RUCs to apply to all vehicles (incl EVs), replacing road user tax on petrol

Forums › Transport (cars, bikes and boats) › RUCs to apply to all vehicles (incl EVs), replacing road user tax on petrol

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#3190762 5-Feb-2024 08:53

Technofreak: The government isn't double taxing PHEV's. In fact a smart PHEV owner using a PHEV as intended will pay the least of any vehicle owner.

RNZ talks to a rural owner with 15km of range left on his Outlander who was happy to drive the car until it's end of life, now looking at selling or removing the plug and recertifying. Waka Kotahi can't provide advice on that until April 1st.

https://www.rnz.co.nz/news/national/508403/hybrid-owners-trying-to-remove-plugs-to-avoid-road-user-charges

mudguard

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#3190769 5-Feb-2024 09:15

To be fair, an eleven year old Outlander with no range probably wasn't worth very much anyway. I mean the value halving might have been $5000 to $2500?
Who knows.

lchiu7

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#3190773 5-Feb-2024 09:24

Seemed like an edge case to me but for the Outlander owner. I guess quite an impact. It would be hard to sell the car with those conditions in place. Who is going to buy the car knowing they have to pay both petrol tax and RUC?

wellygary

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#3190783 5-Feb-2024 09:51

lchiu7:

Seemed like an edge case to me but for the Outlander owner. I guess quite an impact. It would be hard to sell the car with those conditions in place. Who is going to buy the car knowing they have to pay both petrol tax and RUC?

The owner's name is the same as a local Marlborough alternative fuel "enthusiast" - I suspect they are one and the same...

These are from 2010- the time of the great biofuel frenzy as fears of "Peak Oil" took hold - then fracking turned up setting the US on track to became the worlds largest oil and gas producer...

"Marlborough Biodiesel User Group co-ordinator Kevin Parker, of Blenheim, said that by October, the wine, aquaculture and transport industry operators who had signed up should be filling vehicles with biodiesel."
https://www.stuff.co.nz/marlborough-express/news/3997996/Marlborough-firms-commit-to-biodiesel

"Kevin Parker, of Blenheim company Vine Gas Ltd, has invented an engine with an inbuilt distillation column which produces and is fuelled by ethanol made from winemaking waste."

"Asked whether surplus wine could be used as fuel, Mr Parker said "yes", in a suitably modified car.
But its tank would have to be about eight times the standard size, because alcohol was a less efficient fuel than petrol." https://www.stuff.co.nz/business/4008931/Another-grape-idea-to-save-energy

Hmm, so that's a 400 litre tank, and presumably the corresponding 400kg of fuel weight to transport :)

gzt

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#3190839 5-Feb-2024 10:11

mudguard: To be fair, an eleven year old Outlander with no range probably wasn't worth very much anyway. I mean the value halving might have been $5000 to $2500?
Who knows.

It's a popular 4wd car with good safety features. I've looked at Outlander PHEV from time to time. Assuming highish KMs probably between $10k - $18k depending on condition and servicing. 15km range is still useful if you're local urban. Rural it's good for a pleasant trip to the letterbox or a different access point.

I do think the govt got it wrong with PHEV.

Scott3

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#3190928 5-Feb-2024 11:22

mudguard: To be fair, an eleven year old Outlander with no range probably wasn't worth very much anyway. I mean the value halving might have been $5000 to $2500?
Who knows.

Cheapest 2013 outlander PHEV listing on trade-me in Auckland is a $10,500 buy now, can't comment on battery health, but seller says the display shows 32km when fully charged.

For comparison the next cheapest 2013 is a regular petrol 2.4L AWD, LS trim asking $11k.

As a general rule AWD, Med - Large SUV's command a decent price in the current market. It seems the PHEV versions sell at roughly similar prices to the non-hybrid. Given this pricing, fairly plausible that a used buyer with no interest or understanding in plug in car's could end up buying one simple because it was cheaper. Quite a different situation to a few years back, where used plug in car's commanded a premium price.

lchiu7

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#3191005 5-Feb-2024 13:07

gzt:
mudguard: To be fair, an eleven year old Outlander with no range probably wasn't worth very much anyway. I mean the value halving might have been $5000 to $2500?
Who knows.

