Inside NZ’s stalling EV market - and how the country fares on infrastructure roll out

Sunday, 22 September 2024

Removing the electric vehicle (EV) rebate has set the country back years on its efforts to electrify the roads and reduce carbon emissions.

That’s according to Drive Electric, an advocacy group lobbying for the decarbonisation of New Zealand's transport sector.

Following the end of the Clean Car Discount scheme - a government initiative designed to make low emissions vehicles more affordable - in December, EV sales have hit rock bottom.

Fewer EVs also means the business case for rolling out critical infrastructure, such as charging stations, seem less imperative in the current recessionary environment.

EV sales were down 70% in the year to August, and the industry says it will take more than efforts from the private sector to turn that around.

“Removing the clean car discount by the [new National-led coalition] government at the end of last year had a significant impact on the market. You just have to look at the sales graph, EV sales fall off a cliff in January,” says Kirsten Corson, chair of Drive Electric.

“The economy is obviously very tough right now, and so I think it is a really challenging time regardless, but the policy changes did most of the damage to the EV market. EV sales have shrunk compared to petrol and diesel vehicles.”

The removal of the Road User Charges (RUC) exemption has also made it less appealing for consumers to buy an EV. Some consider it a penalty, as EVs are charged a higher rate than an equivalent petrol or hybrid vehicle are paying in terms of petrol taxes.

RUCs were introduced at a rate of $76 per 1000km for EVs, but petrol vehicles paying $61.70 and petrol hybrids being charged $39 are paying less in comparative fuel taxes, according to calculations by the Motor Industry Association.

The Government says this will be resolved when a universal RUC is introduced, but that isn’t planned until 2027.

Even with road user charges now at the rate they are for EV drivers, the Energy Efficiency and Conservation Authority (EECA) says it is still cheaper per 100km to run an EV, including if you're public charging, than to operate a petrol vehicle.

The average range of an EV is between 300 and 400 kilometres, and there are approximately 110,000 EVs - made up of 77,000 battery electric and 33,000 plug-in hybrid vehicles - on the roads today.

Market share for new EVs in New Zealand sits around 9% currently, down from around 23% in 2023.

Corson says industry is hopeful the number has bottomed out, and will rise again as the economy improves.

She says last year New Zealand had more EVs on our roads than Australia did, but this year they are on track to “double us.”

Missed opportunities

Research conducted by Concept Consulting for Drive Electric shows the removal of the Clean Car Discount and the adjustment of the Clean Car Emission Standards will likely result in between 100,000 to 350,000 fewer EVs on New Zealand roads by 2030.

That’s a big cause for concern given the lifespan of a car, says Corson.

'When you buy a car in NZ, people tend to keep them for a long time. Most cars have a lifespan of 15 to 20 years. Every new petrol or diesel car that's bought today is going to still be on our roads well into the 2030s - knocking on the door of 2040 - and each of those years emitting more CO2.

“This is one of the reasons why there is justification for stimulating uptake of EVs at this early stage of adoption to flip the switch and make this transition happen a bit faster than it would otherwise.”

A global context

New Zealand’s uptake of electric vehicles and EV-supporting infrastructure is minuscule compared to other markets.

New Zealand began its big EV push and infrastructure roll out in 2017/18. At that time, there were just one or two players installing chargers throughout the country, led by ChargeNet, which installed its first charger in early 2016 in Kaiwaka - taking a gamble when there were less than 1000 EVs on the road.

China is leading the race for the fastest uptake of EVs - on adoption and production, with the market share of EVs there sitting between 40-50%.

But in percentage terms, Norway still leads the world.

One in every two cars bought in China have some type of electric motor, and in Britain, the EV market is miles ahead of New Zealand’s in being established for at least 20 years.

In Britain, there is one AC charger for every 20 EVs, compared to one charger for every 300 EVs here. However, the EECA says New Zealand is focused on rolling out DC chargers not AC chargers - DC chargers enable a much quicker recharge.

If we look at the number of DC chargers deployed globally, the roll out numbers in New Zealand don’t look so bleak.

“We're about 118 cars to one DC charger. UK is one to 110, US 100 and Germany 140-odd. Australia is around 180, so from a ratio of DC charges per EV we're certainly better than those comparable countries,” says Richard Briggs, EECA’s expert on EVs.

