Clean Car regime starts
The pressure is on for car dealers to provide affordable electric and plug-in hybrid electric vehicles now that the Government has introduced its feebate incentive – the Clean Car Discount.
From 1 July, buyers of newly registered EV and PHEV vehicles can apply for a rebate.
However, with a global pandemic, shortages in raw materials, and limited numbers of new and used EVs available, prices are going up, not down.
For New Zealand, the problem will be compounded in 18 months when the Clean Car Standard introduces a credit and penalty regime for CO2 emissions on all vehicle imports. This too is expected to affect the price of cars.
Christchurch member David Boot of EV City imports used EVs from Japan. He says immediately after last month’s feebate announcement his phones lit up and he sold a month of stock within a week. “At the same time, prices in the Japanese auction houses went up by the same amount as the feebate.”
He expects prices in Japan to continue to rise, pushed up by the growing numbers of dealers coming into the market trying to buy used EVs. The pressure will just get more intense as the Clean Car Standard requirements come in.
“Supply is short and we cannot keep up with demand. If customers want used EVs, they will have to pay more.”
He’s grateful it’s been left to the customer to collect the discount paid out by Waka Kotahi NZ Transport Agency for newly registered cars. “It takes it completely out of the dealers’ hands and avoids any rorting.”
Clean Car Standard
David is less enthusiastic about the Clean Car Standard, which he describes as a complex minefield.
From 1 January next year, importers are required to display and track the CO2 emissions of all the used and new vehicles they import as the country moves to a limit of 105g of CO2 per kilometre by 2025.
From the beginning of 2023, importers will start attracting a mix of credits or penalties (depending on the CO2 emissions of each vehicle imported). At the end of each year, they will have to tally up their credits and debits for all their vehicles and pay any net amount they owe.
David Boot says as a specialist used EV dealer he gets nothing but credit. It can’t be cashed in but it can be transferred/sold to another used importer and used to offset their CO2 penalty.
“I’ve already been approached by two dealer importers selling higher-emitting used vehicles. But it’s a risky process, particularly when the tally-up is only required at the end of the year. EV dealers like me are likely to use the income from selling our credit to lower the price on our electric vehicles. But what if I buddy up with someone who goes bankrupt and I’ve spent a year selling my cars at a lower rate?” He’s thinks a weekly or monthly system of selling his credit might be the answer.
However, bankruptcy is a possibility for some dealers, he reckons. “The system is complicated and smaller dealers may not realise the size of the penalty they are likely to get at the end of the year.” He says importers who are selling their business will also need to declare their CO2 tracking. “Anyone buying a dealership will need to do their due diligence to make sure they are not going to face a bill for tens of thousands of dollars at the end of the year.”
In Hastings, Brendon Vesty of Stortford Motors imports a range of used vehicles from Japan and buys locally where he can. He has sold a few hybrids recently and is likely to import more. “But EVs are not popular in Hawke’s Bay and this isn’t likely to change quickly. I’m picking the market will move to more efficient cars – people do want something more economical. But at the moment, many of my customers still want a big car, a ute for business or a big family 10-seater van.”
He’s not looking forward to having to start monitoring his imported vehicle CO2 ratings next year as part of the Clean Car Standard. However, overall, he’s optimistic about the future. “Everyone will adjust to the new prices and the new systems because there won’t be a choice.”
Stortford Motors has its own finance company and Brendon says this makes his business more profitable. “There’s not much margin in just selling cars,” he says.
The big picture
MTA Dealer Sector Manager Tony Everett believes there will be a change in buying patterns among dealers over the next few months. Only EVs and PHEVs attract a rebate this year. “So it's likely dealers will ease back on hybrid purchases for a few months because they will be harder to sell until they become eligible for the feebate in January 2022.” He expects dealers will start stocking up on higher-CO2-emitting vehicles over the next few months and register them before customers must start paying a penalty fee on high emitters next year.
Tony says the market will always adjust and look for opportunities within any new regime – it just takes a little longer for the flow through in the new cars market. “Hybrids are quickly becoming the car of choice and will be the major contributor to our carbon reduction efforts over the next few years.”
He expects the Clean Car Standard penalties in 2023 to make pricing difficult for many dealers. “Those who are able to sell their credits will be able to keep their prices to the consumer down. Those who use their credits to offset their ICE high-emitters won’t be able to do that. So dealers selling a wide range of vehicles will have trouble competing on price with those who are specialising in EV and PHEV vehicles.”
Clean Car Discount
Received by customer
1 July – 31 December 2021 – buyers of EVs and PHEVs will receive rebates from the Government ranging from $2,300 - $8,625 (available from a set $300m fund)
From 1 January 2022 there will be three broad bands:
Low/zero emissions, which gain a rebate (which will cover many hybrids).
Mid-level emissions, which have zero rebate and zero fees.
High emission vehicles, which will require the buyer to pay a fee (up to $5,175).
Clean Car Standard
Paid by importer/distributor
1 January 2022, importers required to display and track CO2 emissions of vehicles imported.
From January 2023, credits and debits attach to all imports depending on their CO2 emission rate. The net bill of the average CO2 above the limit across all the new stock must be paid by the importer annually.