Clean Car Discount changes July 2023

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#3073787 8-May-2023 13:08

nova:

The clean car standard will have a massive impact, and it is staggering that there is not more publicity around this. The CO2 target reduces from 145 g/km in 2023 to 66.3 g/km in 2027, with the price per gram increasing from $36 to $54 over that time. I'm quoting pay as you go pricing, fleet average pricing is more expensive. I don't understand why that is, as pay as you go credits appear to be trade-able, so you can achieve the same effect as fleet average at a lower cost.

Under the policy, a Mitsubishi ASX which emits 196 g/km would attract a fee of $2,016 in 2023. This increase to $7,290 in 2027. A Toyota Corolla Hybrid which emits 101 g/km would have a $1,476 rebate in 2023, but by 2027 this flips to a fee of $2,052. This is an effective increase of $5,276 for the Mitsubishi, and $3,528 for the Toyota (all using PAYG pricing).

It really is a very insidious policy, and every single new car that Toyota currently sells would be hit with a fee by 2027. So it seems inevitable that these charges would pass onto the consumer, the importers can't absorb the charges without creating price signals for the consumer.

It is very surprising that they are using both clean car policies. The combined impact is very significant, even for fuel efficient hybrids. There is also already an ETS levy on petrol / diesel, which most economists would argue is sufficient in itself to drive the desired behaviour. If you use an emissions trading scheme and progressively lower the cap, everything else should self-adjust to match, and consumers would naturally shift to lower emitting and therefore cheaper forms of transport.

insidious: adjective: Proceeding in a gradual, subtle way, but with very harmful effects.

It's gradual, and subtle for sure, but I effect is very beneficial from a vehicle fleet emissions perspective.

The government is attempting to move the country from a high emitting fleet to a low emitting fleet in a very short time. Yes, this is done by cranking up the price of everything without a plug come 2027.

The standard seeds a pritty clear message, that ceiling drops fast. Currently having a fleet heavy in Suzuki swifts is OK. In 2024 & 2025, having a fleet heavy in Corolla / Yaris hybrid or similar is OK. But come 2026, even the Yaris hybrid will need to buy credits.

Essentially unless you want to be paying thousands of dollars in credits / fees per car, auto importers need to have a pipeline to deliver large volumes of Plug in cars in pritty short order.

Absolute brands are going to start pricing this into car's. If Nissan wants to sell the current Y62 patrol in 2027 they will need to sell multiple leaf's to offset, or pay thousands in fees. Makes sense for them to crank up the price of Y62's, and discount Leaf's... Price signals to the consumer are ultimately good.

As per my previous post, I thought the clean car discount was just a smoke screen for the clean car standard. Would have been a shrewd political play. Both combined are extremely powerful. We could loose whole brands (Suzuki? Mazda?) from NZ who don't find our market attractive anymore.

On the ETS, it is fair to criticize schemes like these. As emissions are already capped, under the ETS, this will not actually reduce emmisions. All it will do is make emissions cheaper for other sectors.

There are a few counterpoints:

Light vehicles are somewhat a low-hanging fruit. Minimal impact on a consumer getting a corolla hybrid instead of the non-hybrid version... May well be good to focus on this sector for the following reason.
We don't want ETS units to be cripplingly expensive. It would crush our export sector, making us poor as a country. And cause the likes of petrol prices to rise.
When a new vehicle enters the fleet, we are essentially stuck with it for 20 odd years. If we wanted 50% of our cars to be plug in by 2033, we would need to start selling close to 100% plug in cars now... Makes sense for this policy to lead ETS hikes.
Moving to cleaner cars will make future ETS credit price hikes (or cap reductions) more palatable to the general public in the future.

---- Couple of side issues.

PEHV's. We are going to hit a point like in the UK where people / companies buy the PHEV version of the car because it works out to be a better price / deal after all of this stuff, not for the plug in ability. They then don't bother to plug it in, or if they are a company provide a fuel card, but not $$ to cover home charging, so the car dosn't get plugged in. Net result is an outlander that is in the system as emitting 33g/km ends up emitting around 200g/km
Car mod's. People are effectively being encouraged to buy a smaller car, and throw a roof box on, rather than buy a car the size they need. Same deal with utes, end up better off to buy a ute and fit a giant service body, rather than a diesel van as the service body is not considered when the economic numbers were done. Number of people that drive around Auckland with bulky roof tents on their cars is staggering.
It doesn't capture heavy vehicles. Currently stuff like the Ram 2500 is crazy expensive, but in sectors where the prices jump isn't as much (i.e. larger van's), this could encourage some to jump to larger vehicles. 90km/h speed limit, 6mo COF's, but at lest you get to use the truck lane in Grafton gully.
Overall road funding. - As as cars get more economical petrol tax per liter gets more and more out of wack with RUC charges.

