Electric Vehicles
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Further: the market will undergo rapid change, and the price of goods will be dictated by its parameters. Is the subsidy a stupid move? Potentially; I've looked at second hand Nissan Leafs through a group here in Oz and for that money, with limited support for a grey import, I wouldn't risk it.
I'm still leery of the new EV market, but as they come down in price over the next 5 years, grey imports and second hand EVs will correspondingly drop, and this subsidy will mean more.
In NSW they've announced a $3K subsidy for vehicles under the Luxury Car Tax threshold (up to the first 25,000 vehicles), no stamp duty, and the gradual introduction of road user tax to offset that in the longer term. Details TBC but that makes an EV more attractive to me, and it is only the lack of options that puts a halt to it.
Electrifying the X-Trail doesn't make sense at this point, so I need to wait for the right EV to drop.
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@crucial said in Electric Vehicles:
@jc said in Electric Vehicles:
So once again the government proves itself to be economically illiterate:
Car dealers warn of pricey challenges rolling out subsidised EVs
The Government is watching closely for attempts to hike prices to take advantage of its new subsidy on electric vehicles.
It's sophomore-level economics to understand that subsidising demand has the effect of increasing prices. The Minister's response is that they are going to keep an eye on attempts to distort the market and "call it out". That will have the overseas sellers quaking in their boots I'm sure.
At an aggregate level there is effectively a single source for the in-scope EVs, i.e. the Japanese second-hand car market. That market already monopolises the affordable EV supply and the government has enacted policies which make it the preferred source for the entire future car stock. Of course the sellers will take advantage of their position, that's the way markets work.
This is breathtakingly amateur.
Not unusual though. In a way you could argue that any drive (sic) toward this market will have that effect so the subsidy is a compensation rather than an incentive.
Govts around the world are trying to work this one out. How to shift people to 'cleaner' cars. Politically you can't ban existing vehicles and will have the massive headache of what to do with them and how to compensate people. Encouraging consumers through subsidies will get a bit of traction and I guess that they are crossing fingers that if petrol vehicles become undesirable (off the showroom floor) the market will need to increase and therefore become competitive.
At the moment the problem is the lack of market supply.
The flipside (and also against the aims) is that the clearance of fossil fuel vehicles will drive their prices down and make them a cheap option.But the lack of market supply is the critical part here. If we had an EV manufacturing capability here a subsidy would make more sense as it would incentivise the manufacturers to increase supply. But in this case the suppliers are offshore and repurposing already existing stock. Crucially (sorry) they can get the additional funds without increasing supply. They don't have to adjust anything in their supply chain except the price.
To make it worse the availability of the subsidy is finite, so it isn't in the suppliers' best interests to permanently change their model. So the most efficient thing for them to do is to increase the base price and take it as a windfall. There are no incentives to act well.
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@jc Japan-based vehicle buyer Marcus Jones has emailed car importers with a somewhat sardonic update on pricing.
"I thought perhaps you could pass on thanks from the wives and orphans of Japanese EV and Phev owners," he wrote, "who have seen the auction values of their cars rise in the past few days by more or less the precise amount that the New Zealand taxpayer has generously agreed to contribute."
How does the government not know this? What an utter waste of money. These types of subsidy schemes are stupid and counterproductive.
Here in the ACT if you're wealthy enough to purchase an EV you now get the benefit of free road registration and can sit smugly all by yourself in transit lanes - you know, the lanes designed to encourage mass transportation. Poorer people are more likely to own emissions intensive vehicles, so why aren't the subsidies (if you're going to apply them to a market) capped at a certain point and on a sliding scale?
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@nta said in Electric Vehicles:
In NSW they've announced a $3K subsidy for vehicles under the Luxury Car Tax threshold (up to the first 25,000 vehicles), no stamp duty, and the gradual introduction of road user tax to offset that in the longer term. Details TBC but that makes an EV more attractive to me, and it is only the lack of options that puts a halt to it.
Case in point ^. The government shouldn't subsidise the middle class.
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@antipodean said in Electric Vehicles:
Here in the ACT ... mass transportation
I really don't see a problem.
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@nta I don't know much about Australia's car market. But New Zealand's is the equivalent of the Mozambique clothing market where rich people buy new and the rest buy the shit that richer countries don't want any more. The majority of New Zealanders are driving the equivalent of a sweat-stained Fruit of the Loom.
The fact that it is now so accepted that the government is counting on it to be the source of our green revolution is as depressing as it is laughable.
