Kiwis will pay $3000 penalty for polluting utes under new policy, AA says

Sunday, 13 June 2021

Kiwis will pay roughly a $3000 penalty for their favourite utes from 2022 under new government rules, the Automobile Association (AA) says.

The penalty under the Clean Car Discount package will apply to the likes of the Toyota Hilux and Ford Ranger – two of the top selling cars – and will come into effect in January 2022.

AA national policy manager Simon Douglas said the penalty would occur at the point vehicles were first registered in New Zealand, whether they were second-hand cars that had been imported or new cars.

The new penalty was questioned by Motor Trade Association (MTA) strategy manager Greig Epps, who said we could end up with “country folk who need larger vehicles paying penalties that fund discounts for city folk to use on a low emission run-about”.

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The measures are part of a new government policy designed to encourage the uptake of electric and lower emission vehicles. People buying new electric vehicles (EVs) will be eligible for a discount of up to $8625 from July.

Penalties could rise higher in 2023

The amount paid for utes may increase further with the expansion of the government’s Clean Car Standard expected to come in during January 2023, Motor Industry Association chief executive David Crawford said.

The Clean Car Standards will put a requirement on sellers of vehicles to achieve certain carbon dioxide emissions per kilometre across all cars sold.

If the average emissions of vehicles sold were above this requirement, a penalty would apply, possibly pushing up penalties on high emitters like utes, Crawford said.

Sellers may however choose to spread this penalty across the range rather than target it at the offending vehicles, he said.

No viable alternatives

Crawford said electric utes were expected this side of 2030, and Hybrid versions were expected to hit the market by the middle of the decade.

DairyNZ chief executive Tim Mackle said utes were an essential vehicle for practical farm work, not a “nice to have” and rural businesses should be exempt until other options were available.

“While electric utes are hitting the market overseas, until they are on our shore farmers simply can’t adopt them. Today’s government initiative is skewed to urban options, we want to see a plan for how our rural communities can access transport options too.

“It would be great to see some innovation and creativity from the government to create a test-bed for e-utes in New Zealand – just as we did with EFTPOS or other tech.”

Mixed opinions on fairness

Crawford said there were mixed feeling about the fairness of the penalty on utes while there was a lack of alternative options.

He said many would consider the extra penalty fair when it came to farmers, because their industry was exempt from the Emissions Trading Scheme.

It would be light commercial operators like bricklayers and tradies who some would consider most badly done-by, he said.

Many ute drivers may decide to run their old and more polluting vehicles for longer as a result of the penalty, Crawford said.

‘Good mix of carrot and stick’

Despite the AA flagging the increased penalty for utes, the organisation’s spokesman Simon Douglas said the new clean car package had a “good mix of carrot and stick” and that it was “a well-balanced and positive package”.

“The measures will introduce rebates of thousands of dollars for those purchasing new or used electric or hybrid vehicles from July 1, add a levy to higher-emitting vehicles like utes when they are imported and advances plans for New Zealand to use more biofuels to reduce emissions from internal combustion engine vehicles,” he said.

Douglas said there was still a good range of available vehicles that wouldn’t be hit with the penalty, providing alternatives to utes.

The MTA also supported the package, and said it could go further.

“This can be done by making the rebate process easier for consumers, increasing the size of the rebate and focussing on carbon reduction rather than just electrification,” Epps said.

Epps said the proposed rebate process would still require vehicle purchasers to have enough cash or take a loan to purchase a vehicle first and only then apply for the rebate.

“This could still be a hurdle for the average Kiwi family,” he said.

“While dealers will be happy to help with making applications, perhaps the Government could look at allowing the buyer to access the funds at the time of purchase.”

EV retailer not convinced

David Boot, owner of Christchurch's EV City, said the rebate would not be the best thing for the EV industry in New Zealand long term.

The money would just end up in Japan or other countries where EVs were imported from.

People selling the cars in the offshore markets would know the New Zealand Government was paying a rebate and that combined with a big increase in demand caused by the rebate would push the price up, Boot said.

Importers were going to be put under pressure to buy as many EVs as possible and they would all be competing against each other.

“It will not be me making the extra money. It will be the Japanese.”

Boot said he would have preferred the Government put a more gentle set of incentives across a wider area.

He wanted EV users to be exempt from paying road user charges. The existing exemption runs until the end of 2021.

Boot also wanted EVs to get free parking and to be able to use the transit lanes on motorways usually restricted to vehicles with two or more people in them. Owners should also get a $300 credit on their annual power bill too, he said.

These measures would make EVs more attractive to own and the money would stay in New Zealand, Boot said.

He said people would have about two months before new orders would have to be placed, which was when the demand and prices were likely to increase.

The announcement led to a flurry of buying on Sunday. Boot said he sold seven cars on Sunday, up from an average of three.