EV rebate changes predicted to hike prices by $15,000 for some new cars

Phil Pennington for RNZ

An importer is predicting that some new cars could jump from $20,000 to $35,000 in the next three years as subsidies on some hybrid vehicles and most small petrol cars are removed.

Changes are coming, in July, to try to reverse the drain the Clean Car Discount is having on government coffers due to it hitting targets four years ahead of schedule. There was an "urgent need to review the financial sustainability of the scheme", government papers said in February.

In March, when Toyota declared the discount scheme a fail, it also predicted the price for traditional hybrids and many thrifty petrol vehicles will rise.

Slashed are the existing rebates of more than $3000 on hybrids Suzuki Swift, Hyundai Kona and Kia Niro, and Toyota's Rav 4 loses its $2400 discount.

The Toyota Corolla hybrid's rebate is cut almost in half, to $1840.

But a Tesla at the scheme's top end would still get $7000 off, a bit less than the $8600 before.

Suzuki's range used to be held up as the lowest emitting in the country; now its lead importer, Tom Peck, will be left without a single model that qualifies for a rebate.

"The choice will reduce, there's no doubt" if customers wanted a rebate, Peck said.

"People that are planning to go and buy a new car in the $20,000 to $30,000 range are definitely going to be hit quite hard, because you're not going to buy any sort of new vehicle that's an EV or a PHEV [plug-in hybrid] in that price range any more."

For new small petrol cars, $1000-$2000 in rebates is cut from the Suzuki Swift, Toyota Yaris, Honda Jazz and Kia Stonic.

Others - in fact, 12 of the 20 most popular petrol makes - will attract emissions fees for the first time, or the fees will rise, by up to $2700.

Used cars, too

EV rebate changes predicted to hike prices by $15,000 for some new cars
Photo credit: RNZ via Ministry of Transport

The same fate awaits 10 of the top 20 used cars.

The government said the changes narrowed the focus to more fuel-efficient vehicles earlier than planned, adjusting what was eligible to promote EV uptake.

"It just seems a bit back-to-front to take what was the biggest change in the market, the hybrids, to take them out of the system," Peck said.

The rise in fees and drops in rebates under both the Clean Car Discount scheme and the related Clean Car Standard that applies to importers were combining badly for buyers, and rapidly, he said.

"Right now our entry level price is 20 grand. Our entry level price in three years' time is likely to be mid 30s."

Toyota NZ chief executive Neeraj Lala was concerned the changes would put cleaner cars out of many people's price range.

"We've been in a crunch for a long time in terms of supplying low-emission cars," Lala told Morning Report.

"We have back orders that run into the tens of thousands," he said.

"There are a large number of customers that have made a commitment to buy a low emission car, and this change will impact their ability to purchase, potentially, a lower-emission product."

The subsidy and fee changes would affect low-emission petrol cars, which were making a bigger impact on decarbonisation in the short term, and harm sectors requiring utes and vans for which a low-emission alternative was not yet available, he said.

EV rebate changes predicted to hike prices by $15,000 for some new cars
Photo credit: RNZ via Ministry of Transport

Another major player, who would not be named, agreed with that forecast, adding the changes were "gross disregard" for hard-pressed New Zealanders, who would end up paying when the fee on a used Mitsubishi Outlander rose $1000 to $1900 and slashed any profit margin from the vehicle if the dealer tried to keep the price down.

Like many dealers, big importer GVI has used cars on their way from Japan - and the swiftness of the 'feebate' changes has caught all of them out.

"We've got a huge focus on low-emission vehicles," GVI chief executive Hayden Johnston said.

"A lot of those are now either going to become neutral or a heavily reduced rebate.

"We will potentially have to dramatically change the profile of the vehicles that we bring in."

For example, the third most popular used car, the Mazda Six or Axela petrol, will cop a new $776 fee, up from zero.

The hybrid Axela's rebate will drop by $500, while a used Toyota Aqua rebate drops by $400.

Motor Industry Association chief executive Aimee Wiley said some buyers who had ordered ahead might get caught out.

"They will have an expectation around the transaction value," Wiley said.

"If that no longer attracts a rebate, or attracts a fee, total transaction value may change."

One dealer told RNZ they would wear this and not charge the customer.

All 10 industry participants RNZ talked with mentioned the fact thousands of Teslas had won rebates, and still would.

"We don't need more Teslas. The Teslas have caused this blowout," Johnston said.

But the Motor Industry Association is happy the scheme cap stays at $80,000, encompassing Teslas, as it argued to the government that a lower cap might exclude some models entirely, such as the new LDV electric ute.

Industry body VIA chief executive David Vinsen said the industry warned the government years ago the Clean Car Discount scheme would never be cost neutral.

Then, in recent weeks, they had pleaded in talks with officials for less rush so dealers could alter what cars they ordered in time.

"They presented a range of options for the minister and Cabinet to consider," Vinsen said.

"There were none of the options that we could endorse or support, but what we did was we sort of recommended that they use the least worst of them."

Fully electric cars and plug-in hybrids emerge comparatively better from the changes, though some have their rebates cut a bit.

The discount for some actually goes up, but Tom Peck said there were not many to choose from, as EVs were primarily being made for the major markets, not New Zealand.