The world’s carmakers have got the message – we’ve got to go electric. But with record sales of fuel-burning utes, has New Zealand? We examine the progress so far, and some of the tricky issues that are concerning consumers as they weigh up when to
get rid of their gas guzzlers. By Mark Sainsbury.
We might paddle well above our potential in the Olympics, but New Zealanders top the tables in many other fields, too. One of them is car ownership. According to a new study by UK insurance aggregator confused.com, we have the most cars per capita in the world. Their research claims we have 912 cars for every 1000 people. The United States
Given our recent form, perhaps it should be no surprise that we’re snapping up vehicles as if they were toilet rolls during a lockdown. Electric vehicles (EVs) are leading the charge, selling more in July than in the first seven months of last year combined. But here’s the rub: the antithesis of the EV – the ubiquitous fossil-fuel-guzzling double-cab ute – had record sales as well. Although we bought 760 pure electric cars, 431 plug-in hybrids and 1163 hybrids in July, we also scooped up 1418 Ford Rangers, the highest-selling single model. And another 806 Toyota Hiluxes.
The bump in EV and ute sales had a simple explanation: the Government’s “feebate” scheme, which promises rebates of nearly $8700 on newly imported light electric vehicles, and smaller amounts for plug-in electric hybrids. From January, the rebates will be extended to all low-emission cars, including hybrids that don’t plug in. However, high-polluting vehicles such as the Ranger and the Hilux will be whacked with an extra fee of up to $5875 for a top-of-the-range model.
There’s still a long way to go to meet the Climate Change Commission’s recommendation of phasing out fossil-fuel vehicle imports by no later than 2035. To meet that target, the Energy Efficiency and Conservation Authority (EECA), which advises the Government on these matters, estimates that total EV sales will need to leap from 6000 a year (in 2020) to 150,000 a year by 2030.
The new normal
Myles Gazley runs 10 franchises in his Wellington new-car empire and has been closely watching the EV evolution. He likens the development of electric cars to the Beta-versus-VHS videotape wars from decades ago. “The world has made up its mind,” says Gazley. Although hybrids have filled a valuable gap in the market, they are now “just sticking plasters”, he suggests. All the major players are moving to pure electric and that momentum won’t be stopped.
Gazley believes pure EVs will become the norm within the next decade. Among his brands are some at both ends of the spectrum: a pure electric German SUV costing north of $180,000, and a Chinese-manufactured wagon that is closer to $40,000. “They’re only going to get cheaper,” he says.
China is certainly attempting to shake up the market. Its BYD brand (the acronym stands for Build Your Dreams) is believed to be poised to enter New Zealand with very competitive prices. Like Tesla, it aims to shave margins through online-only sales.
Jack Gordon-Crosby is managing director of OptiFleet, which sources fleet deals for government and business operators. The company has spent three years on studies that track GPS and depreciation data, and he believes EVs make business sense. With the Government now ordering its departments to buy EVs, he sees implications for the whole country and wants the EV revolution to start reducing the age of cars on our roads.
Depending on the data you use, the average car in this country is between 14 and 16 years old. He would like to see government departments turn over their EVs relatively quickly, putting better-quality cars into the second-hand market.
But if the future is electric, why are we still buying so many double-cab utes? “It’s a loophole in the IRD rules – the elephant in the room no one wants to talk about,” says Gordon-Crosby.
What he’s referring to is section CX 38 of the IRD guidelines, which means utes can be exempt from fringe-benefit tax as work-related vehicles. There are some fishhooks – they have to have signwriting and are not generally meant to be available for private use.
In July, Environment Minister David Parker signalled that he was considering a clampdown on the rules. According to Parker, the advice he has received is the problem is not a “loophole”, but that the existing rules are not being properly enforced. “Inland Revenue advised me that it’s not quite as big an issue relative to other enforcement priorities, but we are having a look at it because [utes] are proliferating,” he was quoted as saying at the time.
Doing it all wrong
All these arguments are irrelevant to Kiwi engineer Ian Wright. As one of the co-founders of Tesla, he did the two-and-a-half-hour pitch to Elon Musk in 2004 that saw the then-millionaire buy in big time. Musk told Wright he was expecting twins in 10 days, so the deal had to be stitched up in nine.
Wright left the company a year after doing the deal. But he recalls that the original Tesla vision was for a high-performance electric car. “We all knew you couldn’t make a cheap electric car. The batteries were costing more than Honda spent making an entire car, so we decided to build a high-performance EV and go from there.”
He still believes you can’t make a cheap electric car, and although he admires what Musk did with the brand, he agrees with those who point out the company’s profitability has until now been largely based on selling its emissions credits.