It's a popular 4wd car with good safety features. I've looked at Outlander PHEV from time to time. Assuming highish KMs probably between $10k - $18k depending on condition and servicing. 15km range is still useful if you're local urban. Rural it's good for a pleasant trip to the letterbox or a different access point.

I do think the govt got it wrong with PHEV.

According to this article there are no shortage policy analysts

https://www.stuff.co.nz/nz-news/350164796/heres-what-our-63000-public-servants-actually-do-and-why-we-have-so-many-them-now#:~:text=How%20many%20of%20them%20are,for%20every%2083%20New%20Zealanders.

The Ministry of Transport doubled itself from 120 to 241 staff...

Since MOT is primarily a policy agency (NZTA is operational) they surely could have assigned a few analysts to come up with an more analysed and fairer policy than what was announced. Seems little consideration was given to PHEV drivers.

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Scott3

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#3191034 5-Feb-2024 14:09

Big question is how long will it be until RUC's are rolled out to all vehicles?

Government has obviously favored simplicity over fairness (and there is some merit to this), but hasn't resolved the key issue with the RUC / petrol tax system in that that modern efficient (non plug in) vehicle get taxed very lightly, vs RUC vehicles. This impact effectively killed the economics of small diesel car's in NZ (something we can be thankful for now we know the impact on urban air quality felt by european cities), bit has the potential to do the same to plug in car's...

They will need to change the law as currently all vehicles required to pay RUC are eligible for a petrol tax refund via a paper form. (but I can see why the government doesn't want to handle paper forms from ever PHEV owner in the country)

To run a comparison fuel tax's (excl gst) are here:

https://www.mbie.govt.nz/building-and-energy/energy-and-natural-resources/energy-generation-and-markets/liquid-fuel-market/duties-taxes-and-direct-levies-on-motor-fuels-in-new-zealand/

I will use 70.024c/L +GST = 80.53c/L for my calcs below. (11.96c/L for LPG)

Based on

A basic tax comparison:

BEV's: 7.6c/km

PHEV's: 5.3c/km + Petrol tax.

Example car's per km road tax:

Commodore VF on LPG @13.5L/100km: 1.61c/km

Yaris Hybrid hatch @ 3.6L/100km WLTP conversion = 2.9c/km

Rav4 hybrid (not the plug in one) AWD @ 5.3L/100km WLTP conversion = 4.3c/km

Rav4 Prime (Plug in hybrid, assume 100% electric running) = 5.3c/km

BMW i3 REX (assume 100% electric running): = 5.3c/km

CX5 2.0L petrol @7.7L/100km wltp conversion = 6.20c/km

Nissan leaf: 7.6c/km

Diesel ford ranger: 7.6c/km

V8 mustang @14.5L/100km: = 11.62c/km

2013 outlander PHEV (assume 100% petrol, lets say 8.5L/100km): = 12.15c/km

(I have excluded biofuel from my analysis, as blends stronger than 10% are rare, and a vehicle running E10 still pays 90% of the tax of a vehicle running ethanol free fuel, so the results would not be dramatic).

Break even point (EV vs Petrol car) is about 9.3L/100km.

Some pretty clear winners and losers here.

The LPG commodore is by far the most encouraged fuel vehicle tax wise. Quite perverse, but I guess an argument could be made that the fuel is dying anyway, however I think it is time to end favorable tax treatment for LPG, given it is a fossil fuel.

The Non plug in hybrids come next, No longer will a Nissan leaf be the lowest fuel cost car for long distance commuters. A leaf at 7.6c/km + .16kWh/km @ 17c/kWh = 10.32c/km. A yaris hybrid at 3.6L/100km & $2.60/fuel = 9.36c/km

As per now, high performance petrol engined cars still carry A high tax burdon.

And of course the PHEV that does most or all of it's running on petrol get's completly smoked.

Seems to be a lot of uncertainty around how electric motorbikes will be handled. Press release just says vehicles so that would imply they are included, but there are rumors that they are going to be excluded. Will be interesting to see what happens. Potentially a tricky issue. Given there is a flat RUC band under 3500kg, as road wear is negligible, and you are basically paying for space on the road (the vast majority of which is following distance, so the footprint of the vehicle is immaterial), it would be "Fair" that motorcyclists pay the same RUC's as cars, but I don't think this would go down very well with motorcyclists.

