There’s a general consensus across the New Zealand business community that the move to greener vehicles is inevitable.
It’s no secret the country has to wean itself off older gas-guzzling vehicles that drive up our annual emissions tally to give us the reputation of having one of the dirtiest fleets in the world.
The area of contention, however, lies in the timeline and how quickly this transition should occur.
At the panel discussion hosted this morning by NZME’s Driven, Transport Minister Michael Wood reiterated the Government’s goal to reduce our emissions from 180g of carbon dioxide per kilometre travelled to 105g per kilometre. This target applies only to vehicles entering the fleet that year, rather than the country’s overall emissions.
“If we don’t take action we will become the dumping ground for world’s dirties vehicles, and I don’t think anyone, whether you’re in the town of the country, wants to see that happen,” Wood told the audience in attendance.
The feebate scheme, which came into effect today, is an important tool in the government’s strategy to push car-buyers toward those greener options.
“This change is coming,” Wood stressed.
“Every month there’s a new country or a new manufacturer saying they’re going to phase out petrol or diesel cars. We know that cleaner vehicles, be they hybrid or electric, are coming down the track at us. This policy is about how we move forward more quickly with that transition – which is happening anyway.
“We can bury our heads in the sand and say it won’t happen, but New Zealand is not going to stop it.”
• See the full discussion from the Driven panel here.
The point Wood makes here has an important corollary. He’s right that New Zealand is too small to stand in the way of the global move toward greener vehicles, but our size also makes it difficult to compete with bigger countries rolling out similar policies.
Also on the panel was Motor Industry Association chief executive David Crawford, who took exception to the idea that New Zealand was on the road to becoming a dumping ground for undesirable cars.
“We have supported the introduction of both the emissions and the feebate scheme, but what we’ve asked for are sensible timelines so that the costs don’t blow out,” Crawford said.
“The big point of disagreement is not that they’re brought in but the timeline of the clean car scheme.”
Crawford said that without the time and opportunity to switch the fleet to greener options over a number of years, Kiwi consumers would end up having to foot the bill for the increased importation costs.
With global push toward green vehicles means New Zealand is now competing with far bigger countries for a limited supply of vehicles.
“Bear in mind that the total supply of new vehicles in New Zealand is 0.18 per cent of world production of vehicles in any one year. We’re a squiggly dot of nothing.”
The point here is that New Zealand doesn’t have much bargaining power when it comes to the international car market.
Crawford added that New Zealand wasn’t being helped by the fact that Australia was moving relatively slow when it came to encouraging the transition to electric and hybrid vehicles.
“Australia is, unfortunately, dragging the chain a little bit and it’s not helping us. If Australia go harder and faster, we’ll have a bigger market and a bigger pool.”
Some Australian states, like New South Wales, have started increasing incentives for greener vehicles, but the country is still some way from a broad consensus.
David Vinsen, the chief executive of used car industry group VIA, said New Zealand is significantly constrained by supply when it comes to second-hand cars.
“The manufactures can make more vehicles as they get demand, but we have finite number of vehicles that have already been made,” Vinsen said.
“They’re not making any more brand new five-year-old cars. What they’ve made is what they’ve made.
“In Japan, which is our primary source market, they’ve made about 125,000 pure EVs total. We’ve imported 20,000 of them to New Zealand. So there’s potential for another 100,00, which is less than a year’s imports. So we’re really limited by what we can bring in.”
Vinsen says that this has already led to a price war, which is pushing up the cost of vehicles coming out of Japan.
“Our members are bidding against each other to buy the available stock and this is forcing up prices. And so, there’s been a wealth transfer from the New Zealand Government through local importers straight to Japanese sellers.
“That means the desirable vehicles, the EVs, are going to come in more expensive, which is completely contrary to what was hoped.”
Wood stepped in at this stage to defend the Government approach, saying that the policy isn’t only limited to EVs.
“That’s not how we see things playing out,” Wood retorted.
“This policy isn’t only about EVs … It’s about an overall effort to clean up the fleet. And so when the policy comes fully into effect from the beginning of next year, discounts will apply to EVs, many hybrids and actually to some of the cleanest petrol vehicles as well.
“Japan has over the last 10 years produced 10 million hybrid vehicles, so there is a significant stock to draw upon.”
Wood took a longer-term view of the issue, saying that the best thing the country could do to reduce the cost of fuel-efficient vehicles in the medium- to long-term is to increase the supply of these vehicles.
Wood argues that the incentives and policies, particularly those that encourage government departments and big corporates to shift their fleets to fuel-efficient vehicles, will increase the supply and drop prices in the longer term.
That may be true, but the question remains how quickly that will happen and whether it will be fast enough to ensure the country meets the ambitious targets set by the government schedule.
Time will tell.
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