Electric Vehicles can save New Zealanders $15 billion

A new study on Electric Vehicles (EVs) shows a more rapid uptake of EVs could save New Zealanders $15 billion in vehicle, fuel, and carbon emission costs by 2050. https://www.concept.co.nz/updates.html

The study by Concept Consulting and Retyna shows there is both an economic opportunity and an environmental imperative to accelerate EV uptake:

  • The opportunity is because EVs are already cost-effective for some New Zealand households and businesses who drive longer distances each year, and at the current rate of cost and performance improvements they should be economic for the vast majority of New Zealanders purchasing a new vehicle within a few years.
  • The imperative is because vehicles are a major source of emissions, and without accelerated uptake, it will be substantially harder for New Zealand to meet its climate change commitments.

The study shows that accelerating the uptake of EVs could save New Zealanders $10bn in vehicle and fuel costs out to 2050, with a further $5bn reduction in carbon costs.

“Given our low-cost renewable electricity resource, the environmental and economic gains from EV uptake should be among the greatest in the world” says Concept Consulting Director, Simon Coates. However, the study finds that our current lack of policies to overcome the significant barriers facing EV uptake is resulting in New Zealand falling substantially behind overseas markets such as Europe.

Drawing upon overseas experiences, complemented with NZ-specific modelling, the study identifies three ‘core’ policy measures to deliver optimal rates of EV uptake. Two of them were proposed, but not implemented, by the last coalition government:

  • A Fleet Emissions Standard (referred to as a ‘clean car standard’ in the 2019 proposal) which requires vehicle importers to supply vehicles whose average emissions across the fleet are below a target, backed up by a financial penalty for falling short.
  • A Feebate scheme (referred to as a ‘clean car discount’ in the 2019 proposal) which offers discounts for low-emissions vehicles funded from increases in the purchase price of high emissions vehicles.

The third policy measure is an ‘ICE ban’ which would prohibit the sale of new petrol and diesel Internal Combustion Engine (ICE) vehicles. The study indicates an appropriate date for such a ban for passenger vehicles should be no later than 2035, and probably earlier subject to further analysis. Such bans are increasingly being put in place by overseas countries on the grounds that not to do so would compromise their ability to meet their climate commitments. In this vein, the key right-hand-drive market of the UK recently brought forward its ban to 2030, and Japan has introduced a 2035 ban. Without such a policy, New Zealand risks missing its own targets, and being a petrol and diesel vehicle ‘dumping ground’ for manufacturers wishing to sell their remaining stock, thereby locking-in higher emissions for New Zealand over the 20-year average lifetime of a vehicle in New Zealand.

The study identifies that implementing these complementary policies together will maximise their collective effectiveness and deliver the greatest benefit to New Zealand.

While greatest attention has been on light vehicles, the study finds that a similar suite of policies are required for trucks – the fastest growing source of our vehicle emissions, and a contributor to the $15bn modelled benefit from faster EV uptake.

The study reflects the views and analysis of Concept and Retyna, and was funded by 15 companies and organisations from across the electricity and motor vehicle industries.