Technofreak: The government isn't double taxing PHEV's. In fact a smart PHEV owner using a PHEV as intended will pay the least of any vehicle owner.

The government has picked an arbitrary fuel consumption (just under 3L/100km) to calculate a reduced RUC rate for Light PHEV's.

If we compare a PHEV with a BEV, the PHEV owner who runs almost entirely on electricity benefits, while the PHEV owner who runs mostly on petrol has to pay a lot.

If we compare PHEV to an an effichent petrol car, the efficient petrol car is way off. As an example even if the owner of a RAV4 prime runs 100% on electricity, they will need to pay 5.3c/km in road tax, vs 4.3c for the non plug in version of the same car. As such it is not true that a "smart" PHEV owner will pay the least [tax] of any vehicle owner. That award goes to LPG car drivers per the above, with Yaris hybrid drivers next...

Should also note that not all PHEV's are created equal. A BMW i3 120Ah, with around 200km of electric range is a completely different kettle of fish to an outlander with a degraded battery pack that can only get 15km (and use around 8.5L/100km once the battery is flat).

And the likes of a Prius Plug in (cira 2012) is a different kettle of fish again (sub 20km range, but around 4L/100km once the battery is flat...)

With the exception of cars that would be cross-shopped with pure EV's, like the (discontinued) BMW i3, i suspect this RUC policy will largely kill the attractiveness of non luxury PHEV's in the NZ market.

gzt:

RNZ talks to a rural owner with 15km of range left on his Outlander who was happy to drive the car until it's end of life, now looking at selling or removing the plug and recertifying. Waka Kotahi can't provide advice on that until April 1st.

https://www.rnz.co.nz/news/national/508403/hybrid-owners-trying-to-remove-plugs-to-avoid-road-user-charges

Interesting article. The subject is correct that that it will be no longer going to be cost effective to run an outlander PHEV if the majority of you running is on petrol.

On one hand, this could encourage the car to be sold to a user who does sub a 15km round trip commute, which is the best use of the car, and the owner pick up say a rav4 hybrid instead which is a lot more economical on petrol than an outlander PHEV (once the battery is flat). Given the car's short range, and not being cost effective in hybrid mode, I suspect the owner is correct that the value would have dropped a lot.

On the other hand if the Plug in ability is de-commissioned, and the car is turned into a non plug in hybrid this would be really perverse. Means an additional 15km per trip would now be done on petrol, just to optimise for tax reasons.

frankv

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#3191039 5-Feb-2024 14:32

wellygary:

"Kevin Parker, of Blenheim company Vine Gas Ltd, has invented an engine with an inbuilt distillation column which produces and is fuelled by ethanol made from winemaking waste."

"Asked whether surplus wine could be used as fuel, Mr Parker said "yes", in a suitably modified car.
But its tank would have to be about eight times the standard size, because alcohol was a less efficient fuel than petrol." https://www.stuff.co.nz/business/4008931/Another-grape-idea-to-save-energy

Hmm, so that's a 400 litre tank, and presumably the corresponding 400kg of fuel weight to transport :)

Wait... winemaking can produce ethanol waste? I thought the whole point of winemaking was to produce ethanol? Presumably there's still some energy left in the grape pulp after the winemaking is finished which can then be fermented some more. But conceivably any plant material would do.

Wait again... "surplus wine"??? Why don't they sell this "surplus" wine?

Wait again... energy density of ethanol is about 2/3 of gasoline... 30MJ/kg for ethanol, 47 for gasoline. Volumetrically, ethanol is 23GJ/m^3, gasoline 36GJ/m^3. So about 1.5 times the weight or volume of ethanol for the equivalent energy of gasoline. His "alcohol" is about 75% water if it's about 1/8 the volumetric density of petrol, so 25% ethanol by volume. Which is pretty strong wine!

To be fair, his idea is not to run cars on wine or alcohol... that seems to have been a dumb idea put forward by the reporter. His idea is to run stationary engines for refrigeration on vineyards, and use the waste heat of the engine to do the distillation. Very nice and efficient!

BlakJak

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#3191161 5-Feb-2024 16:10

lchiu7:

According to this article there are no shortage policy analysts

https://www.stuff.co.nz/nz-news/350164796/heres-what-our-63000-public-servants-actually-do-and-why-we-have-so-many-them-now#:~:text=How%20many%20of%20them%20are,for%20every%2083%20New%20Zealanders.