New Zealand sits well behind Norway, which is considered the poster child for the EV market. It has about 80 EVs to every DC chargers, and last year, over 80% of new car registrations in Norway were an EV.

Falling EV prices

There are some bargains in the market for EVs currently, and that’s partly to do with how challenging conditions have been, according to Corson.

“Because EV sales were going so well last year, car retailers bought stock, and then the clean car discount was taken away, the market crashed. So in an effort to get through stock, there's quite a lot of discounting going on. Right now, I’d say it is a fantastic time to buy a new EV. For the first time there's a car in the market that is under $35,000.

“What impact this has on the market over the next couple of years [is unknown]. But we’re already seeing automakers reluctant to bring new models to New Zealand as they’re uncertain about the future.”

The cheapest EV available in New Zealand is a Fiat 500e for $34,990. Other affordable models include a MG ZS EV, which costs $48,990, a Mini Electric, with a $60,400 price tag, and a Peugeot e-208 GT at $59,990.

The increasingly popular Tesla Model 3 retails from $63,900 in New Zealand, and an entry model for Swedish rival Polestar, $55,000. Hybrid EVs such as the popular Toyota Prius cost about $58,000 to buy brand new.

Charging infrastructure

When it comes to public chargers, it is a tale of two tails as to who has funded the infrastructure: both the taxpayer and the private sector.

Up until 2023, the government was willing to foot the bill for half the cost of installing EV charges. This has now changed with governments and there is no longer an appetite to subsidise the industry through grants.

Currently, there are 1250 public EV chargers around New Zealand - a number that Drive Electric says will need to increase seven-fold over the six years for the government to reach its target of 10,000 public EV chargers by 2030.

The majority of people who own an EV also own a charger, typically installed in their garages, but industry insiders say for the market to fully flourish, public EV chargers need to be widely available to curb ‘range anxiety’ - drivers’ fear they will be caught short without a charger in sight.

Over the last 18 months, the main charging companies have been installing about 21 chargers a month -- this number needs to be in the vicinity of 140 per month to reach the government target of 10,000 by 2030, Corson says.

Currently, New Zealand is on track for 3000 chargers by 2030, she says.

“Some people have range anxiety, which is one of the reasons that they're reluctant to buy an EV; they go ‘Oh, well, there's not enough chargers’. But also, if you're a commercial enterprise, if there's not a growing EV market, why would I invest in public charges?

“This is why we need more public chargers to give confidence and the service. However, investors in EV charging infrastructure need to be confident in the demand for EV charging too - they want to see strong demand,” Corson says.

“Around the world, governments play a role in catalysing that investment to get EV infrastructure in place ahead of widespread adoption and before the business case becomes truly viable.”

According to the International Energy Agency, New Zealand has the fewest chargers per EV in the world, when compared to comparable countries.

“We're in this situation where basically the government policy choices have crashed EV sales, so there’s less demand and this has created some uncertainty. It’s expensive to invest in EV infrastructure, things like electricity network connections and consenting take money and time … the economics of it are challenging, and that’s why the roll out isn’t going as quickly as it needs to be at the moment.

“The best thing for public charging investment is strong demand for EVs.”

EECA group manager of delivery and partnerships, Richard Briggs, is more optimistic. He believes the country is on track to reach its EV charger targets, and the industry will bounce back within the next two years.

Briggs, who has been a driver of EVs since 2016, says he believes the EV market will begin to recover over the next year or two -- once a large number of cheap new EVs come into the market from China.

“When people realise there's operational savings, but you're not actually having a huge capital premium to be able to buy that car, that’s when we’ll see momentum pick up again.

“The vehicles will come, and they will come in volume. The Climate Change Commission, their growth pathway is still valid, which means there's going to be a significant number of EVs on the road in the next five to 10 years.”

The EECA is the agency working with the industry to deploy chargers currently. Historically the agency co-funded 95% of all of the public chargers through a grant program.

The current government has said it is uncomfortable with providing grants for public chargers when at some point in the future, those chargers will become commercially viable, and therefore businesses would make money from them.

Briggs believes removing any “unique New Zealand regulatory requirements” would be beneficial for the industry - enabling the EV market to align itself with other countries to make it more attractive.

