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.

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

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.

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

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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Member comments

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Trevor B
22 Jul 2019
How much carbon dioxide is produced to build a car?

The one factor that never seems to get mentioned is the production of carbon dioxide during car manufacture. So there must be a tipping point between keeping that old petrol-inefficient car running and buying a new one. So it is possible that keeping a car running for, say, ten years may produce less carbon dioxide than buying a new car every three to five years. Buying electric when you do buy is of course a no-brainer regarding climate change.

Staff C.
23 Jul 2019
Wise words

Hi Trevor,

I think that's a great attitude to take with all products.

Use what you've got for as long as possible. When it reaches end-of-life, first consider if you need to replace it and, if you do, choose the most functional and satisfying, least damaging and most durable option.

cheers,
Paul

J W.
21 Jul 2019
Japanese controls?

I looked at a "new" leaf ex Australia (from Nissan NZ) and a "nearly new" leaf ex Japan. They both had inoperable GPS and the Japanese head unit was difficult to decipher. The dealers offered no help ("it's how it is" and "it'll be fine"). Is there a way around this without replacing the head unit and losing the air con controls?

Thomas
21 Jul 2019
NZ conversion

Yes there are companies which will NZ-ify leaf head units... have a read of https://www.geekzone.co.nz/forums.asp?forumid=162&topicid=248688

Staff C.
23 Jul 2019
re: Japanese controls

Hi J.W. Yes - that's probably the only downside of an import vs NZ-new.

You can get the dash panel (instrument panel) converted easily for a couple of hundred dollars (GVI and Coventry Cars in Wellington do it,). That gives most of the functionality to operate the car. The head unit (radio, GPS, a/c etc) can''t be converted yet, I believe. However, a crowd in Christchurch tell me they are working on it. I'm pessimistic though, if it does happen it's a bonus. The latest Leaf works with Apple Carplay, which gives me all the functions I want from it, and the a/c, reversing cameras etc work without needing to understand Japanese.

When I get the car I plan to write about the experience of sourcing, buying and getting it on the road here.

cheers,
Paul

John M.
20 Jul 2019
really as good for our environment as they say?

Good for you, Paul, making your decision to go EV, fuelled by your need to do something about the climate emergency. But I wonder if it is really all that good as it seems. I have been asking questions that nobody seems to want to answer and that is worrying because if my concerns were totally unfounded then surely at least one of these organisations I have written to would smartly jump down my throat! Basically my concerns are 1. Mining of the materials for the batteries. I think we all know that mining is not a clean industry. 2. Manufacture of the batteries. How clean is that process? 3. The batteries only have a limited life. What is going to happen in about 6 to 8 years time when there will be the start of a flood of expired batteries being removed from vehicles? Will we end up with another problem like we have with tyres? Please, please will someone reassure me these are unfounded worries!
And although Paul the financial aspect was a secondary factor in your decision again I wonder if you are viewing the matter with some blinkers on. Every advocate of EV champions the running costs but they conveniently focus only on the day to day costs. The limited life of the batteries means that in maybe 8 years you will be faced with not only the cost of replacement batteries but also the cost of removing/fitting them. (Not a DIY job, batteries contained in a air conditioned cell which has to be purged and replaced, I am told) That cost could be as much as one third of the value of your vehicle and in any event has to be factored into the cost of running the vehicle.
Finally another financial consideration our Government has to consider long term (not that any of our governments have demonstrated the ability or will to look beyond the number of terms they expect to rule!) . The materials for the batteries are mined in very few countries and I don't believe that unlike oil, NZ misses out. Once the world has placed its dependence on battery powered EVs Then there is the opportunity for those mining companies to set the price for their minerals at whatever they want. The oil cartels all over again!
Sorry to be all doom and gloom but I am wanting someone to tell me we are not leaping from the frying pan into the fire!

Fraser B.
21 Jul 2019
Oil companies want you to forget how dirty oil is.

Actually Lithium is fairly abundant and very clean to mine compared to anything that is oil and coal based. Batteries are expected to last a lot longer than 5 years. Already there are 2011 Leafs around that are 8 years old and still have 70% of their battery. A tesla battery loses only 1% per year. Then when they are no longer suitable for cars, they are able to be used in houses as backup for solar. (batteries from a crashed leaf sell very fast to those who have solar.)
This data is everywhere if you want to look for it. Also the cost of repairs for ICE cars (internal combustion engine) are far greater than electric. A petrol car has around 2000 moving parts vs 19 in an electric. On the other hand, with global warming, the sea may rise over 6 metres in level and wash out most of the major cities in the world, and all because people want the oil companies to continue to suck money from their wallets. I have had my Leaf for 2 years, and saved over $12000 on fuel alone. I have reduced the amount of fossil fuel burning considerably in that time, as I recharge from solar. My range has dropped about 4%, which means very little as I can still drive to the Coromandel, or Whangerei, or anywhere around the country that I want to drive to without concern or "range anxiety". The only time I ever ran out of fuel was in a petrol car.
I look forward to the day when I can drive to work and not cough half the trip from everyone else's pollution being sucked into my lungs.
In conclusion there is nothing clean about oil producing cars. The damage done to the environment by oil companies, oil spills, and green-house gases remains huge, and the world is suffering because of it. Change today for the better, you will never regret the change, you would only regret that you didn't change sooner. Anyone who can afford spending $10,000 on a car, or paying $2000/year on fuel can afford an ev right now.

roy s.
20 Jul 2019
Good Intentions.

