Jacinda Ardern driving an electric car with Christchurch Mayor, Lianne Dalziel

The Government’s new fee-bate scheme to encourage electric car uptake yesterday started to hit some potholes.

Toyota, the company that sells the largest number of cars here, said the Prime Minister was wrong in her claim that electric utes would be available within the next 24 months.

The company is also questioning the safety of some of the EVs that will come in under the Government scheme.

Meanwhile, the right-wing think tank, the New Zealand Institute, argued that theoretically, the  Emissions Trading Scheme could simply see the emissions saved by EVs replaced by other emitters.  

Toyota confronted the Prime Minister over her claim on the AM show that “within the next 12 to 24 months the likes of Toyota are talking about bringing in EV utes.”

 “I’d like to reiterate that we do not have any plans for a battery-electric Hilux in our line-up in the next 18 – 24 months,” said Neeraj Lala, Toyota New Zealand Chief Executive Officer.

“It is irresponsible to suggest that customers stop buying non-electric vehicles immediately until there is an electric option available.

“The range and volumes of EV’s needed to meet demand are simply not available.”

 Global constraints around battery production, the semi-conductor crisis, and technology adoption could mean that the rate of EVs arriving into New Zealand’s market would be under considerable pressure, said Lala.

That question of the availability of EV cars was also questioned in the Climate Change Commission’s report, which said that the New Zealand vehicle market was small, remote, right-hand drive, and  heavily dependent on used vehicle imports from Japan.

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“We heard from some industry submitters that EV manufacturers currently have limited production capacity globally and that they are likely to prioritise markets with stronger low emissions vehicle policies than Aotearoa currently has,” the report said.

Putting policies in place to support the adoption of new EVs can help to limit the impact of this constraint.”

But the question of upfront subsidies – which is effectively what the Government is proposing — was questioned by the New Zealand Initiative, whose economists Eric Crampton and Matt Burgess argued that electric vehicles would liberate Emissions Trading Scheme units which could then be used by other polluters who wanted to pay but continue emitting carbon dioxide.

The counterargument to this (from the Climate Change Commission) was that the high upfront costs of EVs created a significant barrier for low-income households who struggled to access capital for major one-off purchases.

“Fiscal incentives to lower the upfront costs of EVs should also be introduced as a matter of urgency, to help overcome this cost barrier,” the Commission said.

“Such incentives could include, for example, direct subsidies or a feebate scheme.

“A feebate scheme has the additional benefit that it disincentivises high-emitting vehicles while encouraging lower-emissions ones.”

And Ardern said the Government got clear advice that a feebate scheme would be needed.

“In the course of implementing the clean car standard, the Ministry of Transport made it very clear that its success would also be dependent on some form of incentives regime,” she told her weekly press conference yesterday.

Overseas experience shows that subsidies drive increased sales of electric vehicles.

Norway became the first country to sell more electric cars than petrol, hybrid and diesel engines put together last year, with EVs accounting for two-thirds of sales in the final months of 2020.

The Norwegian Parliament has decided on a national goal that all new cars sold by 2025 should be zero-emission (electric or hydrogen).

New Zealand has yet to set such a goal.

Norway levies no purchase, GST (25%) or import taxes on electric vehicles.

But the NZ Initiative argues that the ETS carbon price should be sufficient to discourage internal combustion engine cars and that people would buy EVs once they realised the savings they would make on petrol.

But speaking on a webinar last December, the Chair of the Climate Change Commission, Rodd Carr, said that even if the ETS price went to $50, the ETS component of the petrol price would be only 12 cents a litre.

“At 12 cents a litre, petrol is relatively inelastic,” he said.

“In other words, it doesn’t change much in how much we buy.

“And that price of 12 cents per litre for carbon is often dominated by fluctuations in the oil price and the New Zealand dollar exchange rate.”

Toyota also criticised the Government’s decision to allow cars with a lower safety rating to be imported under its scheme.

Lala said the company had concerns about the decoupling of safety and technology in the feebate scheme, with vehicles only needing to have a 3-star rating to get the rebate.

“For more than the past two decades, the Ministry of Transport have pushed Road Safety through their ‘Safer Journey’ strategy.,” he said.

“So why are we accepting 3-star vehicles as acceptable forms of mobility?

 “Toyota wants to see a stricter stance from the government on the importance of safety alongside the technology.”

Ardern countered this by saying that you couldn’t get a rebate on a car that was considered to be unsafe.

But the big issue will be availability. And that will be out of the hands of the Government.