Silvrav

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#3073808 8-May-2023 14:18

All this while it will also push up values for second-hand upper priced ICE vehicles/utes as importing/buying new will be for the selected few on higher salaries.

Handle9

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#3073810 8-May-2023 14:26

Silvrav:
All this while it will also push up values for second-hand upper priced ICE vehicles/utes as importing/buying new will be for the selected few on higher salaries.

Which is by design.

If you actually have to have a ute for your business you’ll pay the premium. If you don’t actually need one then you’ll probably by a lower emission vehicle which is what the policy is designed to do.

alasta

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#3073897 8-May-2023 18:43

As I see it the most likely outcome of this is that more old inefficient cars will remain on the roads due to people being unable to afford the penalties on new petrol cars, or the price premium of the limited number of electric vehicles available from mainstream manufacturers.

nova

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#3074004 8-May-2023 20:19

alasta:

As I see it the most likely outcome of this is that more old inefficient cars will remain on the roads due to people being unable to afford the penalties on new petrol cars, or the price premium of the limited number of electric vehicles available from mainstream manufacturers.

100% agree, both schemes will soon act as a disincentive to upgrade to a cleaner petrol or hybrid, and the price of EVs is still too high for much of the population, leading to an older vehicle fleet.

The Clean Car Standards also has a perverse weight incentive when it comes to EVs. This has already been pointed out, but to illustrate it a 1200kg EV will get a $2,484 offset in 2027, but a 2000kg EV will get a $6,102 offset (assuming the same weight slopes are applied in 2027 as 2023). In reality the heavier EV will have greater emissions, but since EVs are incorrectly treated as zero emission vehicles, this isn't reflected properly. Ideally EVs should reflect the carbon emissions needed for electricity generation, and the weight slopes should also be different for EVs. As it stands a manufacturer can get up to an extra $3.5k for making the vehicle heavier, for a petrol car this won't work as the emissions will be higher, but for an EV they can get away with it as it is zero rated.

Obraik

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#3074052 8-May-2023 20:26

alasta:

As I see it the most likely outcome of this is that more old inefficient cars will remain on the roads due to people being unable to afford the penalties on new petrol cars, or the price premium of the limited number of electric vehicles available from mainstream manufacturers.

From an emissions perspective, it's probably better for people to hold onto their existing car as long as possible until used EV prices reach their budget.

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Scott3

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#3074104 9-May-2023 09:15

For those the benefit of those that haven't ventured into the other thread (or have arrived here via a search).

Here is a post discussing Mobility vehicles:

https://www.geekzone.co.nz/forums.asp?forumid=162&topicid=197896&page_no=578

Key points of the discussion.

Is a Toyota aqua with a swivel passengers seat really enough to justify $5750 in rebates?
Are people going to start gaming this? I.e. put swivel seats into various Hybrids and Pure EV's. Either as a retrofit, or from the factory. Imagine if MG or BYD made the addition at the factory, and had their entire fleet entring NZ certified as Disability vehicles. Could well be worth it for $4,485 extra rebate.
Basing the rebate of technology is stupid. My example was a Toyota Porte & Toyota estima hybird with the same slide out seat design. Porte is far more efficient, but only the less effichent estima will get the rebate.

And a Copy paste of what I would have done differently

Scott3:

On the Clean Car discount changes, I feel the outcome was largly in line with what I expected. There was no way we could afford to keep paying Rebates on stuff burning 5+ L/100km in 2023.