The credits are one of the incentives governments around the world have introduced for carmakers, to help drive down emissions. In the US, Tesla receives the credits for free and is able to sell them to other carmakers that can’t meet regulatory requirements.
But fundamentally, Wright still isn’t persuaded by EVs. “If you want this thing to happen you need to cross the chasm. It needs to be economic and it’s easier if people are saving money while doing it. To save the most money, you don’t convert the most efficient vehicles [which are cars] – you should be looking at changing the vehicles that use the most fuel, that are the most inefficient.”
He created another company after Tesla, called Wrightspeed, which developed conversion kits for heavy users such as New York garbage trucks and delivery vans. He’s since sold the company, but stands by his view we’re doing it all wrong.
But with President Joe Biden calling for half of all US sales to be electric by 2030, and the UK government banning sales of new fossil-fuel cars by the same date, that momentum is only getting stronger.
The UK move, in particular, has big implications for New Zealand. The country is a major right-hand-drive market, so if it isn’t ordering any more fossil-fuel cars, then manufacturers will be even more reluctant to supply the rest of the RHD market.
The same issues will apply when trying to source more-efficient vehicles. With most countries facing regulatory pressure, we could find ourselves well down the queue.
Simon Rutherford is the boss of Ford in New Zealand. It’s Ford’s 3.2-litre double-cab Ranger ute that has become the poster child for the big polluters, but also our most popular vehicle. Under the feebate arrangement, it could attract a surtax of $3000 to $4000 next year. But Ford already has a similar Ranger, with a bi-turbo two-litre engine, 10-speed gearbox and much lower carbon emissions that would cut that fee in half.
From November, the 3.2-litre will be availableonly on special order. Rutherford says Ford was already phasing out the bigger-engined Ranger, but securing sufficient supplies of the leaner and cleaner version is already an issue. This is likely to mean ute users will face penalties they can’t do much about.
Because the feebate scheme is self-funding, it could also mean there will be less money to encourage EV sales if ute sales drop. What happens when the fund runs out, no one is sure.
The timing of the scheme has also upset the carmakers. The Motor Industry Association (MIA), which represents the manufacturers, wanted more time because what we import is totally dependent on offshore production cycles.
Rutherford says Ford supports the Government’s position to have a compliance framework. However, he believes it’s missing key elements, such as tailpipe tests to measure carbon-dioxide outputs and a scrappage scheme.
“Hopefully we’ll get there, but pulling forward the standard was unfair on people. We end up with a divisive policy that could have been avoided if they got the timing right. We’re going to have the scenario where a ute buyer turns up at a supermarket and gives a mouthful to the EV driver, saying, ‘Hope you’re enjoying what I paid for.’ And, to be fair to the ute driver, he doesn’t have an alternative right now – not from us, or from anyone else. If the time frame the MIA and Climate Change Commission suggested was kept to, we could be on this path united, not disunited and at risk of letting political factors get in the way of the bigger objective– the need to do something.”
The cost factor
Other significant hurdles EVs are likely to face include price and supply. Mark Gilbert heads the non-profit lobby group Drive Electric and is governance chair ofthe Battery Industry Group (BIG), an organisation that is focused on managing the life cycle of large industrial batteries. He acknowledges the supply issues and says we need to get tough with companies to make sure they can deliver what we need.
But on price, much comes down to what he says is Kiwis’ obsession with getting a good deal. “The problem with that is we don’t factor in repairs and maintenance over time. An EV has essentially 20 moving parts. Four are the wheels and two are the wipers. You don’t have the same exposure to maintenance as with fossil-fuel cars with 2000 moving parts.”
The public’s poor understanding of EVs and concerns about range haven’t helped, he says. As for fears about the long-term future of batteries, he notes that a proposal to comprehensively manage the issue, initiated by energy company Vector, is sitting on the Environment Minister’s desk. A similar proposal for tyres was presented to a previous environment minister many years ago, he claims, but little, if anything, was done with it.
Rutherford says Ford is working on battery technology and costs are predicted to drop. Ford has teamed up with VW to swap technology and platforms, and other carmakers have inked similar deals.
As with many industries, technological changes are the key driver. Wright warns that we should watch “very carefully” experiments in the rest of the world and pick the best results. “Look at technical development and what is applicable, but don’t do anything unless you really understand it,” he says.
So, once we can source EVs and afford them, what about running them? Will we have enough power? Richard Briggs runs the transport programme for the EECA and says it is already working with Transpower on balancing convenience and cost, as well as ensuring public chargers are deployed in a way that will give the market confidence.
