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Petrol vs EV: Time to Trade?

Environment Energy Issues

We New Zealanders love our cars. We have the highest rate of car ownership in the OECD. Between 2012-2017, 1,420,000 vehicles were imported, yielding a net increase to the fleet of 760,000 more cars, after scrapping some.

Tom Belford01 April 2020

BB52

CHOICE STALLED!

As BayBuzz goes to press, it appears NZ First has pulled the plug on the proposed Clean Car Standard, a huge setback for the Labour-Green coalition and, more importantly, for a nation yet to limit vehicle emissions at all. 

New Zealand is the only OECD country without such limits. For its prehistoric views on climate policy alone, NZ First does not belong in any modern New Zealand Government. A campaign issue? You bet! Read on to learn what’s at stake.

And we drive the worst of them from an environmental standpoint.

Boris Johnson recently announced a five-year speed-up of the UK’s elimination of new petrol and diesel cars, including hybrids – none are to be sold in the UK after 2030.

Timidly, by comparison, after declining the option of a legislated end-date to the import of fossil fuel vehicles, our Labour-led Government has floated the prospect of introducing fuel-efficiency standards for NZ-driven cars. Currently NZ is the only OECD country without such standards. 

And this despite the fact that road transportation accounts for 40% of all CO2 emissions from burning fossil fuels, up 93% since 1990, while particulates and other toxins from combustion wreak their own damage on human health.

Still, while a last Century-sounding initiative long overdue, better late than never. The Government is driving where previous political ‘leaders’ have feared to tread.

More futuristically, the Government wants to promote electric vehicles (EVs) and even hydrogen-fueled vehicles for heavy transport. More on that later. First, the emissions standards.

“We are experiencing significant interest in electric vehicles from business customers and they seem to be adopting the technology at a greater rate than private consumers in our region.” ROB TOWNSHEND

More fuel-efficient cars

The Government has proposed two linked policies which aim to reduce NZ’s transport-related carbon footprint. Final decisions on these proposals are pending as I write.

First-ever fuel efficiency standards would be imposed, requiring importers to gradually reduce the fleet-wide average emissions of the vehicles they bring in over a five-year period. The Clean Car Standard would apply to all new and used light vehicles entering the New Zealand fleet (i.e., not to existing cars in NZ), including all cars, SUVs, vans, utes, and light trucks of 3.5 tonnes gross vehicle mass or less.

Alongside that, cash grants (‘feebates’) would be available to consumers to encourage purchase of EVs or more fuel-efficient cars, while adding fees to the cost of high-emissions vehicles like SUVs. The revenue-neutral scheme would begin in 2021.

Announcing its proposed policies, the Government noted: “New Zealand is one of only three developed countries [alongside Australia and Russia] that has no regulations or meaningful incentives to influence the fuel efficiency of light vehicles entering our country. As a result, the vehicles supplied to New Zealand are among the most fuel inefficient and polluting of any OECD country…”

Industry observers suggest that tighter emission standards taking effect in the European Union (new vehicles must emit less than 95g/km of CO2) will eventually drive all vehicle fleets downward in emissions.

The current average vehicle emission in NZ is almost twice that – 180g/km of CO2 – and the Government would mandate importers to deliver a fleet average of 105g/km CO2 by 2025. This is the average fuel efficiency reached by Japan in 2014, and is less stringent than the European Union. By comparison, a Nisson Leaf EV would emit 50g/km CO2.

In New Zealand, it is estimated that an emissions target of 105g/km CO2 in 2025 could reduce emissions by 5.1 million tonnes over 2020–2041.

NZ has an estimated 4 million used vehicles on the road. And our top-selling vehicles are both utes – the Ford Ranger and Toyota Hilux (almost as many in the last year as the entire EV fleet). Without a fuel-efficient fleet, NZ guzzles about 7 billion litres of petrol a year, for which we spend about $5 billion a year on the imported portion. The Government notes that if our cars were as fuel efficient as the vehicles entering the European Union, we would pay on average $794 less per year at the pump. 

AA has lobbied against including used cars in the proposal, claiming that importers who bring in some 150,000 used cars per year won’t be able to source enough complying vehicles. The Motor Industry Association has endorsed the feebates, but not the efficiency standards, which they see as market distorting. I should hope so!

Feebates for EVs

The Government’s goal is to have 64,000 electric vehicles on the road by 2021. Currently we’re slightly above 19,000, or 1.2% of the country’s vehicle fleet. The Ministry of Transport projections suggest that only around 40% of vehicles entering New Zealand will be electric in 2030 without further government intervention or incentives.

