Will emissions standards raise car prices?

National says a new standard for vehicle emissions will see car prices rise, but the Labour Government says it will mean EVs become cheaper.

National’s transport spokesman Michael Woodhouse and transport minister Michael Wood have locked horns over the new Clean Car package, Stuff reports.

Woodhouse cited a policy paper from last year that warned new standards will increase the cost of importing vehicles.

But Wood responded with a more current paper that argues the cost of EVs and hybrids is likely to decrease.

The government’s newly announced Clean Car discount (feebate) charges people who buy polluting vehicles and subsidises those who purchase cleaner vehicles like EVs – the discount applying from July 1 this year while the fee aspect starting on January 1, 2022.

The Clean Car standard sets suppliers an emissions target so cars they import don’t breach a specific threshold or they’ll face a fee.

Suppliers can avoid that fee by lowering the average emissions of the cars they import, Stuff explains, by importing EVs and hybrids to reduce the overall average emissions across the fleet they import.

Transport officials warned that an early version of the Clean Car standard could increase some small EVs’ costs by up to $40,000.

Wood’s new paper, a regulatory impact assessment, puts the cost of a new EV falling from about $58,000 in 2019, to $47,000 in 2025.

Woodhouse, however, believes there will still be increased costs, particularly on vehicles like the Toyota Hilux, which will be carried by consumers because suppliers could struggle to find sufficient hybrids and EVs, particularly as New Zealand is not considered a priority market by some.

But Wood believes sufficient supply of low to zero emission vehicles will remain available.

He says the emissions standard “will result in average fuel savings for families of nearly $7000 over the lifetime of their vehicles and stop over three million tonnes of climate pollution going into our atmosphere”.