“Just because cheap Chinese cars come in that are the same price as a petrol car still doesn't mean people are going to buy them. We are in a recessionary economy, and I think anyone buying a new car at the moment is in the minority, so it is going to take a while to trickle through. That was one of the reasons why the previous government, in particular, had a focus on getting EVs into the public sector; to help create a pool of used EVs, which is where most people buy their car.”

Transport, Energy and Resources Minister Simeon Brown is currently looking at what the government can do to make it easier for charge point operators to put chargers in the ground and connect to the network.

A taskforce has been established to work with the charging industry to identify what the best model will be.

The cost case

At off peak times, it typically costs a few dollars per 100km to charge an EV, around 85 cents per kilowatt hour, compared to about $20 for 100km worth of fuel.

Most charging stations are established by Charge Net, Meridian or Jolt.

It costs anywhere between $40,000-$50,000 through to several hundred thousand dollars to install a single public EV charger, with the price dependent on where it is located and whether or not there is easy access to electricity mains.

Dustin Murdock, chief executive of smart vehicle-charging station technology provider, Kwetta, says charging point operators and suppliers are far less concerned about slowing EV sales or government policy changes.

“We don't think it fundamentally underpins the trajectory of the market, and we certainly don't see it in terms of volume of interest in [charger] sales. It's still going super strong - the whole market,” Murdock told the Sunday Star-Times.

Napier-based Kwetta, which builds and sells its charging technology, recently partnered with Z Energy and Aussie fuel giant Ampol to supply its technology to their fuel stations.

It currently has 13 charging systems live. Its first charger went live in Waiouru in September last year. Each of its systems have four to eight charging points.

By the end of next year Kwetta expects to have 100 charge points in New Zealand alone.

Murdock says the three-year-old start up expects the consumer side of the market and new EV purchases to rebound and resume in the medium term.

“We're deploying large scalable infrastructure with a long term vision, our focus is on the next five, 10 or 15 years, ensuring that Kwetta’s technology not only meets today’s demands but is built for the future. Our focus isn’t on what happens in 2024 or 2025, but about where the market and technology will be in 2030 and beyond,” says Murdock.

“There will be a tipping point when 5% of new cars [on the road] go electric, then the prevalence in the market will change, and we’ll see this exponential uptake.”

Currently that figure sits around 2% in New Zealand.

Murdock says Kwetta has not been affected by any slowdown in the market, and business was going “gangbusters”.

“We haven't seen a slowdown in terms of our customers being worried about the short term wiggles in the market - here or in any of our markets beyond New Zealand.”

Looking at the EV infrastructure and adoption rates in Norwary was a “glimpse” into New Zealand’s own future. But one of the biggest challenges is managing the power grid to handle all these chargers, says Murdock.

Mainstream electrification of transport, including buses and trucks would be the next big areas of growth for charge point operators and vehicle manufacturers once the widespread switch to electric cars had begun.

“Bus charging is happening, and bus electrification is happening, and will happen quite quickly over the next 10 years, and trucks are coming next. Heavy transport, last mile and even long haul trucking, there’s a whole pile of electrification in the trucking space that even Norway is only just starting to scratch the surface of.”

Corson believes the gear-changing moment for New Zealand’s EV market will be when EVs hit price parity with petrol cars.

“At some point between now and 2030, EVs will be the same equivalent price as ice [internal combustion engine] vehicles, and at which point consumers will say ‘price is no longer a barrier, it's cheaper for me to run, they're quieter, and I feel good about the zero emissions’. At that point uptake will start to take care of itself.

“I think the real question for New Zealand, or any government, is how fast do you want it to happen?”

Murdock holds the view that the government’s move away from subsiding vehicles to wanting to subsidise or incentivise electrical infrastructure for the industry was the right one.

“If you talk to people and ask ‘What's your hesitation to buy an electric car?’ It’s not always price. It's often, are there enough chargers around? Are they going to work? Are they going to be where I need them so I can use it for cross-country transport as my main vehicle, and so we actually think that incentivising the infrastructure deployment is quite a sensible way to go.”

Speaking at the Responsible Investment Conference in Auckland this week, Megan Woods, Labour spokesperson for climate change and energy resources, said New Zealand needed to do more than just invest in green infrastructure, such as electric vehicle charging networks, to support the transition to a low carbon economy.

“We need to help create the demand for green solutions,” said Woods.

“It is not enough just to invest in the infrastructure. We also need to have policies that drive the uptake of those electric vehicles to use those charging stations.”