EVs are of course an ingredient for meeting the Government’s broader 100% renewable electricity goal by 2035 and its broader-still target of carbon neutral NZ by 2050. 

Research shows that even if owners need to replace their battery, an EV car can compete with a petrol car in terms of ‘whole of life’ cost. A small petrol car emits 5.6 tCO2 in production/recycling and 2.8 tCO2/year in use, for a total of 44.8 tCO2 over its 14 year life. A small electric car emits 5.6 tCO2 in production/recycling, an extra 2 tCO2 to produce/recycle the battery, and 0.26 tCO2/year in use, for a lifetime total of 12.2 tCO2 – 75% less.

Currently about 70 EV and hybrid models (only 22 pure EVs) can be purchased in NZ (but try to find one in any Hawke’s Bay showroom!). The top six brands are Nissan (8,273 EV registrations), Mitsubishi (1,855), Hyundai (957), BMW (722), Toyota (675) and Tesla (658). While the Nissan Leaf dominates the market by far, recent strong sellers have been the Tesla Model 3 and the Hyundai Kona, with 450km ranges. Average daily vehicle travel is less than 29 kilometres in NZ.

While there are low-emission alternatives sold in the New Zealand market for most vehicle types, a notable exception is single and double cab utes. However, over the next few years, low-emitting ute models will become more commonly available. 

In the US, by far the best-selling vehicle of any kind is the Ford F-series pickup truck, and Ford will soon feature an electric option. Others will be forced to follow (top seller in NZ is the Ford Ranger). General Motors’ president recently blogged GM’s EV intentions: “We will offer not just one pickup, but multiple models with multiple variants, for multiple customers — a vehicle and package for everyone.”

Further confirming that electric trucking is on the way, delivery giant UPS recently announced it will purchase at least 10,000 battery-powered trucks over the next five years.

Of importance to our primary sector, beyond trucks, electric-powered tractors, utility vehicles, ATVs, farm bikes, even robot weeders and precision planters are already at work on the farm, including products from recognized giants like John Deere, Allis Chalmers and Kubota.

GM is even promising a 1,000 horsepower Hummer EV (the original Hummer, favoured by Arnold Schwarzenegger, delivered 10 miles/gal); it will compete with the Tesla Cybertruck, which already has 187,000 orders. Both arriving in 2021.

Toyota has said that by 2025 it aims to have every model in the Toyota and Lexus line-up around the world available as either a dedicated electrified model or have an electrified option. Every car brand is merging onto the EV highway (see sidebar, HB Dealers Talk EVs).

Terry Elmsly, EuroCity, with his electric line-up

But getting back to NZ!

To promote EV take-up, the Government first focused on pumping cash (about $7 million a year from the Low Emission Vehicles Contestables Fund) into indirect incentives, like more charging stations throughout the country, including for electric buses. Palmerston North now boasts the first provincial electric bus operation.

But its more recent proposed incentives are aimed right at the consumer’s wallet. The Government’s Clean Car Discount would make pure EVs up to $8,000 cheaper, and very efficient petrol cars nearly $3,000 cheaper. Top petrol sellers like the Ford Ranger and Toyota Hilux would face approx. $2,000 fees.

The current market for EVs is one of early adopters, most tending to buy the lowest-priced entry vehicles like the Leaf (often as a used, second car), or more familiar hybrids like Toyota’s Prius.

But the range of EV/hybrid cars available at all price points is steadily increasing, including virtually all the major up-market brands introducing fairly pricey models, often the first representatives of corporate parent-announced ‘sustainability’ commitments to phase out petrol-car production … these in the wake of Government mandates such as the Boris Johnson deadline mentioned at the outset.

So now we’re at the point where early adopters with high disposable incomes will have EV options befitting their wallets. Admit it, whether you’re a poor greenie or a rich one, your car is a statement!

And indeed, during the Government’s policy development, Treasury argued that ‘feebates’ would simply reward already-motivated EV buyers and not provide much additional stimulus.

Where is the NZ EV market headed? Check out the comments in our side bar, HB Dealers Talk EVs.

Beyond EVs

But before we turn the market over to electric vehicles, consider that hydrogen-fueled vehicles might ride the highway of the future instead. Currently, about 11,200 hydrogen cars are in operation, mostly in California, Europe and Japan; plus a growing number of buses and trucks, with China driving that sector.

