Balancing carrot and stick for EV switch

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

The Government appears to be a victim of its own success with its Clean Car Discount programme, which has exceeded its own and industry projections.

A review after the first year of the scheme has shown that 20 percent of new passenger vehicle sales were electric last year, up from 8 percent in 2021. Now Transport Minister Michael Wood says the Government is tweaking the scheme to maintain its success and ensure it will be self-funding until the next review.

The Government is loaning the scheme a further $100 million in Budget 2023 to cover the mismatch between fees and rebates. Motoring NZ reported that $98m was left in the fund, which was kickstarted with a $300m loan, because income was lower than the rebate payouts.

The Government is also narrowing the focus to more fuel-efficient vehicles earlier than planned. The rebate threshold for new and used cars will be 100 grams of CO2 per kilometre, down from 146 grams.

The rebate for used EV imports will, though, increase to $3507 per vehicle up from $3450, which Wood says will allow more low and middle income New Zealanders to get into lower emitting vehicles.

The stick in this update to the scheme is that charges on high-emitting vehicles will be increased and broadened. The threshold for vehicles subject to charges will decrease from 192 grams of CO2 per km to 150 grams, and the maximum charge for high-emitting vehicles will increase from $5175 to $6900 for new vehicles and from $2875 to $3450 for used imports.

Hiking the so-called “ute tax” is already meeting opposition; another problem for the scheme is that even with the higher rebate for imported used EVs, they will remain beyond the reach of many New Zealanders.

National transport spokesman Simeon Brown says there are significant failures with the programme, such as giving a rebate of thousands of dollars for expensive EVs while steep fees are imposed on other vehicles — punishing farmers and tradies who need utes to do their jobs and contribute to the economy.

ACT is committed to repealing the Clean Car Discount scheme.

Very few are left disputing the fact that New Zealand needs to lower transport emissions, our fastest growing source of greenhouse gas emissions — now accounting for 20 percent of the total. Nearly 70 percent of that comes from cars, utes, vans and light trucks.

The Government has to get the carrot and stick approach into the right balance but it is not easy.