That said, if I was writing the policy I would have done some stuff differently:

Got rid of the clean car fee cap. Just have it uncapped. Would force the media / opponents to pick an example and calculate the fee for it, rather than just putting a photo of a ranger and saying Up to $6,900 fee (when most rangers will pay a way lower fee).
Tried as hard a possible not to cut the EV rebate. I don't feel it is the time to be reducing incentives for EV's yet.
Cut the PHEV incentive - Unlike EV's, the emmision saving here are highly dependent on how they are operated.
Tiered the PHEV incentive. Something like a Mini contryman with 40km of electric range (and bad fuel economy in hybrid mode), is quite a different offering to a Volvo V60 PHEV, with 91km of WLTP range.
Put more eligibility requirements(in addition to the current sub $80k & 3 star safety):

Require an immobilizer (Reduce the Aqua's reputation as the poster ram raid car) - dealers will retrofit as it is cheaper than the value of the rebate.
For new EV's, PHEV's require a minimum traction battery warranty (say 8 years or 160,000km with 70% minimum retention) - basically the same as the federal minimum requirements in the USA - California goes further, 10 years or 240,000km. Will do a lot to alleviate buyer concerns, and I don't think we should be paying out thousands of rebates to any brand which doesn't back the battery to last a decent amount of time.
Put an age cap on the used rebate. Perhaps 8 years (rounded to whole year of first registration numbers). Key issue here is the 2011 - 2013 leaf has a battery chemistry that is very prone to degradation. We should not be paying out $3500 to subsidize the import of a 2011 leaf with a battery at the cusp of starting to have cells fail. We want to be importing cars that have at least half their useful life left. Should note NZ already has ample supply of 24kWh leaf's as this was our dominant EV for many years, for those who really want one.
Get rid of the hybrid-specific mobility vehicle exemption. Use a metric like g/km CO2 instead if you really want to crack to the media articles quoting Milner Mobility. I question the mobility category at all. Lots of industries are hurt by the clean car discount, but this is the price of reducing the emissions profile of vehicles entering our fleet.
Introduce a new $100k price cap for vehicles with particular attributes:

Pure Electric Vehicles with a large payload (say greater than 740kg) - Should capture Utes, Larger Cargo Van's, and larger electric passenger van's Frankly meeting the $80k price cap with these types of vehicles isn't going to be possible in the next couple of years for non china brands.
Pure electric Vehicles with 8+ seats
Pure Electric Vehicles with both AWD / 4wd & 200mm+ ground clearance (between axles, unladen) - No brand is yet to get an AWD EV under the $80k cap, and rareness of EV's with at least weak off road ability is quite a pain point. Hopefully EV's meeting my criteria will appear on the market soon.
I would get rid of the half price clean car fees for used imports, and charge both new and used at full price (but keep the half sized rebates. I don't see why somebody importing say a a Dodge challenger, or a 2020 toyota prado, should get half price emissions fees vs somebody buying a new ford mustang V8, or Prado.
Unrelated to the clean car discount, but I would also introduce an include Pure EV's under 4250kg as light vehicles (so no need for COF and 90km/h speed limit). Larger petrol / diesel vehicles are already approaching 3,500kg GVM (Ranger v6 wiltrak is 3350kg, Hiace ZX Panel Van 3500kg, nissan Patrol Y62 3500kg GVM). Any electric equivalents are going to be 300 - 500kg heavier. If we want electric versions of these style of vehicles to be viable in NZ, we need to allow them extra weight. Especially pressing with van's already Toyota NZ doesn't bother to offer 12 seat passenger version of the hiace likely due to this reason, instead offering a 10 seat version (12 seat is available in Aust. 3710kg & 3720kg GVM for each of the two versions)

I picked 4,250kg as this is where the UK has moved their Drivers licensing limit to for alternative fuel vehicles, so there are a good number of van's optimized for that threshold. Note that in NZ on a full car license one can already drive up to 6000kg, so that is not an issue here, and I don't propose to change that limit. On safety, the light / heavy threshold is just arbitrary anyway, and one can drive a 3500kg car and 3500kg trailer on Just WOF's anyway (class 2 licence needed), and I would expect a 4250kg van to be dynamically a lot bigger than any rig with a big trailer. Note that really heavy American stuff like the Hummer EV is so heavy it would still miss the 4250kg GVM threshold.

Hatch

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Scott3

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#3074116 9-May-2023 10:11

Emissions ratings are going to become increasingly important for NZ car importers.

There seems to be some issue with the WLTP conversion.

Corolla hatch gets 101g/km CO2 (Converted from Euro5)
Corolla Wagon gets 88.28 g/km CO2 (Converted from Japan 2018).

Means the wagon gets a $1635.38 clean car discount rebate, and the hatch gets nothing.

And I can't at first glance see any reason that beyond the different rating processes the wagon would be so much more efficient. Think it would be good to fix this in interest of fairness. (if not I think we will see a lot of brands opt to bring Japan-rated cars to NZ, instead of euro ones).

