Incentivising the switch

The Government’s move to boost sales of electric vehicles and punish those buying so-called gas guzzlers is laudable and something that has to be done. As always, however, the devil is in the detail.

Essentially the Government will offer a subsidy of up to $8000 on new electric cars, while the penalty for bringing in larger high-emission vehicles will be up to $3000 — with the scheme, known as a feebate, coming in from 2021.

There is no doubt some sort of incentive or penalty will be needed for what is a massive task, and to help counter the higher prices electric vehicles still command. New Zealand has only 14,807 electric cars compared with about 4 million light vehicles. Realistically the switch will take decades.

One of the biggest problems of this feebate is the risk that it will impact unfairly on low income families who, even with the subsidy, will be priced out of new electric vehicles — while the number of used EVs on the market is nowhere enough, and will not be for a long time.

By 2025 it is estimated that 50 percent of low-income people will incur a fee on their vehicles, while 34 percent would receive a subsidy.

Not surprisingly National has seized on this as another target for attacks on the Government, describing it as a tax on the poor. It could be something that will prove a real vote winner for them.

Also chary are Federated Farmers. Vice president Andrew Hoggart has been widely quoted as saying it would be pretty hard to fit a bundle of strainer posts into a Nissan Leaf.

The Government in fact subsidises electric vehicles to a small extent already by waiving road users charges of about $600 a year, a scheme previously introduced by the former National government.

It is interesting that the present Government declined a recommended $2000 direct payment for buyers of electric cars because the estimated $104 million cost was considered to be “poor value”. By contrast the feebate will be cash neutral.

Perhaps more surprisingly, it did not adopt a recommended seven-year age limit on imported vehicles, because it felt the net reduction in emissions would not warrant it.

The Government’s move to boost sales of electric vehicles and punish those buying so-called gas guzzlers is laudable and something that has to be done. As always, however, the devil is in the detail.

Essentially the Government will offer a subsidy of up to $8000 on new electric cars, while the penalty for bringing in larger high-emission vehicles will be up to $3000 — with the scheme, known as a feebate, coming in from 2021.

There is no doubt some sort of incentive or penalty will be needed for what is a massive task, and to help counter the higher prices electric vehicles still command. New Zealand has only 14,807 electric cars compared with about 4 million light vehicles. Realistically the switch will take decades.

One of the biggest problems of this feebate is the risk that it will impact unfairly on low income families who, even with the subsidy, will be priced out of new electric vehicles — while the number of used EVs on the market is nowhere enough, and will not be for a long time.

By 2025 it is estimated that 50 percent of low-income people will incur a fee on their vehicles, while 34 percent would receive a subsidy.

Not surprisingly National has seized on this as another target for attacks on the Government, describing it as a tax on the poor. It could be something that will prove a real vote winner for them.

Also chary are Federated Farmers. Vice president Andrew Hoggart has been widely quoted as saying it would be pretty hard to fit a bundle of strainer posts into a Nissan Leaf.

The Government in fact subsidises electric vehicles to a small extent already by waiving road users charges of about $600 a year, a scheme previously introduced by the former National government.

It is interesting that the present Government declined a recommended $2000 direct payment for buyers of electric cars because the estimated $104 million cost was considered to be “poor value”. By contrast the feebate will be cash neutral.

Perhaps more surprisingly, it did not adopt a recommended seven-year age limit on imported vehicles, because it felt the net reduction in emissions would not warrant it.

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