Once China, India, the U.S. and the rest of the major polluters declare a climate emergency, i might follow suit. If everyone in this country bought an E.V tomorrow and ditched petrol/diesel, the resulting reduction in emissions would hardly be measurable in a global sense. But i understand people wanting to feel like they are doing something positive. Good luck.

Chris O.
20 Jul 2019
Feebate affecting sales

I also am in the market for a new EV; I am troubled by the fact that if I buy now I won't get the "feebate". So I wonder about the pros and cons of the government paying it retrospectively, once they have sorted the details. Then people like myself would be free to go ahead and buy now, knowing that we won't be missing out. Otherwise I see EV sales dropping, while buyers wait for the rebate to kick in. And our environment certainly needs no more fossil fuel burnt ASAP.

Staff C.
23 Jul 2019
re: Feebate affecting sales

Hi Chris,

That's a very good point and a risk of announcing the scheme now. You should make a submission on the scheme, pointing out the idea of retrospective payments.

The details of the proposal are here:
http://transport.cwp.govt.nz/multi-modal/climatechange/electric-vehicles/clean-cars/

which includes a link to a survey to collect submissions. It's set up to be really easy to do.

cheers,
Paul

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

Fraser B.
21 Jul 2019
How much will the government save not importing oil into New Zealand.

New Zealand spends over 7 billion a year on importing oil. They won't be losing revenue, they will be saving it!!!

Staff C.
23 Jul 2019
Other options

Hi Kevin,

There are lots of cars I could choose for $40k or less. I'm sure the Civic is a very nice car - it's just not for me. I chose this Leaf for many reasons, some of which I've explained. I'm certain others in my position will make different decisions.

One of the factors I considered is the ongoing legacy of my decision. A new car bought now will be trundling up and down our roads for almost 20 years. Decisions have long-term implications.

If the Civic really returns the 6.3L/100km and 148 gCO2/km Honda claim (see the Honda NZ website), in just ten years of driving 14,000km each year, it'll put out 20 tonnes of CO2 and use 8680 litres of petrol. Double those numbers for it's 20 year life, and add plenty more for the inefficiencies that come with age. Fuel alone will cost almost $20,000 over ten years, assuming petrol won't get more expensive. The engine and gearbox will need maintaining too - hopefully nothing major will go wrong.

I'm sure my EV will need maintenance in the next decade, though not as much as a petrol. It's likely to need a new battery in 7-8 years time too as it degrades and range reduces. By then, the old battery may be able to be repurposed as static energy storage, as it'll still have 70% or so of it's capacity. And its replacement will be cheaper and better than the options currently available, as battery technology is flying along.

And yes - roads need to be paid for. EVs will contribute a fair share through some mechanism - I'm not expecting a free ride. Though I'd also argue that the most polluting road users should pay more to cover the hidden costs of the pollution. Maybe petrol will get more expensive after all?

cheers,
Paul

Peter H.
23 Jul 2019
Out by a factor of one

Paul, make that 2 t of CO2, not 20. (If you think about it, 8600 l of petrol cannot make 20t of CO2.)

Staff C.
24 Jul 2019
More than you think

Hi Peter,

It is 20 tonnes over 10 years average driving. The Honda emits 148g per km (which is a long way from the target of 105g/km for 2025, by the way). Driving 14,000km each year, is 2 tonnes every year. That's in line with figures on rightcar.govt.nz too.

CO2 is a combination of carbon and oxygen. Petrol is mostly carbon, add twice as much oxygen and a litre (kg) of petrol produces more than a kg of CO2 - 2.3kg in fact.

This is a really useful factsheet from Natural Resources Canada that explains: https://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/files/oee/pdf/transportation/fuel-efficient-technologies/autosmart_factsheet_6_e.pdf

cheers,
Paul

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

Staff C.
23 Jul 2019
re: Correction, savings and RUC

Hi Daniel,

Thanks for the correction. I realised a 3-year-old car will get the $8000 discount but didn't include it. In my defence, I was comparing the cost of my Leaf at the time when I might sell it, when it'd be competing with others with the $2600 discount. If I held off buying it for two years I would need to compare to buying a car with the $8000 discount.

I agree with you about the increased demand potentially increasing used car prices. I was also weighing up the cost of running my current car for two years versus a Leaf, and having the uncertainty of not knowing what will happen in the future - whether the feebate will have a positive or negative effect on car availability and price, or even if it'll be implemented as announced (it is open for consultation).

Regarding RUC, while there needs to be a mechanism for light vehicles to pay for roads, I agree than removal of the RUC exemption for EVs in 2021 isn't a great solution. Keeping incentives for purchase and running costs for EVs would be ideal if the goal is to encourage a switch from petrol. As much as we complain about petrol tax, it does mean more polluting (less efficient) vehicles pay more - it's a direct incentive to choose a more efficient petrol car. Add in the feebate scheme that rewards the most efficient petrol cars, and you have a purchase and running cost double-whammy. But EVs also need a purchase and running cost incentive. Feebate and zero RUC wouldn't be perfect, but it's a start.

cheers,
Paul