Future of EVs in NZ
Posted on 01 May, 2015
Mark Gilbert, chairman of Drive Electric, spoke to Autofile Online at his organisation’s plug-in fleet day at the ASB Showgrounds in Auckland on April 30.
The event was geared towards promoting electric vehicles (EVs) to fleets buyers “because they represent 60 to 80 per cent of new cars sold in New Zealand each year.”
MAKING THE MOST OF RENEWABLE ENERGY
“Drive Electric believes New Zealand has a great story that never gets told about renewable energy and only 0.1 per cent of electricity is used in the transport sector,” says Gilbert. “It’s cheap, available locally, home-grown and there’s plenty of it. It’s the alternative to tankers pulling up and distributing crude oil.
“Everyone has got on the bandwagon of being carbon zero and building big sustainable energy policies. But do fleet policies match companies’ aspirations because one way of mitigating CO2 emissions is to transfer from fossil-fuel cars to EVs.”
CHANGING THE FLEET’S MAKE-UP
“Drive Electric is realistic enough to say we don’t expect wholesale change,” says Gilbert. “The fleet has got to be fit for purpose and there has to be a business case around EVs, but we think there is an opportunity right now to do it utilising all sectors – new and used.
“We have a feeling New Zealand will get to 1,000 EVs this year and that total may go higher in terms of cars sold. When you look at EV penetration in a market like Norway, EVs make up about 20 per cent of that market.
“Could we say 20 per cent of the market here by 2020? If there are 80,000 used and 80,000 new, that’s 160,000 or 8,000 units per year. That’s doable. Something like that is aspirational, but we are still trying to work through some of that stuff with the Ministry of Transport and the industry.
“Drive Electric is a non-vested interest organisation, so we need to start getting the industry to talk about targets it wants so it can prove us right or wrong. We really need to get the industry to say ‘we see an opportunity here for whatever it might be’. We need to set some bold targets that will help New Zealand to increase electricity in the fleet."
WORKING ON MARKET PERCEPTIONS
“Younger people are going to drive a lot of this change,” says Gilbert. “Why would people want to keep putting money into depreciating assets which is what vehicles are. You can mitigate some of this by buying an EV. Electricity is about 30 cents per litre, probably less. You also have savings that are going to accrue in household budgets and there are health benefits from cleaner air.
“Drive Electric has about 67 members and around 35 are corporates. We have work-stream participation where you can come in at $25,000 to be a major player or at $10,000 to be a lower player. That’s still developing.
“The problems car companies have are around production numbers. Markets that have lots of stimulus and incentive programmes track the vehicles to go that way, which New Zealand doesn’t do. Our place in the world and size of our market doesn’t help.
“We just need distributors to really be passionate about EVs when they’re doing their planning with other countries and tell our story about renewable energy. Generally, fast movers and early adopters benefit, so whoever is first to market will be the first to benefit.”
Gilbert says interest from fleet buyers has been quite surprising. “I thought we would have got a bit of ‘oh yeah, you’re dreaming’. But there are people saying ‘gosh, I never realised that so I’m going to go back and have a look at my fleet policy’.”
ELECTRIC CARS’ COST OF OWNERSHIP
“The EECA has its total cost of ownership model where you can compare cars,” says Gilbert. “There are some assumptions about it, but it just shows EVs aren’t that far out of reach. If a new car is out of reach, then stick a used import in at a lower figure and it must make it cost-effective.
“A lot of people are pleasantly surprised the reality of a total cost of ownership model because we tend to think transactionally, such as ‘what deal can I get today on that price’, but that’s only part of the story because you have to think of all the servicing and so on.
“We are very happy with the feedback thus far and it will be interesting to see what happens with sales numbers over the coming weeks and months to see if it has an impact.”
PROMOTING THE EV INDUSTRY
“Drive Electric works closely with the EECA,” says Gilbert. “We want to ensure we aren’t wasting resources. The EECA can tell the story through campaigns, such as Energy Spot. Drive Electric’s role is to run events like this one and to get consumer groups on board.
“What we’re trying to do is bring in people with expertise into this space, so it’s not just us telling the story but also people who have made the transition and changed their fleets. They can tell real-world results.
“You just have to look at what happened with diesel vehicles. Prior to 2000, there were no diesel BMWs on the market. Then, four years later, 60-70 per cent of our fleet were diesel imports. That’s how quickly it happened.
“You are going to pay a little bit more for electric, like you would with a diesel, but that may change over time. I forecast most major car companies will offer a PHEV within model ranges. That’s the logical way to go. It means you have the basic body shell in three different body components, so supply and demand will determine what goes into them.”
PRICING, SUBSIDIES AND TAXATION
“It’s unlikely for consumers in New Zealand to be offered subsidies to buy EVs,” say Gilbert. “There are two reasons not to do this. One is that the tax-take on the automobile industry is quite high, but on an individual base the only tax on a car is GST. Then, if it’s a company purchase, there’s fringe-benefit tax.
“In some ways, the EV industry has already been subsidised because the power stations have been paid for by you and I, and the government, going back for many years.
“In the UK and Norway, there are 40-50 EV models on the market. Here we only have four or five. We’ve got to be careful we just don’t tar EVs with the same brush in terms of price modelling. We’re talking about a car that won’t have a big fleet margin in it.
“The technology around this stuff is still different to the combustion engine cars that have been around for many years. Price structures will be different going forward.
“Sales techniques for selling EVs will be different because you are talking about new things. Renewable-energy sales teams need to familiarise themselves with this space. It’s not like a customer walking in and asking for the best deal. I think that’s where the wake-up call needs to come from – the approach needs to be about mainstreaming EVs.
“At the end of the day, the price will be the price. That’s a variable for sure. It’s about trying to make customers understand what they are buying.”