New Zealand flags “cash for clunkers” scheme to drive shift to EVs

The New Zealand government has flagged plans to introduce a “cash for clunkers” scheme, incentivising low-income drivers to swap out their fossil fuelled cars for a discounted electric vehicle, as part of a package of economy-wide emissions reductions policy proposals.

The “vehicle scrappage scheme” proposes the introduction of income-tiered EV rebates for New Zealanders who decide to give up their ICE car, coupled with financial support for the installation of home EV charging.

It could also offer financial incentives for people to opt for low-emission alternatives, such as bicycles, rather than replacing their vehicles, the NZ government said in the long-awaited draft of its Emissions Reduction Plan.

The proposed new EV incentive forms part of a broader plan – also revealed on Thursday – to make 30 per cent of New Zealand’s light vehicle fleet electric by 2035.

The government has already made a start on this journey, with the recent introduction of an electric vehicle “feebate” – a carrot -and-stick policy to incentivise uptake of EVs while at the same time disincentivising new and used ICE car purchases.

In place since July, the Labor government’s Clean Car Discount offer a rebate of up to $NZ8,625 for new EVs and up to $NZ3,450 for used EVs, while promising to pay for the rebates by taxing higher emitting internal combustion engine (ICE) vehicles.

That policy had an immediate impact, resulting in a quadrupling of EV sales to 1944 that month and then, in September, boosting sales again to 3505 units, or 21 per cent of total car sales, according to the Motor Industry Association.

The proposed cash for clunkers scheme was welcomed on Thursday by New Zealand’s Motor Trade Association which, according to New Zealand Autocar has been advocating for the introduction of such a policy.

“We particularly welcome the government’s recognition that we need a scrappage scheme to make sure all New Zealanders can benefit from the move to low emission vehicles,” said MTA chief executive Craig Pomare.

“We are pleased the government listened to our submissions and we look forward to working with them on the details of the scheme.”

Elsewhere on transport, the draft plan sets out goals to get people to drive less, including a target to reduce overall car travel by 20 per cent by 2035. It also commits to a plan for large-scale rollout and investment in EV
charging infrastructure and to investigate support for clean fuels.

NZ EV advocacy group, Drive Electric, welcomed the new policies in the government’s draft ERP, saying that while more detail was needed, the ambition was there and progress had already started – even if it was being hampered by other laggards in the Pacific region.

“When taken together, we are starting to send signals to the global automotive industry that New Zealand is serious about electrification,” said Drive Electric chair Mark Gilbert.

“That’s how we will get a supply of these vehicles. The faster we can get a comprehensive plan in place, the faster we build the confidence of importers and consumers. Let’s hope that the Australian importers that influence the models available in New Zealand wake up and smell the electricity.”

Meanwhile, across the ditch, Australia still offers no federal policy, nor any real commitment, to drive the uptake of electric vehicles. Individual states have stepped into the void, however, with New South Wales rolling out some of Australia’s most generous incentives, incuding rebates and stamp duty concessions to help slash the up-front cost of EVs.

Victoria also offers a rebate on zero emissions vehicles, but took the shine off that policy with the simultaneous introduction of a road user charge, that has been hugely unpopular among electric vehicle drivers in the state, even sparking a High Court challenge.