Could well see brands go to a lot of lengths to improve the economy of the cars they offer in NZ.

Some of this will be good for consumers:

Smaller diameter rims, with taller sidewall tires.
Better aerodynamic profile wheels
Engines/transmissions that are optimized for economy (over say rapid acceleration)
More efficient auxiliary systems (LED lights rather than incandescent, more efficient entertainment unit etc)

Some neutral

Increasing placard tire inflation pressure to drop rolling resistance.

And some bad for consumers:

Engine tunes optimized for more expensive 95RON fuel (more compression / tweaking spark timing allows for better efficiency, but is unlikely to outweigh the higher cost of the fuel).
Deleting stuff to save weight (spare tire? powered seats? Acoustic treatment?)
Selling cars with special OEM only low rolling resistance tires, that prioritise low cost and low rolling resistance over things like tread life and grip.

alasta:

As I see it the most likely outcome of this is that more old inefficient cars will remain on the roads due to people being unable to afford the penalties on new petrol cars, or the price premium of the limited number of electric vehicles available from mainstream manufacturers.

We have a few years to pass before we get to that point (for smaller, cheaper car's).

For the next year as an example, you can still import a used aqua or fielder hybrid from japan and get a rebate under the clean car standard, and credits under the clean car scheme. Yeah, those cars sit around the $11k - $13k mark, so won't be in reach of those looking for a $3,500 car. But they will be imported in large volumes makign them fairly abundant, and in say 7 years time, they will become some of the cheapest running cars on the used market.

There were 215,525 aqua sold in japan in 2015. So NZ is not going to max this out.

Also with used EV's being treated so well (and no age cap on the rebate), Low SOH leaf's are going to become comically cheap in NZ.

One way to look at this is we are basically paying to import japans trash. The other way is that for those willing to tolerate a 55% health 2011 leaf, they will be able to get one for dirt cheap in NZ.

EV's don't sell that well in Japan, so we could well max this out.

Suggest for smaller, mainstream stuff, the same stuff fleet exit's will happen as they always have. I used to have a P11 primera (about 1997? year). Somebody fell asleep behind me on the motorway, and the insurance company wrote the car off. Same kind of thing happens for major mechanical faults.

Segments that will get harder hit are those that can't be replaced with a Aqua or Fielder hybrid (or similar).

v6, v8 and thistry turbo performance cars used cars are going to become rarer and see upwards price pressure in the used market.

Same deal for 7 seaters, and van's (especially van's that don't meet the Type B classification in the clean car discount).

Same deal for medium and larger SUV's. Way less attractive for an importer to bring in a used outlander now it gets a $1000+ clean car discount fee.

alasta

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#3074172 9-May-2023 11:13

I have built a financial model in preparation for evaluating my car replacement options late this year or early next year. It essentially works as follows:

Take the sticker price of the car.
Add the ute tax.
Calculate approximate operating costs - i.e. fuel and servicing, taking into account any free servicing package.
Adjust the price of the car based on the capital value of its operating cost advantage/disadvantage relative to a baseline. i.e. the operating cost variance divided by my cost of capital.
This then derives a single cost figure in capital equivalence terms which can be compared across vehicles.

Obviously this exercise is particular to my situation but, for what it's worth, here is what I came up with:

CX-30 GTX : $47,100
Niro Water Hybrid : $50,500
ZR-V Hybrid : $52,200
CX-30 Ltd : $53,500
Niro GT-Line Hybrid : $54,500
CX-5 Activ : $55,400

The hybrids on this list are all front wheel drive, so the Mazdas are still looking like a better value proposition for me.

Obraik

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#3074177 9-May-2023 11:27

alasta:

I have built a financial model in preparation for evaluating my car replacement options late this year or early next year. It essentially works as follows:

Take the sticker price of the car.
Add the ute tax.
Calculate approximate operating costs - i.e. fuel and servicing, taking into account any free servicing package.
Adjust the price of the car based on the capital value of its operating cost advantage/disadvantage relative to a baseline. i.e. the operating cost variance divided by my cost of capital.
This then derives a single cost figure in capital equivalence terms which can be compared across vehicles.
Obviously this exercise is particular to my situation but, for what it's worth, here is what I came up with:

CX-30 GTX : $47,100
Niro Water Hybrid : $50,500
ZR-V Hybrid : $52,200
CX-30 Ltd : $53,500
Niro GT-Line Hybrid : $54,500
CX-5 Activ : $55,400
The hybrids on this list are all front wheel drive, so the Mazdas are still looking like a better value proposition for me.

