Thursday, November 30, 2023

Government gives clean-car discount a $100m boost

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Transport minister also announces hikes to fees paid on higher-emitting vehicles.
The government’s clean car discount policy is forecast to save New Zealand from importing 1.4 billion litres of petrol.
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The government is providing an extra $100 million repayable grant to fund its clean-car discount scheme to continue subsidising low-emissions vehicles. 

Making the announcement, Transport Minister Michael Wood highlighted the fact that the scheme is contributing to levels of electric vehicle (EV) uptake not anticipated until 2027.

“With over 100,000 rebates granted since the scheme came into effect in 2021, we currently have one of the fastest uptakes of EVs in the world,” Wood said. 

“The scheme is successfully exceeding industry and government projections, with 20% of all new passenger car sales being electric in 2022, a substantial increase from 8% in 2021.”

Rebates provided to buyers of low-emissions vehicles under the scheme are meant to be paid for by charges on high-emitting vehicles like utes, leading to political attacks from National and ACT, which have both denigrated the policy as a “ute tax” and a subsidy for Teslas.

Federated Farmers transport spokesperson Mark Hooper said  the new changes will increase the maximum fee charged on the registration of a new ute to $6900 (up from $5175 previously), and the registration of a used ute to $3450 (up from $2875).

The policy is just another cost on a productive sector already under pressure from increasing costs and slipping commodity prices, he said.

“We’ve opposed the ute tax from day one because farmers don’t have viable or reliable alternatives to get the job done on their farms – and now the government is increasing it,” Hooper said.

“Farmers aren’t driving utes as some sort of status symbol. We have a genuine need for reliable four-wheel drive vehicles to tow equipment and get around our farms safely.”

Hooper said farmers shouldn’t be taxed on their work vehicles to subsidise wealthy Tesla owners in Remuera and Karori. Instead of heaping new costs on the productive sector, the government should be focusing on sorting out the state of pothole-riddled rural roads.

Under current settings, a new Tesla Model 3 attracts a rebate of $8625.

Despite ambitions for the scheme to be self-funding, between April and December 2022 it paid out $203.3m in discounts against $105.1m in fees. 

As well as the grant, Wood announced changes to focus on more fuel-efficient vehicles earlier than planned, as well as hikes to the fees paid on higher-emitting vehicles. He framed this as a way of keeping up momentum while ensuring the scheme would be self-funding until its next review.

Rebates will be paid for new and used imports emitting less than 100 grams of carbon dioxide per kilometre, compared to 146g CO2 under the original scheme.

The rebate for used EV imports will also increase, Wood said, meaning buyers will be able to save up to $3,507 per vehicle.

Charges on higher emitting vehicles will kick in from 150g CO2 per km compared with the current 192g CO2 per km threshold.

Wood emphasised the environmental benefits of the clean-car policy.

“The scheme is also now forecast to reduce emissions by 3.4 million tonnes by 2035,” he said.

“That’s an additional 50% out to 2035 over and above what was forecast when it started. It will deliver twice the emissions reduction forecast between the start of the scheme and 2025.”

Wood said the policy will save NZ from importing 1.4 billion litres of petrol. At current prices, this means the economy will save an average of $325m a year on fuel, he said.

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