Wellington city councillor and the council's transport committee chair Andy Foster said it was almost 40 years since the existing cable car system was upgraded.
"We've estimated that each car has made something like 1.2 million trips up and down the hill over that time -- and more than 30 million passengers have been carried. It is safe to say the service has had its ups and downs ...
"Technology has also changed and improved enormously since 1979 - and it's time for the necessary upgrades to keep the service running well into the middle of the 21st century," he said.
Mr Foster said quicker journeys would allow the cable car to take more passengers, especially during peak cruise ship season.
It could allow an extra 150 to 200 passengers an hour, he said.
The interior and exterior of the cars would also be refurbished.
A temporary bus service will run from Lambton Quay to Kelburn, via Victoria University, while the upgrade is under way, operating every 20 minutes.
Wellington Cable Car
• The cable car is used by about 1 million people each year.
• The original cable car railway was built and operated by the Kelburne & Karori Tramway Company. The line opened to the public on February 22, 1902.
• The hilltop location of Victoria University's main campus was influenced by the company's offer of a donation of £1000 if the university was located in Kelburn, so students would utilise the car when travelling between the city and the university.
• The cable car's original steam-powered winding gear was replaced by an electric motor in 1933.