If you're looking at the CX-30 have you also looked at the MG ZS EV? With the post-July rebate, it's around $45k

Looking to buy a Tesla? Use my referral link and we both get credits

alasta

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#3074184 9-May-2023 12:10

The short range version won't work for me as most of my mileage is long distance. The higher price of the long range version isn't financially viable due to lack of anywhere to charge in my apartment car park.

I'm also weary of Chinese cars - I would prefer to stick with Japanese/Korean.

alasta

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#3074186 9-May-2023 12:21

Actually, I take that back. I just ran the numbers on the long range version and the adjusted capital outlay works out to be $51,300 even if I exclusively rely on public charging. So, the financial viability is comparable with the other options above.

The MG4 looks nicer though.

Scott3

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#3074520 10-May-2023 11:53

alasta:

I have built a financial model in preparation for evaluating my car replacement options late this year or early next year. It essentially works as follows:

Take the sticker price of the car.
Add the ute tax.
Calculate approximate operating costs - i.e. fuel and servicing, taking into account any free servicing package.
Adjust the price of the car based on the capital value of its operating cost advantage/disadvantage relative to a baseline. i.e. the operating cost variance divided by my cost of capital.
This then derives a single cost figure in capital equivalence terms which can be compared across vehicles.
Obviously this exercise is particular to my situation but, for what it's worth, here is what I came up with:

CX-30 GTX : $47,100
Niro Water Hybrid : $50,500
ZR-V Hybrid : $52,200
CX-30 Ltd : $53,500
Niro GT-Line Hybrid : $54,500
CX-5 Activ : $55,400
The hybrids on this list are all front wheel drive, so the Mazdas are still looking like a better value proposition for me.

Options not mentioned:

Bring forward the transaction. A lot of Mazda's on that list, and that is a brand that has a decent number of cars on hand for immediate delivery. The CX-5 AWD is getting about $2500 fee added come 1 July, so some decent coin toe be saved (depending on if Mazda drops their prices with global auto demand falling)
Get in the queue for a Toyota hybrid (CH-R / Corolla Cross / Rav4). - All clean enough to avoid a fee under the new system.

alasta:

The short range version won't work for me as most of my mileage is long distance. The higher price of the long range version isn't financially viable due to lack of anywhere to charge in my apartment car park.

I'm also weary of Chinese cars - I would prefer to stick with Japanese/Korean.

...

Actually, I take that back. I just ran the numbers on the long range version and the adjusted capital outlay works out to be $51,300 even if I exclusively rely on public charging. So, the financial viability is comparable with the other options above.

The MG4 looks nicer though.

Frankly this doesn't sound like a very good use case for a Plug in car.

I am a pretty strong advocate for EV's, but don't recommend them to people that can't charge at home. Without it, owning an EV is going to be a lot less convenient. And it costs about four times as much to use public fast chargers (bringing the fuel costs up to a similar about to an efficient hybrid car).

We are still at the early adopter stage with EV's so they won't be the logical lick in

Eventually, EV charging ports will need to be added to apartment carparks, but it is obviously a bit of effort for whoever is the first mover to get this past the Body Corp.

On the MG ZS EV, (even with the long-range having a $2000 discount at the moment), I don't think the long-range is great value. Atto 3 extended range is cheaper. Rated range is 20km Less, but it is a lot more powerful, and gets the more durable LFP battery chemistry. And while it is a sedan not an SUV, the price is very close to that of an inventory Model 3 ($65,327 drive away before rebate). If you really want a Japan or Korean Long range EV, the price is a little higher $69k +ORC before rebtate for a Niro EV light (460km WLTP range) - note the spec level is low on this trim. Or EV6 RWD LR at $79990 before rebtate (530km WLTP range).

alasta

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#3074567 10-May-2023 14:06

I don't want to rush into anything so I will wait until after the election to see how it all shakes out.

When I'm sticking around town I only do about 50km per week, so topping up an EV while I'm doing my weekly shop at Pak N Save probably isn't a major hassle. However I do a lot of long distance trips and that's probably where the charging situation becomes a bit dicey.

alchemist53

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#3076883 16-May-2023 16:50

These guys have a calculator for rebate and fees, plus links to all the relevant data, kind handy.

MyDrive Clean Car Discount Calculator

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