The number of New Zealanders willing to shift to an electric vehicle (EV) has sharply declined over the past three months, with less than one in four new cars leaving the lots being electric, posing a significant challenge for the government in meeting its climate targets.
Data from the Motor Industry Association (MIA) for the March period shows a significant decline in new EV Sales compared to March of the previous year.
Only 11,616 new vehicles were registered, marking a decrease of 27.4 percent from March 2023, and a 44.7 percent decline from March 2022.
EV ownership in New Zealand had been on the increase through the middle stages of the pandemic, as consumers hit by a credit crunch took advantage of incentives like a clean car rebate scheme, road user charges exemptions, and discounts on registrations provided by the previous Labor government.
However, the change of government saw the clean rebate scheme scrapped on Dec. 31 last year. Consequently, that month recorded the highest level of sales since 2022, likely due to buyers rushing to make purchases before the deadline.
This decision was part of the National Party’s election pledges. Simeon Brown, the former Transport spokesman, argued that subsidising EVs was unfair to other sectors of society.
“New data shows that between July 2021 and September 2023, over $500 million was paid out in rebates on new electric vehicles at the expense of hardworking farmers, tradies, and taxpayers who have been bearing the brunt of these subsidies,” Mr. Brown said.
“It’s clear that Labour’s Ute Tax and Clean Car Discount is a reverse-Robin Hood scheme, taxing hardworking Kiwis for the vehicles they need to subsidise other people to buy new cars.”
Climate Minister Simon Watts was not worried about the purchasing slowdown, saying, “As a coalition, the government remains committed to meeting the 2050 net zero target and our emissions budgets.”
Aimee Wiley, CEO of the Motor Industry Association (MIA), said the latest figures could also, in part, be attributed to the wider economic slowdown New Zealand is currently facing as well as higher interest rates, which “have also dampened consumer spending considerably.”
Reductions for PHEV but not BEV
Despite the withdrawal of incentives, the government has conceded that some relief needs to stay in place for drivers.Ahead of new Road User Charges (RUC) being applied to EVs from April 1, a reduced rate of $53 per 1,000km, around two-thirds of the full RUC rate of $76 per 1,000km, was proposed for Plug-in Hybrid Electric Vehicle (PHEV) owners.
The MIA lobbied for a greater reduction, saying this would result in PHEV owners paying more in road user charges than comparable hybrid vehicles.
In response, Transport Minister Simeon Brown announced a 50 percent reduction for PHEVs, set at $38 per 1,000km driven. In comparison, EVs are charged at $76 per 1,000km.
Mr. Brown said the changes were aimed at increasing the uniformity of all vehicles on the road.
“Plug-in hybrids are powered by electricity and petrol and have had to pay petrol tax, but not to the same level as petrol equivalent vehicles. To ensure that plug-in hybrids avoid paying twice through both fuel excise duty and RUCs, these vehicles will pay a reduced rate RUC,” he said.
“This transition to RUC is about fairness and equity. It will ensure that all road users are contributing to the upkeep and maintenance of our roads, irrespective of the type of vehicle they choose to drive.”
While the MIA welcomed the announcement on PHEVs, it expressed disappointment that the scope did not extend to fully-electric Battery Electric Vehicles (BEV).
“Based on average fuel consumption of new petrol hybrid vehicles sold in the last two years, MIA analysis showed that at the initial proposed RUC rate, a PHEV would pay 70 percent more than an equivalent hybrid petrol vehicle, and a full battery electric vehicle (BEV) would pay 95 percent more,” MIA CEO Aimee Wiley said.
Ms. Wiley highlighted the tax discrepancy between fully electric and hybrid RUCs, arguing that it would “unfairly disadvantage owners of PHEVs, whose battery range can vary according to model and age.”
She emphasised that this discrepancy could potentially discourage the uptake of these low-emissions vehicles and undermine progress to reduce transport emissions.