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@antipodean said in Electric Vehicles:
@nta said in Electric Vehicles:
In NSW they've announced a $3K subsidy for vehicles under the Luxury Car Tax threshold (up to the first 25,000 vehicles), no stamp duty, and the gradual introduction of road user tax to offset that in the longer term. Details TBC but that makes an EV more attractive to me, and it is only the lack of options that puts a halt to it.
Case in point ^. The government shouldn't subsidise the middle class.
Probably not, but when no EVs currently exist in the market under ~$50k, what else is it going to be but a middle class subsidy?
People aren't going to take up a $45k vehicle ($50k minus value of subsidy/stamp duty) when they've got a shitload at or below half that price, no matter their social conscience. That's why we have a Kia Cerato instead of a Nissan Leaf at this point as our second car.
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@jc said in Electric Vehicles:
@nta I don't know much about Australia's car market. But New Zealand's is the equivalent of the Mozambique clothing market where rich people buy new and the rest buy the shit that richer countries don't want any more. The majority of New Zealanders are driving the equivalent of a sweat-stained Fruit of the Loom.
The fact that it is now so accepted that the government is counting on it to be the source of our green revolution is as depressing as it is laughable.
I think (but don't know 100%) the primary difference is your grey car market is a larger percentage - for ALL vehicle types, not just EV.
Australia at the moment could do a couple of simple things to help EV adoption, and the first is drop Luxury Cary Tax (LCT) on EVs, which admittedly is subsidy by another name. LCT was originally designed to protect our car manufacturing from reasonable-value overseas cars entering the market, by putting the BMWs and Mercedes etc above a certain cutoff in favour of your Commodores and Falcons.
Now that we don't have manufacturing (speaking of massive subsidies...) it is a pretty easy move to scrap it and get some EVs down into a price where they don't need any more subsidies. Oh wait - except it is yet another free hit for the government tax base. (Note: LCT for "fuel-efficient" vehicles is a slightly different threshold, but regardless isn't fulfilling the stated purpose).
EDIT: and LCT is effectively new cars only, but that is where a significant chunk of second hand cars come from I reckon
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@nta said in Electric Vehicles:
@antipodean said in Electric Vehicles:
@nta said in Electric Vehicles:
In NSW they've announced a $3K subsidy for vehicles under the Luxury Car Tax threshold (up to the first 25,000 vehicles), no stamp duty, and the gradual introduction of road user tax to offset that in the longer term. Details TBC but that makes an EV more attractive to me, and it is only the lack of options that puts a halt to it.
Case in point ^. The government shouldn't subsidise the middle class.
Probably not, but when no EVs currently exist in the market under ~$50k, what else is it going to be but a middle class subsidy?
People aren't going to take up a $45k vehicle ($50k - value of subsidy/stamp duty) when they've got a shitload at or below half that price, no matter their social conscience. That's why we have a Kia Cerato instead of a Nissan Leaf at this point as our second car.
But then what is the longer term plan to get the poorer people with the most polluting cars into a greener vehicle? Are we counting on them to buy old Leafs with end-of-life batteries? Because I reckon if you tell them they are up for a $5k-plus refurb bill within the next 2 or 3 years otherwise their car is unsellable they might just keep on driving that old XE Falcon.
Wouldn't it make more sense to subsidise trade-ins of towards the modern rule efficient, lower polluting ICE equivalents as an interim step?
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@nta said in Electric Vehicles:
@antipodean said in Electric Vehicles:
@nta said in Electric Vehicles:
In NSW they've announced a $3K subsidy for vehicles under the Luxury Car Tax threshold (up to the first 25,000 vehicles), no stamp duty, and the gradual introduction of road user tax to offset that in the longer term. Details TBC but that makes an EV more attractive to me, and it is only the lack of options that puts a halt to it.
Case in point ^. The government shouldn't subsidise the middle class.
Probably not, but when no EVs currently exist in the market under ~$50k, what else is it going to be but a middle class subsidy?
There shouldn't be one. Manufacturers will fill that market opportunity as wealthy people and early adopters make the design and manufacture of cheaper vehicles cheaper per unit. Of course there are cars in that space, but people don't like them.
If a government wants a policy of encouraging EV uptake, it should spend the money improving supporting infrastructure.
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@antipodean There is apparently a EV charging station at least every 50km's across NZ state highway network.
Never seen more than 3 chargers at a single station. Last thing anyone needs is rapid uptake.
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@jc said in Electric Vehicles:
But then what is the longer term plan to get the poorer people with the most polluting cars into a greener vehicle? Are we counting on them to buy old Leafs with end-of-life batteries? Because I reckon if you tell them they are up for a $5k-plus refurb bill within the next 2 or 3 years otherwise their car is unsellable they might just keep on driving that old XE Falcon.
