Higher petrol prices will drive more people to electric cars, says Volvo boss

Rising petrol taxes, as high as 25.3 cents a litre in Auckland, may increase demand for electric vehicles and speed up the introduction of electric charging stations, says Volvo's general manager Coby Duggan.

The New Zealand boss of Volvo said Government and Auckland Council plans to hike petrol taxes will act as a de facto subsidy for electric vehicles, making them a more attractive financial proposition.

On Tuesday, the Government announced plans for petrol tax hikes of 9 cents to 12c a litre over the next three years as part of its draft 10-year transport plan to boost spending on public transport and local and regional roads in a bid to lower the road toll.

This is on top of a proposed regional petrol tax of 11.5c a litre, including GST, the council plans.

The decision to purchase an EV or hybrid is in part, an economic one for many buyers

Coby Duggan, Volvo New Zealand

When GST is added to the Government tax hikes, Aucklanders could be paying up to 25.3c a litre extra for petrol after three years.

Transport Minister Phil Twyford said raising petrol by 3c a litre would cost the driver of an average car filling up once a fortnight about 75c a week, or $39 a year.

Raising petrol by 25.3c will cost Auckland drivers $329 a year, or $6.33 a week using Twyford's formula.

Rising petrol prices may drive motorists to electric vehicles.

Electric car sales have increased from 38 in 2013 to 5804 in November last year.

As monthly growth approached the 504 cars sold in all of 2015, the Energy Efficiency & Conservation Authority set a goal of 64,000 electric vehicles by 2021.

Last month, New Zealand's first full battery-powered electric bus hit the road, serving AUT's north and south city campus bus routes.

"The decision to purchase an EV or hybrid is in part, an economic one for many buyers.

"Kiwi motorists already contend with petrol prices which are among the highest in the OECD and as the cost of fuel increases, the appeal of this alternative energy source broadens to include more and more drivers," said Duggan.

He said an EV would cost about the equivalent of 30c a litre or about 13.5 per cent of the running cost of an internal combustion engine vehicle when factoring in the proportional reduction as more fuel levies are added.

Coby Duggan, general manager Volvo Car New Zealand.

Jucy chief operating officer Dan Alpe said as the cost of fuel rises, the campervan company expects to see greater demand for its electric vehicle fleet.

"We are testing the latest battery technology at the moment to ensure these vehicles can travel the distances between charging points around the country.

"At the same time we are working with popular campgrounds to see more charging stations introduced. As the cost of travel here decreases and becomes more environmentally friendly, New Zealand becomes a more attractive destination for visitors," Alpe said.

Higher petrol prices made New Zealand less attractive for tourists, many of whom travelled more than 10,000kms in a campervan, he said.

Meanwhile, the National Road Carriers Association, with 1700 members operating 15,000 trucks, said members may be prepared to pay an extra tax but want to see tangible benefits.

"We realise more investment is needed in transport infrastructure, but it is a case of what the priorities are," said chief executive David Aitken.

"As the population grows and our big cities expand there is going to be more demand for freight to be moved and much of it can only be moved by truck. And more trucks need better, safer and less congested roads."

Auckland Chamber of Commerce chief executive Michael Barnett said he was aware of three mid-sized freight companies that will collectively face petrol price increases of around $1 million a year.

"Other businesses are telling me a similar story, and making the point that tight margins means that every cent will get passed on."

"People understand that Auckland transport congestion needs a dramatic fix and time is running out – but is this the best way?" said Barnett, saying early reactions suggests most people believe it isn't the best way.