Subsidies and war fuel boom in electric car sales

Sustainable future

Sales of electric vehicles have gone wild since the government introduced the clean car rebate last year and then Russia invaded Ukraine, disrupting petrol prices. March figures just released set a new record for electric vehicle sales – and there’s more to come. | Content partnership

The Motor Industry Association of New Zealand has some interesting tables on annual vehicle sales – they’re worth looking into if you’re into that sort of thing.

In 2011, its list for electric vehicles had two lines. One model, 12 cars sold.

One model, 12 electric vehicles sold in 2011. Source: Motor Industry Association

Ten years later, the MIA’s electric vehicle chart takes up a full, close-up page. In the 2021 list, there are 28 fully electric vehicle models, eight heavy-duty electric vehicles (trucks and buses) and 31 plug-in hybrid electric vehicles, sometimes referred to as PHEVs. A plug-in hybrid is a car whose primary power source is electricity, but once the battery is depleted, it switches to gasoline to power the internal combustion engine.

The total number of vehicles sold across the three EV categories in 2021 was 9,380.

But dive into the monthly sales numbers and you can see a big difference between the two halves of the year.

Between January and June 2021, total electric vehicle sales in New Zealand were 1,670. From July to December, they were around 5,150, or three times as many.

Same with EV plug-in hybrids. There were 629 cars sold in the first half against 1864 in the second.

The difference is due to the government’s clean car rebate, which came into effect on July 1.

The Waka Kotahi program offered $8,625 back on a new electric vehicle (as long as it cost less than $80,000) and $3,450 back on a used import.

The boom in electric vehicles continued until 2022. The list of models on the MIA site now sneaks onto a second page. If you extrapolate electric and plug-in hybrid vehicle sales in February over a full year (an interesting but not precise metric), the industry could reach nearly 13,000 registrations this year.

Chris Blair, Managing Director, Passenger Cars at Hyundai New Zealand, has some metaphors from the natural world to describe the past few months.

“It’s been a whirlwind,” he says. “The market just caught fire when the clean car rebate came along… It’s been a wild ride.”

Hyundai launched its first electric vehicle on the New Zealand market in 2016, a second in 2018, a third in 2021. The market was bubbling – until July 2021.

Blair says a large share of pre-2021 sales came from large companies and government departments – “people looking at more than just price, with priorities around corporate responsibility and CO2 reduction” .

There was also an appetite from private buyers, he said, but most were waiting.

“It was like everyone was hanging around, waiting for some kind of government initiative. So when it happened, I think there was a backlog of demand.

In fact, the biggest constraint on sales for any automaker after the discount arrived was the Covid-related supply chain disruption in a strong market.

The international shortage of semiconductors has also had an impact – the higher the specification of the car, the more semiconductors it will have and the greater the potential for delay.

Still, a customer walking into a Hyundai dealership today could take delivery of an electric vehicle tomorrow, Blair says. They may have to compromise on color or specs.

The impact of rising gasoline prices

Meanwhile, the Russian invasion of Ukraine on February 24 and the subsequent increase in gasoline and diesel prices gave the electric vehicle market another crazy boost.

Undiscounted average pump prices for fuel 91 in Auckland rose from $2.72 in mid-January to $3.30 two months later, according to interest.co.nz, before the government cut 25 cents per liter fuel tax.

Source: Globalpetrolprices.com

“Due to rising petrol prices and our 2021 New Zealand Motoring Writers’ Guild IONIQ 5 Car of the Year winner [announced on February 18] we saw a surge in demand again overnight,” says Blair.

March 2022 figures from the Motor Industry Association show New Zealanders bought 1,716 electric passenger vehicles and 431 plug-in hybrids last month. That’s a total of 2147 cars. A year earlier, in March 2021, those numbers were 430 passenger electric vehicles and 150 plug-in hybrids, for a total of 580. That’s almost four times as many cars sold in March this year, compared to the last year.

The increase in the number of people buying pure electric vehicles as opposed to plug-in hybrids is also significant. In 2019 the ratio was around 2:1, in 2021 it was 3:1, in March it is closer to 4:1.

Keep in mind the interesting but potentially inaccurate extrapolation number above – 13,000 records for the full year 2022, based on February sales.

Do the same extrapolation with the March numbers and you get another huge jump – 20,592 full EV records and 25,764 EV plus plug-ins.

Keeping up with the demand for electric vehicles is even more difficult, says Nic Tsimas, main dealer at Hyundai North Harbour.

“When they come to the dealership, we basically sell them.”

A car for everyone

Another factor driving electric vehicle sales is the sheer number of different cars on offer.

In 2019, New Zealand customers could choose from 16 pure electric vehicles and 20 plug-in hybrids. There were 12 automaker brands selling electric vehicles in the New Zealand market.

Two years later, in 2021, 29 electric vehicles and 31 plug-in hybrid vehicles were offered by 19 different manufacturers.

Hyundai’s Chris Blair with the IONIQ 5. Photo: Supplied

Hyundai currently has the IONIQ, Kona and IONIQ 5 on the market and plans to launch two plug-in hybrids and a battery-powered EV in the next 12 months.

The significant increase in the number of electric vehicle models is great for electric vehicles as a category — and for the environment, says Blair.

Meanwhile, on April 1 this year, the next stage of the government’s clean car scheme came into effect – the introduction of sticks for high-emission vehicles alongside carrots for low emitters.

The maximum charges will be $5,175 for someone buying a new car and $2,875 for a used vehicle.

Source: Waka Kotahi

The government’s Clean Car plan is part of its net zero 2050 target. Transport is responsible for 47% of New Zealand’s national CO2 emissions, and two-thirds of transport emissions come from our light-duty vehicles, figures show. of the original report.

Next government target: automakers

The July 2021 and April 2022 rebate and fee schemes are moving the dial for customers, but the government has another rabbit in its hat for next year – and this one brings auto trade into the equation.

From 2023, car importers and distributors will also have to reduce the total amount of CO2 in the vehicles they bring in – and will be penalized if they fail to meet the targets.

“From December 2022, vehicle importers must have a CO2 account with Waka Kotahi in order to progress vehicles to entry certification,” the rules say.

“This ensures that systems are in place to monitor importers against targets from January 2023.”

The global objectives will harden each year until 2027.

Source: Te Manatū Waka, Ministry of Transport

“It will be based on the number of vehicles we sell each year and the average CO2 output,” says Blair.

“We expect around 40% of our volume this year to be alternative fuel of some kind, which puts us in a pretty good position to offset traditional ICE (internal combustion engine) vehicles with more CO2.”

He says the exact mechanism for automakers to pay or get credit is still being worked out by officials, “but if I had to guess, I’d say it will probably be done quarterly.”

Already, distributors are reviewing the cars they bring in, he says, to get as many of their models on the correct side of the government’s emissions line.

“It’s already done a good job of forcing us to look at our model range and, more importantly, the engines in these vehicles.”

NOTE: Serious Personal Conflict of Interest: While the author was researching this story, he was loaned a Hyundai IONIQ 5 to drive. She will never love her Toyota Corolla the same way again.

Hyundai is a founding partner of Newsroom