltos LX at $3623, and the Nissan Navara Pro-4X at $1838.

Bishop says the total changes are estimated to avoid $264 million in net charges that could have been passed onto consumers through higher vehicle prices.

The Government is also protecting existing credits from expiring before December 31 2028 and launching a full review with recommendations due to Cabinet by June 2026.

“These practical steps will keep pressure off car buyers while the wider Standard is reviewed,” Bishop says, though the reduced financial incentive to import cleaner vehicles may slow progress toward the Government’s emissions reduction goals.

The amendment will be made via the Land Transport (Clean Vehicle Standard) Amendment Bill (No 2), which has just been reported back from Select Committee. The change is expected to pass this week and take effect from January 1 2026.

The policy shift comes as New Zealand’s EV market faces headwinds, with reduced government incentives and changing consumer sentiment affecting adoption rates across the sector.