Yesterday the government announced they are looking to bring in a feebate system for new cars that would see electric or plug in hybrid vehicles up to $8,000 cheaper which would be paid for by making vehicles with higher emissions up to $3,000 more expensive.
The Government is signalling its intention to slash the price of imported electric and hybrid vehicles by up to $8000 in a bid to make greener cars cheaper for Kiwis.
But it is also planning to slap a new fee of up to $3000 on the import of vehicles with the highest greenhouse gas emissions.
The Government has today opened a six-week consultation period before it introduces new legislation in Parliament later this year.
The plan, according to Associate Transport Minister Julie Anne Genter, will get more Kiwis into cleaner vehicles by reducing some of the cost burden.
It would come into force in 2021.
“Most Kiwis want to buy a car that’s good for the environment, but tell us the upfront cost and limited choice makes it a challenge,” she said.
The Government is proposing discounts of up to $8000 for zero-emission new imported vehicles, such as electric vehicles (EVs).
That number would be $6800 for plug-in hybrid electric vehicle (PHEVs) and $4800 for hybrids.
The level of the discount depends on the total net emissions of the vehicle.
Genter said the policy would be cost neutral – meaning the money gained through the fees from higher emitting vehicles would offset the subsidies provided to the lower emission cars.
“This means people will still have choice, while contributing to the task of cleaning up the vehicles coming into New Zealand.”
The policy would only apply to new and used cars being imported into New Zealand, not to vehicles already registered in New Zealand when on-sold.
Some 74 per cent of annual vehicles sales are of vehicles already registered and these would not be affected, Genter said.
On top of the capital cost savings, the government say:
“These policies are expected to save the country more than $3.4 billion in fuel and result in fuel savings of more than $6,800 over the lifetime of an average vehicle”.
This seems like a good start and it’s notable that already many commentators have come out in support of the plan, including the Motor Industry Association. It certainly seems a better way to encourage uptake of electric vehicles than silly schemes like allowing them in bus lanes.
Anecdotally I’ve been seeing a lot more electric vehicles around, especially Nissan Leafs. This is reflected in the numbers too with June seeing 648 electric or plug in hybrid vehicles being registered, the highest month so far. That has seen the total number registered in NZ to just under 15,000 and used Nissan Leaf’s make up over half of these.
As good as that is, it does need to be put in perspective. NZ has over 3.2 million light vehicles in the current fleet and even the newly registered EVs represent only about 2.5% of all new registrations. Interestingly you can also see that in general, registrations of new vehicles (new or used imports) have dropped since late 2017.
Here are a few thoughts I’ve had about the announcement.
- The additional cost of higher emissions vehicles doesn’t seem all that much in total. I wonder if there is also a case to make that a bit higher and use the extra revenue to include subsides for other types electric vehicles, particularly ones that also don’t contribute to congestion such as e-bikes.
- The government also need to look at how they can get more buses replaced with e-buses. That seems like it should be something much easier to achieve and would also help remove some of the nasty particulates that cause health problems.
- Light electric vehicles are currently exempt from paying road user charges (RUC) until 31-December 2021. It’s not known if this will be extended again but with the growth in the vehicle fleet, it’s going to be increasingly important that it isn’t as that will impact on the ability of the government to deliver its transport programmes. As it is, the Ministry of Transport estimate RUC is approximately $600 per vehicle per year so for the current fleet that’s about $9 million annually being missed out on.
- Even with the full $8,000 discount, it will still be hard for many people to justify the cost of an electric vehicle, especially if they’re using public transport, cycling or walking a lot.