End of New Zealand “ute tax” pushes EV penetration over 50% in December

For the first time, electric vehicles (EVs) accounted for over 50% of the new car market share in New Zealand in December, a high point for the country’s transition to EVs, but one that was driven more by a short-term rush than sustainable growth.

According to James Foster at the EVDB, a New Zealand “data-driven website combining insights from real-world experience in EV ownership”, EV new car registrations reached a record high of 50.8% in December, an impressive 18.1% month-to-month increase.

Battery electric vehicles (BEVs) accounted for the lion’s share of all new cars registered in New Zealand in December with 3,357 vehicles accounting for 39.2%, with another 987 plug-in hybrids accounting for 11.5%.

Plugless hybrids accounted for 30.9% (2,644), while diesel vehicles accounted for only 2.7% (233) and petrol cars 15.6% (1,338).

The surge in EV demand in December represented a significant bump over the long-term trend, which has been steadily growing, but nowhere near what was seen in December.

Unfortunately, this December bump is almost certainly the result of the end of New Zealand’s Clean Car Discount and so-called “ute tax”.

Announced in June 2021, the combination tax and rebate scheme saw buyers of newly imported combustion engine vehicles paying a tax that was then used to offer rebates for EVs or plug-in hybrids.

Somewhat unsurprisingly, the New Zealand government was forced to remodel the scheme after demand for low-emission vehicles outstripped the rebates available, leading to increased fees for higher-emitting ICE vehicles.

This, however, dramatically affected farmers and tradies across the country, who were unable to benefit as much from the scheme due to the relative lack of commercial low-emission vehicles.

The scheme, introduced by the New Zealand Labour Party under Prime Minister Jacinda Ardern’s leadership, was repealed in December by the newly elected National/ACT coalition government.

“The National-ACT coalition agreement made scrapping the ‘Ute Tax’ a priority of our 100-day plan and we are making good on that promise,” said Simeon Brown, New Zealand’s new transport minister.

“The previous government’s scheme, which provided subsidies for people purchasing electric vehicles while taxing hardworking farmers and tradies who have little choice about the type of vehicle they need for work, is inequitable and fiscally irresponsible.

“Many drivers who need utes for work can’t avoid charges under the scheme as there are few viable alternatives that meet their needs.”

It is therefore unlikely that the December surge in EV demand will last beyond this one month. Similarly, the future for EV and low-emission electric vehicle demand in New Zealand remains uncertain, with no new incentive scheme to support the purchase of electrified vehicles.