In NZ, Ports of Auckland is investing in hydrogen fuel cell vehicles as part of its ‘green hydrogen demonstration project’. And a Provincial Growth Fund grant is helping develop a hydrogen fuel infrastructure in Taranaki.

Of course, fueling hydrogen-powered vehicles would present its own host of distribution, safety and networking issues, but would eliminate harmful emissions (their only exhaust is water vapour) and remove the problem of batteries, which face both political controversy over source materials and environmental issues regarding end-of-life disposal.

The Government’s recently issued Hydrogen Discussion Paper comments:

“In a transport context, availability and access to suitable vehicles and the establishment of a sufficiently dense refueling infrastructure are key. However, the greater range of hydrogen vehicles and their shorter refueling times will reduce the magnitude of this problem somewhat compared with electric vehicles.”

The Discussion Paper envisions complementary roles for hydrogen and electric vehicles, noting:

• Battery electric vehicles exhibit higher overall fuel efficiency if they are not too heavy due to large battery sizes, making them ideal for short-distance and light vehicles. 

• Hydrogen can store more energy in less weight, making fuel cells suitable for vehicles with heavy payloads and long ranges. Faster refueling also benefits commercial fleets and other vehicles in near-continuous use like straddle carriers, forklifts, taxis and car sharing.

BayBuzz will look at hydrogen potential across the economy more thoroughly in the future. For now, the Government’s view seems sensible, that when it comes to transport the two technologies are complementary.

But today, EVs are a choice available to consumers. With substantial ‘feebates’ offered by Government, will consumers accelerate their pick-up and meet the ambitious goals that have been set?

In the accompanying sidebar, BayBuzz asked a few Hawke’s Bay car dealers for their sense of the market. Keep in mind that car dealers want to sell the cars they already have on their lots. And with NZ sitting at the very end of the distribution chain, still few EVs are entering NZ. The virtual handful in Hawke’s Bay are mostly pre-orders from very motivated early adopters. So there’s very little opportunity to actually ‘kick the tyres’ … a deeply ingrained and treasured habit of car-buyers.

HB Dealers Talk EVs

These Hawke’s Bay car dealers are at the coal-face, or is it petrol-face? They ‘get’ that clean cars have become mandatory and they anticipate growing demand. But it’s fair to say they are in business to meet demand, not create it, and they are well-aware of both current product limitations and consumer apprehensions. For now, hybrids appear to show more potential than pure EVs.

Terry Elmsly, EuroCity

“Do I see the future being EVs? Most certainly, but there’s a lot of teething issues between now and then.

Whilst still very much in its infancy, there’s many ramifications to so many people, businesses, communities and society as a whole that I don’t believe any one has really got a grasp on the topic in totality. 

On one side of the spectrum there’s manufacturing companies charged with massive financial incentives to create zero emission product, but with little thought as to the demand on infrastructures required to support this product type, which ultimately is what will drive the volume. 

At the other end of the spectrum, if your bent is towards the greener life, the idealism doesn’t quite cover questions like what happens when the batteries dead and how will the disposal process not be more detrimental than any immediate gains made.

Finally there’s the practical aspect. At present there’s nothing I’ve seen on the market that will benefit people residing in the provinces who need to travel beyond the 250 km radius at the drop of a hat, who don’t retain the luxury of time to reach their required destination. 

Yes, it’s coming. There’s some very ingenious product on the market. But remember, when the manufacturers state 400 kms on a charge, that’s generally without the hills in the way, with no radio and cellphone drainage of power, along with the partner and dog thrown in. 

Then to charge the car in 10 minutes like a Petrol or diesel requires a massive charging station to provide this service, of which at present, basically only a handful exist around New Zealand. Then you have to own an EV whose battery can cope with that surge. Currently, that’s reserved for the higher priced products that aren’t within everyone’s grasp.

So I think that while the Government’s proposed subsidies will assist sales momentum, it might be a bit premature in that it may be smarter to wait until products are created that can actually produce 600 kms of real drive time with occupants actually in the car while allowing for the steep gradients that New Zealand roads are full of. 

I think we will see the EV market mature over the coming years with maybe a third of the passenger car market in 6 years being EVs. I can also see more advanced hybrid product variants gaining momentum coupled with high-powered combustion engines, giving you the best of both worlds – power and efficiency – without the current impediments in charging infrastructure that will retard rapid growth outside of the main centres for now.

The evolution of the electric vehicle is undoubtedly here and Euro City is playing in that market now, with many more electric options scheduled for release late 2020/21.”