The Ministry of Transport doubled itself from 120 to 241 staff...

Since MOT is primarily a policy agency (NZTA is operational) they surely could have assigned a few analysts to come up with an more analysed and fairer policy than what was announced. Seems little consideration was given to PHEV drivers.

Gross assumptions about why the headcount at MoT increased, you're intentionally baiting with this comment, right?

'coz there's plenty of other types of staff to operate a government Ministry. "no shortage" is a rude assumption to make.

No signature to see here, move along...

mattwnz

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#3191164 5-Feb-2024 16:50

lchiu7:

Seemed like an edge case to me but for the Outlander owner. I guess quite an impact. It would be hard to sell the car with those conditions in place. Who is going to buy the car knowing they have to pay both petrol tax and RUC?

I think any PHEV will struggle to sell in NZ until they make changes to the proposed laws. Infact any EV is probably going to struggle to sell when you have upcoming road user fees and the removal of the rebate. Infact EV sales have taken a nose dive which is no surprise.. I wouldn't buy one now and glad we got a normal hybrid instead. That shouldn't be the case IMO, and we should be incentivizing EVs. But we seem to have gone back 10 years with these changes.

https://www.stuff.co.nz/motoring/350165849/electric-vehicle-sales-nosedive-without-clean-car-discount

I suspect that if they bring in RUCs for petrol and hybrids, that it will essentially be a new and additional tax. So they either won't reduce petrol tax , or will only reduce it by a bit, as it will be a way to make extra money. They have already said that they will be bringing in RUCs for all, but I don't recall the NZ media quizzing them on whether petrol taxes would be reduced and it would just be a tax switch or not. I can see it increasing peoples costs.

mattwnz

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#3191166 5-Feb-2024 16:57

lchiu7:

Seemed like an edge case to me but for the Outlander owner. I guess quite an impact. It would be hard to sell the car with those conditions in place. Who is going to buy the car knowing they have to pay both petrol tax and RUC?

Maybe they can get the EV plug removed and then recertificated as a pure hybrid? But it seems so backwards and shows that these laws are like a sledgehammer trying the crack a nut.

mattwnz

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#3191167 5-Feb-2024 17:00

Technofreak:

Looking at overseas trends EV sales have slowed significantly in the last part of 2023 even with large price reductions. The early adopter bucket is full and the rest of the market is not ready or not able to to jump into the EV pool.

The price reductions being a two edged sword, why would I buy something today which I can get for less tomorrow.

It's impossible to attribute the reduction in sales numbers to any one parameter.

FOOP is also common in property . I wouldn't be surprised if there were big price discounts. In 2021 NZers were feeling rich with massive house price prices, and with the 8k clean car discount, they were buying EVs, mainly Teslas, in droves. The situation has totally changed now.

HarmLessSolutions

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#3191171 5-Feb-2024 17:09

mattwnz:

I suspect that if they bring in RUCs for petrol and hybrids, that it will essentially be a new and additional tax. So they either won't reduce petrol tax , or will only reduce it by a bit, as it will be a way to make extra money. They have already said that they will be bringing in RUCs for all, but I don't recall the NZ media quizzing them on whether petrol taxes would be reduced and it would just be a tax switch or not. I can see it increasing peoples costs.

Late last year media were suggesting that the ETS tax on petrol was likely to be increased by 60c/L on petrol, on top of the existing 18c/L. That reasoning was based on this report https://ojs.victoria.ac.nz/pq/article/view/7496/6650

If that is the case it will largely cancel out any price saving that would result from the removal of FET (National Land Transport Fund) as blanket RUCs are rolled out and this would act as an incentive to reduce fossil fuel use as should be the case in terms of the current climate change benefitting strategies.

So far as the case of the PHEV owner removing the plug facility on his vehicle is concerned this is a very shortsighted action as once RUCs are introduced for all vehicles the issue he is aiming to address will cease to exist as PHEVs will just be paying the same RUC rate as every other light vehicle.

https://www.harmlesssolutions.co.nz/

mattwnz

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#3191173 5-Feb-2024 17:19

Although it maybe shortsighted, they do have to drive in the meantime, or sell it and potentially have trouble selling it. Governments can be slow at making changes and a RUC system for all vehicles could take a long time to setup if they want a more modern and automated system.

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