Agreed - there isn't a quick fix to replace an entire fleet of millions of vehicles. This will take a decade or more in order to get the new vehicles in to become second hand and replace the grey import market entirely.
Fleet replacement will be a key area: if the government over there chucks all the mid-size cars it has for EVs, then gets them onto the market, it starts the process.
Wouldn't it make more sense to subsidise trade-ins of towards the modern rule efficient, lower polluting ICE equivalents as an interim step?
I think more of those vehicles with the stop-start enginges (like ?Mazda SkyActiv? etc) are the natural starting point. Cheaper to run in petrol terms, and once they're second hand you start phasing in your carbon taxes etc.
Don't you guys have some sort of scheme for diesel where you submit km per annum?
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@antipodean said in Electric Vehicles:
@nta said in Electric Vehicles:
@antipodean said in Electric Vehicles:
@nta said in Electric Vehicles:
In NSW they've announced a $3K subsidy for vehicles under the Luxury Car Tax threshold (up to the first 25,000 vehicles), no stamp duty, and the gradual introduction of road user tax to offset that in the longer term. Details TBC but that makes an EV more attractive to me, and it is only the lack of options that puts a halt to it.
Case in point ^. The government shouldn't subsidise the middle class.
Probably not, but when no EVs currently exist in the market under ~$50k, what else is it going to be but a middle class subsidy?
If a government wants a policy of encouraging EV uptake, it should spend the money improving supporting infrastructure.
Yeah that's what I believe. I would buy a full electric in a heartbeat if it could get me everywhere I want, whenever I want. It's disappointing that governments want to leave the provision of infrastructure to the market but are happy to subsidise consumption, which is always a bad idea.
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@antipodean said in Electric Vehicles:
If a government wants a policy of encouraging EV uptake, it should spend the money improving supporting infrastructure.
@jc said in Electric Vehicles:
Yeah that's what I believe. I would buy a full electric in a heartbeat if it could get me everywhere I want, whenever I want. It's disappointing that governments want to leave the provision of infrastructure to the market but are happy to subsidise consumption, which is always a bad idea.
In Australia I'd actually be talking the underlying network infrastructure, not direct charging infrastructure. Upgrades to transmission lines are a must given we'll be distributing energy generation resources more widely than before.
As petrol/diesel use decreases, the market will be filled with enough EV charging installers to make it work. And a shitload of petrol stations who don't ship fuel any more.
If you leave the Big Boy infrastructure to any form of private enterprise, it'll cost more in the long run as every link in the chain becomes more expensive.
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Had an unpleasant realisation about EV in NZ yesterday
We're the typical candidates for buying an EV (probably a secondhand leaf - the gateway car). The savings in petrol and maintenance offset the initial purchase price quickly, and range limitations in the city environment aren't super scary at all.
But then I found out yesterday that the Road User Charges exemption for EV was due to end at the end of 2021. For light vehicles, that runs around 7.6c/km.
Our small city car costs around 12c/km to run (petrol costs only, ignoring maintenance). With RUC included and the charging costs, it's basically breakeven unless the cost of fuel skyrockets (currently estimating around $2.35/L). So, it makes no financial sense to buy an EV unless RUC are excluded, or petrol costs go silly.
Then, in a perfect sense of timing, the Govt announced that the EV RUC exemption would run to 2024... so there's a 3 year payback.
What really annoys me is that we should be encouraging people in EV, but someone with a basic calculator can figure out that it makes marginal financial sense in operating costs in NZ. We need some way of funding roads that shifts away from fuel. I want to buy an EV, but I want it to make rational financial sense.
@nta what's the situation in Aus?
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@nzzp Because Australia has three levels of government, road funding comes from the following:
- council rates
- State vehicle registration
- Federal fuel excise
- General revenue
The adoption of EVs in Australia is also dependent on which jurisdiction you're in. In the ACT for example you're exempt from registration costs and obviously don't pay fuel excise. In Victoria they've announced a distance based levy to partly account for the extra damage EVs do to the road over their comparable ICE counterparts.
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@antipodean cheers
what is the additional damage? I thought damage was linked to the fourth power of the weight - so doubling the weight means 16 times the damage.
Light vehicles just don't do much meaningful pavement damage compared to heavily loaded trucks.
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@nzzp said in Electric Vehicles:
@antipodean cheers
what is the additional damage? I thought damage was linked to the fourth power of the weight - so doubling the weight means 16 times the damage.
Light vehicles just don't do much meaningful pavement damage compared to heavily loaded trucks.
