Govt rolls out electric vehicle rebates, National claim policy will create 'waterbed effect'

In a significant step in the Government’s push to drive down climate emissions, they’re launching new incentives to reward those opting for electric and hybrid vehicles. 

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The Government has announced new subsidies. Source: 1 NEWS

The government announced this morning from the beginning of next month they’re rolling out new rebates up to $8,625 for new cars and $3,450 for older used models. 

It’s aimed to boost uptake in low emission alternatives and help reach the Government’s carbon-neutral 2050 goal, in light of the Climate Change Commission's recommendations. 

However, vehicles that cost more than $80000 won’t be eligible for the rebate, leaving more luxury EVs like most Tesla models excluded. 

Transport Minister Michael Wood says the move will allow Kiwis to play “catch up” with the rest of the world, having fallen behind in its uptake of electric vehicles. 

“Our transport emissions are the fastest-growing source of greenhouse gas emissions in New Zealand, so we need to start taking action now if we’re going to meet our 2050 targets.” 

The transport sector currently contributes 40 per cent of the country’s CO2 emissions, increasing by 90 per cent between 1990 and 2018 alone.

Meanwhile, overseas in Europe, electric vehicles are selling like hotcakes, making up 50 per cent of monthly vehicle sales in some countries.  

Discounting lower-emitting vehicles is the next significant shift by the government, following in their Clean Car Import Standards, which will roll out next year. 

Minister Wood called it the “best policy” to encourage a more considerable shift in New Zealanders taking up low emission vehicles. 

“The Clear Car Discount will make it cheaper for New Zealanders to buy electric and low emission cars. 

"It will prevent up to 9.2 million tonnes of carbon dioxide emissions and will help upfront the cost of switching over.”

Next year, Waka Kotahi will also add smaller rebates for vehicles that can’t be plugged in but fit into the low CO2 emissions limit. 

Waka Kotahi will manage the rebates, issuing them directly to the consumer without the need for car dealers to be involved. 

Eligible low emissions vehicles first registered on or after July 1 will be able to receive the rebates, that’s including vehicles purchased before then if the consumer holds off on registering. 

With the discount applying to new and used imported EVs, it won’t affect the second-hand market for those who can’t afford to switch. 

“We recognise that with the additional cost, a low emissions vehicle can be out of reach for many families,” said Climate Change Minister James Shaw. 

“This is a particular challenge for those who rely on a car to get around.” 

He says that reducing the cost of these low emission vehicles will help create a trickle-down effect on secondhand markets in the years to come. 

“It will ensure that more families can enjoy the benefits of low emission vehicles and their lower maintenance and running costs.” 

National fear 'waterbed effect'

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Climate change spokesperson Stuart Smith, told Q+A more people will swap to EVs without the need to incentivise. Source: Q+A

The policy has been met with some challenges though with National’s spokesperson for Climate Change Stuart Smith skeptical incentivising electric vehicles will disproportionately benefit higher-income households.

“I’m against subsidies for EVs... the reason I am is that it’s going to take money out of Papakura and gives it to, lands it all in Parnell,” he told Q+A. 

“I don’t think that’s the right thing to do.”

Smith argues that by having a capped Emissions Trade Scheme (ETS), a subsidy on electric vehicles is more likely to have a reverse effect on lowering carbon emissions. 

“We have what’s called a waterbed effect, you push down emissions in one area and it bulges up somewhere else.” 

The best way to lower emissions with the ETS is to “take water out of the waterbed” or essentially lowering the cap to encourage consumers to turn to a more cost-effective solution. 

“I think they’re going to [shift to electric vehicles] anyway, and the price of these will come down.”

Smith also admitted to Q+A’s Jack Tame that National hadn’t considered adopting a policy to ban petrol or diesel vehicles imported into the country. 

“No, we’re not thought about that, and it’s certainly not a policy of ours,” he said. 

“We’ve certainly not discussed it as a policy either… because we don’t think it’s necessary at this stage.”