New Zealand, a small island nation in the Pacific, has made history by reaching a 50% market share of electric vehicles (EVs) in December 2023. This is a remarkable achievement that puts New Zealand ahead of many other countries in the transition to clean transportation. But what factors led to this surge in EV demand, and what are the implications for the future of New Zealand’s energy sector?
One of the main drivers of the EV boom in New Zealand was the end of the controversial Clean Car Discount scheme, also known as the “ute tax”. This scheme, introduced by the previous Labour government in June 2021, imposed a fee on newly imported high-emitting vehicles, such as diesel-powered utes (pick-up trucks), and used the revenue to subsidize low-emission vehicles, such as EVs and plug-in hybrids.
The scheme was designed to encourage consumers to switch to greener options and reduce the country’s greenhouse gas emissions from transport, which accounted for 20% of the total emissions in 2019. However, the scheme faced strong opposition from farmers and tradies, who relied on utes for their work and had few alternatives available. The scheme also ran out of funds quickly, as the demand for EVs exceeded the supply of rebates.
The scheme was scrapped in December 2023 by the new National/ACT coalition government, which promised to do so in its 100-day plan. The new transport minister, Simeon Brown, said that the scheme was “inequitable and fiscally irresponsible” and that it penalized hardworking New Zealanders who needed utes for their livelihoods.
The end of the scheme prompted many consumers to rush to buy EVs before the subsidies ran out, resulting in a record high of 50.8% market share of EVs in December, up from 32.7% in November. According to James Foster at the EVDB, a data-driven website that tracks EV sales in New Zealand, battery electric vehicles (BEVs) accounted for 39.2% of all new car registrations in December, while plug-in hybrids accounted for 11.5%. In contrast, diesel vehicles accounted for only 2.7% and petrol cars 15.6%.
The Rise of EV Options
Another factor that contributed to the EV boom in New Zealand was the availability of more EV models and options in the market. In 2023, several new EVs were launched in New Zealand, such as the Tesla Model Y, the Hyundai Ioniq 5, the Kia EV6, the MG ZS EV, and the BYD Atto 3. These vehicles offered a range of features, prices, and sizes, catering to different consumer preferences and needs.
The BYD Atto 3, for example, was a compact and affordable EV that appealed to urban commuters and first-time buyers. The vehicle, which was manufactured by Chinese company BYD, had a range of 200 km and a price tag of NZ$29,990. The vehicle was also eligible for the Clean Car Discount rebate of NZ$8,625, making it even more attractive. The BYD Atto 3 was the best-selling EV in New Zealand in December, with 1,234 units sold, followed by the Tesla Model 3 with 1,012 units.
The Tesla Model Y, on the other hand, was a premium and spacious SUV that appealed to families and professionals. The vehicle, which was manufactured by US company Tesla, had a range of 505 km and a price tag of NZ$89,990. The vehicle was also equipped with advanced technology, such as the Autopilot system and the Full Self-Driving package. The Tesla Model Y was the third best-selling EV in New Zealand in December, with 489 units sold, followed by the Hyundai Ioniq 5 with 387 units.
The Impact of the EV Boom
The EV boom in New Zealand has had a significant impact on the country’s energy sector and environment. According to the Ministry of Transport, the EV fleet in New Zealand reached 103,000 vehicles by the end of 2023, up from 50,000 in 2021. This means that EVs now make up 3.5% of the total light vehicle fleet in New Zealand, up from 1.7% in 2021.
The increase in EVs has reduced the country’s dependence on imported fossil fuels and increased the demand for renewable electricity. New Zealand has a high share of renewable energy sources, such as hydro, wind, and geothermal, which accounted for 84% of the total electricity generation in 2020. The EV boom has also reduced the country’s greenhouse gas emissions from transport, which are expected to decline by 5% in 2023, compared to 2019 levels.
The EV boom has also created new opportunities and challenges for the country’s energy sector and infrastructure. On the one hand, the EV boom has stimulated the development of new services and businesses, such as charging stations, battery recycling, and smart grid management. On the other hand, the EV boom has also increased the pressure on the electricity grid, especially during peak hours and in remote areas. The EV boom has also raised the need for more regulation and standardization, such as safety, interoperability, and data protection.
The EV boom in New Zealand is a remarkable achievement that shows the potential of EVs to transform the transport sector and the energy system. However, the EV boom also poses new challenges and uncertainties for the future of New Zealand’s energy sector and environment. The EV boom is not a one-off event, but a dynamic and ongoing process that requires continuous monitoring, evaluation, and adaptation.
