Electric vehicles an option for the better-off in NZ, says Motor Trade Association

Friday, 30 November 2018

Christina Bu, secretary general of the Norwegian Electric Vehicle Association, says she doesn't understand the hostility in New Zealand towards 'feebate' type incentives for EVs.

Electric vehicles are the preserve of the better-off, while people on low incomes are likely to hold on to petrol cars for many years to come, research commissioned by the Motor Trade Association suggests.

The MTA has commissioned researcher Business and Economic Research (BERL) to look into the economics of EVs.

MTA strategy manager Greig Epps said that although the numbers were not yet solid, it was clear that regardless of whether people bought an EV outright or on finance, they were going to need 'a decent income' to pay it off.

'Currently EVs are a 'middle class and above' option. But what are we doing for the rest of society to make sure we are all working together to move towards the climate change goals that the Government wants to set?'

Car manufacturers have sunk huge resources into conventional car plants but will have to make the shift to EVs as fast as consumer sentiment if supply constraints are not to become more apparent.

* Electric vehicles: Can we become the Norway of the Southern Hemisphere?

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New Zealand would not be able to match the achievements of EV leaders such as Norway unless it put similar incentives in place, he said.

It is like asking the Maniototo Rugby Club to play the All Blacks.

Norway and New Zealand have similar-sized populations of about 5 million and both countries produce more than 80 per cent of their electricity from renewable source – in Norway's case the figure is 98 per cent.

But while New Zealand has only 8000 pure electric EVs on the road and about another 3000 'plug-in hybrids', Norway has more than 178,000.

Norway excludes EVs from sales tax (normally 25 per cent) and imposes an additional purchase tax on petrol and diesel vehicles which varies according to their emissions 'so the higher the emissions, the higher the tax', says Christina Bu, secretary general of the Norwegian Electric Vehicle Association.

The result is that the purchase price of EVs and equivalent petrol cars is about the same, she said on a visit to Auckland this week.

Some local authorities provide further incentives such as free parking, though as EVs become more common in Norway that is beginning to change.

All new cars sold in Norway from 2025 will have to be zero-emission under a law change which received cross-party support.

Bu says there was scepticism at first, but that target is now looking increasingly achievable, rather than aspirational.

Norway now has 50,000 Nissan Leafs on the road.

EVs – excluding plug-in hybrids – now make up more than 7 per cent of the country's total fleet and in September 45 per cent of all new cars sold in September were fully electric.

In the county of Hordaland, home to Norway's second-largest city, Bergen, the figure was 62 per cent.

In Norway, EVs were also once just for the better-off, but not any more, Bu says.

'Even in Norway three out of four car sales are used cars.' But EVs are now starting to trickle down to the second-hand market in bigger numbers, she says.

The tax exemptions are also having a levelling effect, she says. 'Some people who might normally buy a car that is three or four years' old are buying new EVs because they are cheaper to use and they do that calculation.'

Bu says she does not understand why New Zealand is so negative towards the 'feebate' incentives Norway has introduced.

'You are treating electric cars the same way as big, polluting gas-guzzlers. Why does New Zealand do that when it spends a lot of money importing oil and you have the possibility of producing more renewable electricity here?'

She gives short shrift to the argument that EVs will take over anyway, so don't need incentives.

'That is so wrong. Global carbon dioxide emissions are an issue because we don't have much time.

'We have to do as much as we can as fast as we can.'

The Paris Agreement on climate change set emissions targets for 2030, but even if that deadline was the only important thing 'you can't wait until 2028 and then do the shift', Bu says.

'You have to do it gradually or else it won't work.'

Epps agrees EV uptake comes down to the rules.

'We do need government to set the course. The industry will respond to the parameters that the Government puts in place.

'At the moment there is a lot of wishful thinking but there is no direction being given. From our members' point of view, we will sell, repair and fuel the cars that the Government demands be on the road,' he says.

Without a 'push' things would not change, he said. 'An example of that is that we are still importing 20 year-old vehicles. Why? It is because the regulations allow it.

'A 1993 diesel Landcruiser – is that the sort of vehicle we want to let into the fleet? It is not going to make it greener.'

Epps said a report issued by the United Nations' Intergovernmental Panel on Climate Change (IPCC) last month showed 'we need to do something now'.

But New Zealand had four million cars. 'We need to find a way to help cycle through the current stock and replace it with 'greener stock' as it comes to hand.'

A finished Yasa electric motor at a factory in Oxford, England.

That greener stock won't come instantly, he points out.

'The world does not have the resources at the moment to produce the number of EVs we are all looking for.'

Bu says one of the biggest challenges Norway will face in achieving its 2025 target is a lack of supply of EVs from manufacturers.

'Demand is higher than supply. Right now more than 30,000 Norwegians have paid deposits for EVs that have not yet been built - it's a crazy situation. It started with Tesla and now everyone is doing it.'

One implication of that is that the targets that many countries – but not New Zealand – have set to ban conventional car sales may have real value, in encouraging car manufacturers to make the switch to EVs faster.

So long as car manufacturers believe the intent behind the targets is serious.

In the meantime, Norway is pushing ahead on other fronts.

'The city of Oslo is about to get 70 electric buses and is planning to make all city buses electric. When it comes to ferries we already have several fully electric ferries and by 2021 we will have more than 60,' Bu says.

'There are also plans for aviation and heavy transport as well. Transport is the easiest area to reduce emissions – it is more difficult in agriculture and we have to do it and we have to do it fast.'

There is no option, she says.

'I really hope [New Zealand] politicians will dare to start to talking a bit more about incentives – they can't just hand responsibility to consumers and businesses. I think they should help a little bit as well.'