LET’S GET ON WITH IT

New Zealand’s EV market will see exponential growth from this year with the government starting to implement carbon reduction policies.

The Labour and Green party coalition will drive long-term EV sales growth as they will likely improve the incentives offered for EV adoption in 2021 with New Zealand expected to lead the Asia region by 2029, a Fitch Solutions report says.

But it’s all rhetoric, according to Drive Electric chair Mark Gilbert who’d like to see action on a plan now.

“Let’s just engage – it’s been like a rolling maul with a bit now and bit added later.

“We’ve got to take consumers on the journey,” says Gilbert who adds the industry, interest groups, agencies and others like those involved in energy supply and EV charging need to be brought on board as well.

The EV push is expected to come from prime minister Jacinda Ardern’s call for all government departments, agencies and ministries to exclusively buy EVs, geared towards making the public sector carbon neutral.

That means nearly 16,000 vehicles in the government’s fleet will be replaced by 2025.
It’s a good start, says Gilbert who reckons fleets outside of government need to be considered too.

Fitch Solutions has revised its EV sales forecast to a 64.4% average annual growth rate (previously 30%), expecting EV annual sales to reach 32,690 units by the end of 2025, with battery electric vehicle (BEV) sales comprising about 80% of that.

EV sales could reach nearly 50% of total vehicle sales in 2029 if a Clean Car plan (including a feebate scheme) is introduced, it says.

Among the few existing EV incentives are a road user charge (RUC) exemption until the end of December 2021.

Hydrogen fuel cell EVs (FCEVs) will gain more support into the 2020s, Fitch Solutions adds, particularly as New Zealand aims to reach 100% renewable energy by 2035 and have a carbon-neutral economy by 2050.

New Zealand’s FCEV market will initially comprise mainly FCEV trucks and buses, with the first due in 2021.

However, the country risks becoming the “Cuba of the South Pacific” and left with old gas-guzzling cars if electrified vehicles aren’t encouraged soon through financial incentives like a “feebate” scheme, says Toyota New Zealand chief executive Neeraj Lala.

He’s concerned this country will become a dumping ground for Europe’s dirty diesels and high carbon-emitting petrol cars, especially with the United Kingdom’s move to ban sales of new petrol and diesel-powered cars by 2030.

He says the UK’s trend is both an encouragement to New Zealand policymakers and a danger sign that this country could be flooded with used internal combustion engine (ICE) vehicles at the end of this decade.

The Motor Industry Association (MIA) is urging the government to introduce a feebate scheme to accelerate low emission vehicle (LEV) uptake as well.

EV dealers also want the government to move quickly, partly because they say some people avoid buying an EV in the hope a discount could come first.

It might seem surprising that Toyota – which has a hydrogen car (Mirai) and a plug-in hybrid (Prius) but not yet a full electric (although plans are being advanced) should push for a feebate.

But Lala is convinced New Zealand needs to work urgently on the right policy settings that encourage much higher take-up of electrified vehicles through meaningful financial incentives.

“We also need to make sure that we do not end up importing vast numbers of ICE passenger vehicles. Otherwise there is no hope of meeting the Paris Agreement’s 2050 net-zero carbon target.”

Lala says a feebate scheme provides much needed financial incentive at no cost to the taxpayer and needs to include both new and used imported vehicles.

He sees merit in the one proposed but stalled in the last Parliamentary term.

“It incentivised private and fleet buyers of low-emitting vehicles by adding a levy to high emitting vehicles and using that revenue to reduce the price of low-emitting vehicles costing less than $80,000.”

As the worldwide supply of hybrids and BEVs becomes stretched due to global demand, New Zealand will find it harder and harder to access stock without a financial incentive, Lala says.

“Essentially, we need to get our hybrid and EV numbers up to get higher stock allocations. The feebate scheme should be back on the table, urgently.”

Lala says the government needs to put financial resources behind its policy.

Companies such as Toyota would be willing to supply the public sector with low emitting vehicles, but not at cost – it needs to be a win-win for both parties, Lala says.

“The transition to a low emissions transport market comes with a price tag, but the cost of not enabling a greater uptake of low emissions vehicle could cost Aotearoa/New Zealand and the planet a lot more.”

Meanwhile, Motor Industry Association chief executive David Crawford says the MIA and its members are strong supporters of having effective policies to encourage the reduction of carbon emissions from transport.

“Policies that influence demand by incentivising the adoption of low emission technologies are effective tools so long as those policies are implemented in a way that addresses the price premium those vehicles have.”

He says “because the distribution of new vehicles in New Zealand is a derived demand model, a well-designed feebate scheme incentivises change as it influences the purchase decision. This in turn alters the mix of models supplied by distributors which is more influenced by what is bought, and therefore restocked, than policies aimed singularly at limiting supply.”

Crawford says policies addressing low emission vehicle affordability are likely to be the most effective.

MIA suggests a feebate should include limits at which a fee is imposed, the size of the neutral zone where vehicles do not attract either a fee or rebate, limits under which a rebate becomes available, and whether the government contributes to the scheme to increase its efficacy.

The feebate should apply to all light vehicles (less than 3500kgs gross vehicle mass), vehicles with CO2 output of 230g/km and above pay a penalty, those with a CO2 output of 100-230g/km are in the neutral zone, a CO2 output between 50-100g/km attract a low rebate (this targets some hybrids and most PHEVs), while vehicles with a CO2 output below 50g/km attract the highest level of rebate.

Alternatively, a sliding scale of rebate from 100g to zero could be used.