Consultation on a light vehicle fleet “feebate” announced

Or why I stopped worrying and bought an electric car.

charging blue electric vehicle

After I trialled a Nissan Leaf and Mitsubishi Outlander PHEV, I wrote “the next car I buy will be electric”.

That was March 2017 and now I’m putting my money where my mouth is. A Nissan Leaf will be on my driveway next month. On Monday I received pictures of my nearly new EV, ready to leave port in Yokohama. On Tuesday, the government announced a “feebate” scheme that’ll reduce new EV prices by $8000 and used imported EVs by $2600 from 2021. I won’t see any of that feebate, but here’s why I’m not worried.

Red Nissan Leaf
Though we’ll save on running costs, the big risk of buying a nearly-new Nissan Leaf is its resale value.

Buying an EV was a family decision, mostly fuelled by our need to do something about the climate emergency. For our household, swapping our 13-year-old inefficient petrol Outlander for an EV is the most significant and immediate contribution we can make.

Looming climate catastrophe aside, cost was a big consideration. We didn’t expect to save money, but we needed confidence that our car-swap would make sense financially. Our nearly new Leaf cost considerably more than our current car is worth – we’re borrowing to buy it. Though we’ll save on running costs, the big risk is its resale value. We’re expecting the EV market to boom, but there’s also the risk prices will plummet as the choice of models expands and battery technology leaps forward. It’s a risk we’re willing to take.

The feebate impact

The government feebate announcement is fantastic for all of us: it’ll make our car fleet more efficient, and less pollution means better air quality and a significant contribution to avert climate disaster.

For me, the feebate affects my financial risk. On the face of it, it doesn’t look good. When I bought my car, I knew Nissan would sell a similar Leaf here for $60,000 from October. My nearly new, low-kilometre model cost about $40,000. So, I had a decent buffer between them, making my car look like great value.

The feebate might reduce the resale value of my Leaf. Or it could stimulate market demand that may prop up its value.

But, in 2021, with the “feebate”, a new Leaf will (I assume) cost $52,000, while freshly imported Leafs equivalent to mine will attract a $2600 reduction. My initial reaction on hearing the announcement was gloomy. My car will be worth less than I thought – I’ve made a big mistake!

I thought more and perked up. The feebate should stimulate the uptake of EVs because they’ll be cheaper while less efficient cars will cost more. In the next few years, many more EV models will be released, but supply is unlikely to keep up with demand, especially for used EVs. My Leaf should still be highly desirable to the legions of electric-converts looking for an affordable used EV.

So, the feebate might reduce the resale value of my Leaf. Or it could stimulate market demand that may prop up its value. Those things could happen without the feebate.

More than money

My EV decision was never really about the dollars. No matter how many numbers I tweaked in my spreadsheet (of course I have a spreadsheet!), I couldn’t confidently predict the future. Frankly, I didn’t even know if we would keep our Leaf for two years, or for much longer than that. Maybe one of our kids would learn to drive in it and it would be repurposed as a second car and home battery system. That decision would have a far bigger impact on financial viability than any feebate scheme.

Now is the right time for my family to ditch fossil fuel and jump into an EV. We’ve taken the first (and easiest) step towards averting impending catastrophe.

So, I got to a point where the numbers didn’t matter. Or rather, they mattered only to justify the decision I’d made, which was to act on what’s important now. Now is the right time for my family to ditch fossil fuel and jump into an EV. We’ve taken the first (and easiest) step towards averting impending catastrophe. We’ll be saving a few thousand dollars in fuel and maintenance costs every year. We’ll enjoy travelling in an extremely comfortable, quiet, modern car that’s heaps of fun to drive. I predict none of us will wish we still had our old Outlander.

Whatever the feebate does to my situation, I’m comfortable with it. I hope it works and our light vehicle fleet quickly becomes newer and more efficient. I think it could have gone further, really hitting the worst polluters hard. I’ll be making a submission of support for the proposal and making that point. I’d encourage anyone with similar thoughts to do the same.

The government’s “Clean Cars” discussion document can be downloaded here.

Submissions to the proposal can be made through the survey here (the deadline is 5pm, 20 August).