In February, Transpower published its electrification roadmap, which sets out the required investment in new generation and transmission.
The report recommends import standards and financial incentives to encourage EV purchases. It also suggests using other incentives, such as fringe-benefit taxes and road-use or parking priority. “And this all needs to be supported through a revolution in the roll-out of public charging infrastructure, both for rapid charging and to provide for those without off-street parking,” it says.
This country’s leading charging company, ChargeNet, has already built a network of more than 250 rapid-charging stations nationwide. But Briggs remains concerned about managing peak use. Work is under way now, and with some urgency, he says. “Although there are 30,000 EVs today, including plug-ins, when that 30,000 becomes 300,000, then we’ve got a problem.”
Jonny Parker is seeing it already. His company, Thundergrid, advises companies on charging systems for their electric fleets. Some are installing expensive integrated systems at work that can manage flows to take advantage of cheaper power. Similar chargers at home can cost thousands to install.
Parker says private buyers often buy an EV then look for a cheap “dumb charger” on AliExpress. The problem with that is the charging can blindside the lines companies. He says there’s no leadership to ensure chargers are integrated and controlled. He’d also like to see a rebate on chargers, to ensure an efficient and smart system.
Energy to burn
Running a clean car also presupposes you are using clean energy. Powering your EV from power generated by dirty Indonesian coal imported to Huntly defeats the purpose, so it is crucial we have sufficient energy produced from sustainable sources. EECA estimates that if all light vehicles in New Zealand were converted to electric overnight, it would increase our total electricity demand by 20 per cent.
“We don’t have power on standby on the off chance thattwo million cars turn up next week,” Briggs says. “It will grow and we are planning for it.”
So, is there a plan to cover all these concerns? Many government departments, companies and agencies are working on various aspects of it. The Government formed the Electric Vehicles Leadership Group but disbanded it last year, and Transport Minister Michael Wood has signalled a new sector leadership group.
When asked what the difference was and what the new group would do, the minister’s office told the Listener that an announcement was pending.
EVs are coming, like it or not. But even they aren’t the complete answer to our climate woes. “An electric car is a better car than a fossil-fuel car, but it’s not emissions-free,” says Briggs. “There are embedded emissions in manufacturing EVs. It’s only after 20,000km driving that it breaks even with a petrol car from an emissions point of view. But, from then on, it’s winning. The batteries have emissions to be accounted for, but we need to get people out of cars – that’s the big problem.”
EECA says we must look at integrated public transport, car-share schemes such as Wellington’s Mevo, and electric bikes. Drive Electric’s Gilbert wants this “once in a lifetime opportunity” to broaden out as well. It’s a chance to tidy up the New Zealand fleet, he says. As well as boasting the highest per-capita rate of car ownership, we’re second to Argentina for having the oldest fleet. “It’s a travesty when the Transport Agency runs television ads telling people not to use certain cars because they are dangerous. Shouldn’t we be banning those old cars instead of wasting money doing ads about something that shouldn’t exist?”
Gordon-Crosby agrees. “An incentive in the market should be given to the lowest socio-economic group who drive these junkers. We should give you $15,000 to bring in the old banger so we can squash it and put the scrappage fee towards a modern, efficient EV. You have then changed that person’s life.”
In its submission on the Climate Change Commission’s report, the Motor Trade Association, which represents nearly 4000 automotive businesses, advocates targeted financing to support households to get into cleaner cars. The MTA also wants rebates, tax relief and accelerated depreciation. In the US, it points out, you can get a US$4500 rebate for scrapping your car, and in the UK it’s £1000.
Can we afford it? Given that we spent more than $3 billion importing fossil fuels last year, proponents argue there’s plenty of room for savings.
As with the mobile-phone revolution, it is technology that will drive innovation: smart charging to avoid blackouts, pool cars accessed by phone and plans for shared charging systems between government departments.
It’s those same departments that have copped some flak for being a little slow on the uptake. “We’ve come under a lot of criticism that the Government is not taking control, not getting enough EVs into the fleet,” says Briggs. “One reason is we are deliberately going at a particular pace. We don’t want to buy a lot of EVs that are surplus to requirements. The first step is to measure what you have; you can’t manage what you can’t measure.”
For private buyers wrestling with the decision to go EV or not, the consensus seems to be that waiting a little longer might be prudent if price is a major factor. Tesla Model 3s have already significantly dropped in price this year in this part of the world, and more are likely to come on to the secondhand market once the Model Y finally arrives here.
Many crucial issues remain unresolved, but for now, the most practical advice is to ask yourself: is it really going to be better for the planet if I buy another car?
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