Angus Helmore, HB Toyota & Lexus

“Self-Charging Hybrid sales grew significantly for Toyota and Lexus in our territory which covers Hawke’s Bay, Taupo, Rotorua and Gisborne. Over the next 12 months we expect more growth in this area as customer demand continues, accompanied by new mainstream models being launched with hybrid options in 2020.

Angus Helmore, HB Toyota and Lexus

2019 saw the introduction of Self Charging Hybrid Rav4, our first new Hybrid Toyota SUV to be launched in NZ. Although available in both Petrol and Hybrid models, 70% of our customers chose the hybrid option. The success being attributed in part to great value when launched at under $40k, plus customer demand for fuel efficient, low emission vehicles. 

Customer feedback has been they enjoy the driveability and ease of use with Self Charging Hybrid models, as they are refueled the same as a traditional vehicle.

Moving forward, every model vehicle Toyota or Lexus launches in NZ will be either a Self-Charging Hybrid or have Self Charging Hybrid options. This is part of Toyota’s national and global strategy to reduce emissions and deliver sustainable mobility options.

Also on the horizon are EVs in the Toyota and Lexus range, along with Hydrogen technology being developed for the future.”

Rob Townshend, Bayswater European

Nine out of the ten brands represented by Bayswater Vehicles will have EV and/or Hybrid models available in the local market by the end of 2020. That number has increased from three of our brands as recently as three years ago. With the pace of change, it would not surprise me if more than half the new vehicles we are selling three years from now will have some form of electric propulsion.

Local consumers are reasonably well informed about the benefits of Plug In Electric Vehicles. However range anxiety, lack of charging infrastructure and rapidly changing technology are all concerns raised by our customers. We are experiencing significant interest in electric vehicles from business customers and they seem to be adopting the technology at a greater rate than private consumers in our region.

The proposed government subsidy doesn’t seem to have stimulated interest in the local market. I think there needs to be much more clarity from central government about future incentives (or disincentives), potential road user charges, charging infrastructure and end of life costs before demand for pure electric vehicles exceeds demand for conventional technology. 

Spencer Pallesen, Mercedes-Benz

“New Zealanders have shown great enthusiasm as early adopters of electric vehicles.

I would have to say the common questions or concerns from customers  are always present – price, range anxiety, charge times, infrastructure, end of life disposal. But all these things are etting better all the time. If a Government subsidy was to come into place then you would definitely find more buyers making the change.

Mercedes-Benz like many manufacturers has been working with electric and hydrogen for a number of years and have so far mainly had hybrid vehicles in the market, until last month when we released the all-new full-electric EQC. We weren’t the first in the market with fully electric we just wanted to be the best. The arrival of the EQC heralds a maturing of this segment that further pries open the door for the EQ models that will follow.

The EQC is a complete, user-friendly solution to future mobility, but it’s also a signpost to an exciting rollout of hybrid and all-electric vehicles from the EQ division over the next few years and beyond.

Now only a handful of the initial stock came into the country and mainly the big dealers got them or had pre-orders. We do have interest but it’s like anything, they want to see, touch drive it first.”

Unison is pleased to sponsor robust examination of energy issues in Hawke’s Bay. This reporting is prepared by BayBuzz. Any editorial views expressed are those of the BayBuzz team and do not reflect the views of Unison.

 

Tom Belford01 April 2020

BB52

3 responses to “Petrol vs EV: Time to Trade?”

  1. Rosemary Marriott says:

    I’m fortunate to own an EV in these perilous times. Great to not have to go to a fuel station and risk touching those germy pumps. Very satisfying to charge overnight at home on the off peak power rate.

  2. Daniel Elderkamp says:

    Great article, Tom, food for thought. Personally I have already decided that my next vehicle will be an EV – not a hybrid, as I want to get away from using petrol altogether. My current vehicle is 19 years old, has 440,000 km on the clock, and is still as reliable as the day I got it, so I see no reason to get rid of it until I’m able to afford an EV, which will hopefully be in the next year or so. Just a question you might pose to some of the major fuel companies – why don’t they install charging points at their service stations? In view of the increasing trend towards EV’s, it makes sense, thinking laterally!

  3. Rosemary Marriott says:

    Daniel, I went on a road trip just before the lockdown and only found 3 rapid chargers adjacent to service stations – which is great because their amenities were open 24/7 so I could get coffee and a snack while charging. But loads of supermarkets have rapid chargers such as our local Greenmeadows New World. But they’re not open 24/7.

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