The government proposal in short

The proposal consists of two policies to increase the supply and reduce the cost of fuel-efficient and electric vehicles coming into New Zealand:

  • The Clean Car Standard is a vehicle fuel efficiency standard. This policy would require vehicle importers to bring in progressively more fuel-efficient and electric vehicles.

  • The Clean Car Discount is a feebate scheme. This policy would make fuel-efficient and electric vehicles more affordable for Kiwis to buy, potentially by a discount of up to $8000 for new vehicles and $2600 on used vehicles.

These policies would help significantly reduce the emissions from transport, and also result in fuel savings for motorists. They would apply to newly imported new and used light vehicles. The Clean Car Discount would take effect from 2021, while the Clean Car Standard would gradually kick in from 2022 to 2025.

White Nissan Leaf charging
The Clean Car policies are aimed at improving the quality of vehicles entering New Zealand.

Both policies are aimed at improving the quality of vehicles entering New Zealand. The buying and selling of vehicles that are already in the existing vehicle fleet will be unaffected. Over time the cleaner, more fuel-efficient vehicles will enter the second-hand domestic fleet benefiting more New Zealanders.

The policies are focused on reducing emissions in the light vehicle fleet (cars, SUVs, utes, vans, light trucks all of 3.5 tonnes gross vehicle mass or less). The government is focused first on light vehicles as they account for almost two-thirds of transport emissions. Light vehicles have an average life of 19 years, which means the vehicles we import over the next five years will lock in emissions out to 2043.

New Zealand is one of only three developed countries that has no regulations, or meaningful incentives, to influence the fuel efficiency of light vehicles entering our country. As a result, the vehicles supplied into New Zealand are among the most fuel inefficient, and polluting, of any OECD country.

This means we end up pumping more pollution into the atmosphere and use more fuel to keep our cars moving. If our cars were as fuel efficient as the vehicles entering the European Union, for example, we would pay on average $794 less per year at the pump.

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Kevin H.
20 Jul 2019
Nissan Leaf EV v Honda Civic RS Sensing

Good for you Paul if you think you are doing your bit for the environment.
I know what I would rather have parked in my garage.
A second-hand Nissan Leaf EV you paid $40,000 for, or a brand new Honda Civic RS Sensing 1.5 petrol turbo at just under $40,000. (and the Civic will tow a trailer, light boat or at a pinch, a small caravan)
The EV supporters need to think ahead in the unlikely event it ever gets to the stage EV's outnumber ICE vehicles. How do you think the government of-the-day are going to replace the millions and millions of dollars of petrol/diesel revenue they lose? You don't have to be a financial whizz to come to the conclusion that the EV users will pay.
Incidentally, the Honda is surprisingly economic to run, somewhere around 6.2 litres per 100 kilometres.
Cheers Paul, I wish you luck

Daniel M.
20 Jul 2019
Correction, savings, and RUCs

Hi Paul,

A gentle correction: as currently proposed, the $8000 subsidy will apply to all new cars and also to 2nd-hand imports that are less than three years old, so freshly imported nearly-new Leafs like yours would receive a $8000 discount not a $2600 discount. However, it is also very likely that when the feebate comes it will increase demand which will result in an increase in the price of the 2nd-hand cars at auction in Japan. Hence purchasers might not see much of a decrease in the actual cost and the rebate will just end up going overseas. I'm still recommending people to buy now: will possibly get a cheaper car compared to when the rebate comes in, and will have several years of reduced costs. We've had our Nissan Leaf for two years now and have saved $6k compared to an equivalent petrol car. You can see exact numbers here by month (I'm yellow):

https://dashboard.flipthefleet.org/reports/public/8779d9fc-65ba-4d74-ab6f-cc7a5b51d2b0

There is also a sting in the tail for EV owners with this proposal replacing the current RUC exemption which is set to end in 2021, which will actually make EVs similar in cost to run compared to efficient non plug-in hybrids (EVs will have RUC at $72/1000 km, while hybrids at an economy of 3.9L/100km pay only $33/1000 km in petrol excise tax). Hybrids have the benefit of lower initial capital cost, longer range, and lower battery replacement costs, which will make them rather attractive.

Daniel