Did the ‘ute tax’ stop us buying gas guzzlers?

There was a big spike in sales of high-emission vehicles before the penalties took force. But, writes Olivia Wannan, what happened after that matters more.

What’s the issue?

The Government says its policy offering discounts on EVs paid for by fees on gas guzzlers has had a more positive impact than expected. But critics – who often describe it as a ‘‘ute tax’’ – say the scheme has failed.

Criticisms of the policy can be nuanced. The National Party and Motor Trade Association accuse it of being unfair. Others, including Toyota chief executive Neeraj Lala, are concerned the subsidies offered are exceeding the fees collected, meaning the scheme isn’t financially sustainable.

In this fact-check, we’re going to concentrate on whether the policy has made Kiwis buy cleaner cars.

What we found

The Clean Car Discount targeted brand-new and New Zealand-new vehicles, and was introduced in stages. In July 2021, people who bought a fully electric or plug-in hybrid car could apply for a rebate of up to $8625.

Then in April last year, a broader scheme kicked in. Not only do EVs get a discount, so do some highly-efficient fossil-fuelled cars. Non-plug-in hybrids – which feature an electric battery to take advantage of the technology’s lower fuel use and running costs – often qualify.

A middle band of cars receive neither a discount nor fee.

Then, there are gas guzzlers: which we’ll define as vehicles that produce more than 191 grams of carbon dioxide for every kilometre travelled – a category that includes utes such as Ford Rangers, vans and trucks, plus some SUVs and station wagons.

These are subject to a gradually increasing charge, up to a maximum of $5175. (The discounts and fees will change again in July.)

Transport agency Waka Kotahi monitors the new and used vehicles arriving in the country, and how much pollution each will typically produce on the roads. Therefore, it does not count the sales of cars already in Aotearoa.

The most noticeable impact is a spike in registrations of very-high-emitting cars just before the fees took force in April last year. In a typical month, car dealers would sell just over 10,000 of these vehicles. That shot up to more than 29,000 in March before crashing to under 2000 in April.

Since then, an average of 5200 gas guzzlers arrived each month, according to the Waka Kotahi data. On the back of that, drivers have bought roughly 48,000 fewer gas guzzlers than normal since 2021.

Used car importers in particular have shied away from very-high-emitting vehicles.

EV sales have trended upwards since the discounts were first introduced. Wait times of up to nine months suggest they’re more popular than import numbers indicate. In March, they had their best-ever month, with more than 3100 arriving onshore.

Sales of low-emitting cars are on the rise as well, with non-plug-in hybrids proving particularly popular.

The International Council on Clean Transportation – a group of clean transport researchers – analysed the policy in countries it’s been introduced, and argue Aotearoa’s had success.

Although we can see a change in carbuying behaviour after the policy kicks in, it’s not so simple to conclude it’s a winner.

Other events in recent years might have influenced car buyers.

The Russian invasion of Ukraine caused global petrol prices to soar, and kicked off a national conversation about the relatively low running costs of EVs and hybrids. Improved electric cars with bigger batteries have hit the market – including the first electric ute.

Climate change is an increasing concern, according to surveys by Ipsos.

We asked Massey University professor Robert McLachlan – a specialist in numerical analysis – if he thought it’s fair to conclude the Clean Car Discount is responsible for changing car sales. He thinks other factors would have had an influence – but supercharged the effect of the policy.

Headlines on the Clean Car Discount publicised the cost benefits of EVs, for example.

The government decision to only pay discounts on vehicles under $80,000 would have encouraged car makers to list a model under that price.

Based on government data, he believes the rebate ‘‘has had a much bigger effect on the market than was expected’’.

Although EVs are an increasing proportion of New Zealand-new cars, we’re behind the skyrocketing sales recorded in Europe and China. Plus, electric cars remain a small minority of the vehicles on the road. The country has ‘‘a long way to go’’, McLachlan says.

In summary

The infamous Ford Ranger remains popular, but arrivals of gas guzzlers have nearly halved since the full policy took force.

Electric alternatives, including the Tesla Models 3 and Y, have been increasing though haven’t yet taken the Ranger’s crown.

As mentioned, there may be a range of factors at play.

The popularity of medium-sized cars hasn’t been noticeably dinted.

The humble hybrid is currently making a play for Kiwi hearts. An average of 3000 low-emitting vehicles (50-99g per kilometre) now arrive each month, similar numbers to a new Ford Ranger’s veryhigh-emitting category (200-249g). This could prove short-lived, as subsidies for many hybrids will end in July.