Yes, fourth power, with the added complication of number of axles. But a Tesla Model 3 for example weighs about an eighth more than a Mazda 6.
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Worth noting that the fuel excise and other vehicle owner taxes aren't directly tied to road spending - like pretty much any tax, it all goes into the pool and then funds are spent as needed.
The heavier EVs' effect on roads will be interesting, but really at less than 1% of vehicles it is a drop in the well as far as road damage goes at this point.
Fuel excise is also dropping steadily as more efficient vehicles enter the market. Anything with one of those stop-start engines is causing just as much wear and tear on the road system by weight as a similarly sized ICEV, but will pay far less in excise for the same distance.
Depending who you ask, a road tax to replace fuel excise for EVs is just a stop-gap, with a few bodies urging a whole-of-market approach at a national level:
Electric vehicle taxes not needed to offset falling fuel excise revenue: report
The report argues the federal government should instead upgrade the nation’s energy grid and push the mining sector to convert from diesel to electric-powered off-road vehicles.
**Electric vehicle taxes not needed to offset falling fuel excise revenue: report** Declining fuel excise revenue doesn’t need to be replaced with new taxes on electric vehicles, a report has found, arguing the federal government should instead upgrade the nation’s energy grid and push the mining sector to convert from diesel to electric-powered off-road vehicles. The Institute for Energy Economics and Financial Analysis (IEEFA) report argues obstacles are being put in the way of large-scale take-up of electric vehicles because of concerns about the potential loss of revenue from fuel excise, without recognition it has been dropping for years with little impact. Instead of state-based taxes, it urges the federal government to accelerate the mining industry’s shift towards electric vehicles by winding back the fuel rebate for off-road vehicle use, and consider a 10-year, 0.1¢/kWh tax on retail electricity to create a $7 billion fund to upgrade Australia’s energy infrastructure. The federal government collects 42.3¢ in tax on every litre of petrol and diesel sold at the pump in Australia and paid by drivers using public roads. In 2021, gross revenue from the fuel excise tax was $19.2 billion and net revenue was $11.6 billion. But despite the growing population, vehicle fleet and total vehicle kilometres driven, revenue from fuel excise continues to decline in real terms as newer, safer vehicles with reduced fuel consumption hit the roads. It has fallen 68 per cent as a share of federal government revenue over 20 years and now contributes only about 2 per cent. The fuel rebate for off-road vehicle use, mainly in the mining sector, is 40 per cent of the total excise raised. IEEFA researcher Owen Evan said proportionally reducing the rebate to zero over 15 years while capping an individual group’s rebate to a maximum of $5 million annually – ensuring no small or medium-sized businesses were impacted – would bring incremental tax revenues from net excise of some $1 billion annually. “Even in the mining industry, this would be a material incentive to implement change, consistent with their own net-zero emissions pledges,” he said. “And our mining industry is a globally significant consumer of trucks and earthmoving equipment. We can have a real impact on this part of the world market.” Australia’s take-up of battery-electric and plug-in hybrid cars has lagged behind many European and Asian nations, accounting for just 0.7 per cent of total car sales in Australia last year. Three states – Victoria, South Australia and NSW – have flagged new taxes on electric cars based on distance travelled. The Andrews government passed laws last month that will charge electric and other low-emission vehicles 2.5¢ per kilometre driven and 2¢ for plug-in hybrids. But IEEFA, a think tank largely funded by environmentally focused private foundations, said states considering their own tax and subsidy structures should concern “all thinking citizens” because “when states drive economic policy, multi-gauge rail networks get developed”. The Australian Automotive Association, the peak organisation for Australia’s motoring clubs, including the RACV and NRMA, has argued that irrespective of technological shifts, the fuel excise is an inequitable tax. It has called for urgent national leadership and co-ordination to move to a single road-user charge. The Federal Chamber of Automotive Industries last month urged the federal government to lead a national overhaul of vehicle registration, stamp duty, licence fees and fuel excise and replace them with a single road-user charge based on kilometres driven. But Mr Evan said the most pressing issue was upgrading transmission infrastructure. Australia would struggle with a scenario of a 20 per cent electrified fleet within five years because there was not yet adequate production, transmission and distribution capacity to charge vehicles, he said. He argued a tax on retail electricity, which would probably cost $60 per household a year, would enable Australia to be ready for conversion when manufacturers suddenly cut off sales of petrol-powered vehicles. “It would maximise the value of Australia’s world-leading rooftop solar and behind-the-meter battery investments, driving decarbonisation while delivering household savings on energy bills at many multiples of the proposed 0.1¢/kWh tax,” he said.
