Give your feedback > Remove lower levies for EV and PHEV

Minister's proposal - Open for feedback until 9 Oct 2024

Electric vehicles and plug-in hybrid vehicles

It is proposed that owners of battery electric vehicles and plug-in hybrid vehicles pay the same levy as other vehicles.

185

Agree

128

Disagree

155

Responses

The ACC Minister proposes that vehicle owners exposed to the same risk pay the same levy. Battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs) are exposed to the same risk as internal combustion engine vehicles.

The Minister proposes removing the class 2a classification for light electric vehicle, which includes BEVs and PHEVs, from the Motor Vehicle Account regulations.

Under his proposal:

petrol-powered PHEVs would return to Class 2 (petrol-powered) vehicles, with no change to their levies
BEVs and diesel-powered PHEVS would move to Class 6 (non-petrol-powered) vehicles, and would no longer have their levies discounted.

This would mean that petrol-powered PHEV owners would pay their ACC levy when they buy petrol and pay their vehicle licence (rego). Owners of BEVs and diesel-powered PHEVs would pay their ACC levy through their vehicle licence.

Because BEV and diesel-powered PHEV owners don’t buy petrol, the levy component of their vehicle licence will increase under this proposal.

Who would be impacted and what it would mean for them

New Zealand has approximately 75,000 BEV owners who, it is anticipated, would experience a $66.96 increase in annual vehicle registration costs under the new class.

The removal of the discount on diesel powered PHEVs and BEVs, would save owners of other vehicles around $15.8 million over the next three levy years.

The change represents a decrease in the licence levy of approximately $1.63 per year for each of New Zealand’s 2.9 million light passenger vehicles.

It is expected that removing the discount for diesel power PHEVs and BEVs to have little or no impact on the uptake of electric vehicles.

Current state — PHEVs and BEVS are classed together as light electric vehicles with a discounted levy

For levying purposes, ACC splits the vehicle fleet into petrol-powered and non-petrol-powered vehicles. NZTA Waka Kotahi identifies each vehicle’s primary fuel type when it is first registered in New Zealand.

Currently, BEVs and PHEVs are classed as light electric vehicles (Class 2a). This classification provides a reduction of $58.98 when compared to the same petrol-driven vehicles. BEVs and diesel-powered PHEVs being part of Class 2a reduced their levies, because the ACC levy for petrol vehicles is collected in part through petrol sales, and those vehicles don’t use petrol.

The previous Government directed ACC to consider how PHEVs and BEVs could be accommodated in the levy system, to support that Government’s Electric Vehicle Programme.

The discounted levy was seen as a small incentive by that Government to increase the uptake of lower-emissions vehicles. The Clean Car Discount scheme and Clean Car Standard, both introduced in 2021, have achieved quicker uptake of low and zero-emission vehicles.

The Minister wants the levy system to be equal for people exposed to equal risk

The levy system is based on the principle that levy payers exposed to the same level of risk should pay the same levy.

This also means limiting cross-subsidisation and avoiding regressive levying. The current system uses incentives within ACC’s levy system which cost other levy payers.

ACC has no data to determine whether low-emission vehicles are safer or riskier than petrol vehicles. When ACC introduced the lower levy rates for Class 2a vehicles, there were around 10,900 BEVs in the class. The value of the discount by other vehicle types was $0.62 million. Over the last 3 full levy years, BEV owners have paid $9.8 million less in levies.

Additionally, the vast majority of BEVs entering the fleet are new. This means that the current incentive settings shift costs from new vehicle owners to owners of other, often older and cheaper vehicles. This is a regressive levying approach.

EVs have exceeded the 2% target

Successive Governments have exempted light electric vehicles (EVs) from paying road user charges since 2009. In 2016, Cabinet decided to end this exemption once EVs made up 2% of New Zealand’s light vehicle fleet. The Government at that time expected this to be achieved by 31 March 2024.

Data from the Ministry of Transport showed that EVs reached 2.03% of the light vehicle fleet in September 2023.

The current Government removed the Clean Car Discount from 31 December 2023 and the road user charges exemption from 1 April 2024, and we no longer see a need for ACC to provide an additional incentive.

11 Sep 2024

Minister's proposal - Open for feedback

9 Oct 2024

Consultation closes

Oct 2024

Recommendations to the Minister

1 Dec 2024

Final decisions by Government

Agree

59%

Disagree

41%

59%

Agree

59%

Disagree

41%

I’m disappointed a discussion document is sent out for consultation when the proposed policy so clearly does not deliver the stated goals.

If the ACC levy is collected to fund healthcare, then it must first address the health risk and cardiac illnesses arising from air pollution:

"Of the more than 3,300 deaths approximately 60% (2,000) were associated with nitrogen dioxide (NO2) pollution – which is largely from motor vehicles."

- From the HAPINZ 3.0 Study, New Zealand

As NO2 is a byproduct of combustion engines, it would be logical to address the 98.3% of light fleet vehicles that emit this tailpipe pollution.

Once that is acknowledged, a levy based on the vehicle's safety rather than its fuel type or powertrain should be factored in.

If the ACC wants to avoid "regressive levying" it cannot levy based on two systems (one a flat rate for BEVs and diesels and another a levy on petrol consumption).

This perversely incentivises hybrid vehicles (which consume less petrol, and consquently less contribution to the Land transport fund and ACC).

All vehicles should equitably contribute to the ACC regardless of fuel type - but based on the changing nature of the light fleet - a major rethink is needed.

Market share of hybrid vehicles continues to grow, leading to a lower levy collection from petrol-based levies.

Where is the ICE levy that pays for the well-documented health costs associated with ICE tailpipe emissions?

Where is the evidence that suggests these changes will not affect BEV uptake? It seems abundantly clear that EV sales tanked the moment the clean car discount was removed.

Simply apply the levy system-wide using evidence-led, risk-based decision making. ACC is interested in risk of harm, therefore base the levy on; safety rating; advanced safety controls; survivability and urban emissions impact (for societal health impact).
You can do this system-wide and create a fully equitable system - it’s not rocket science

This result is a popularity contest reflecting low BEV ownership and the general publics reluctance to change. 2% ownership target is a ridiculous sop to environmental concerns without making any actual difference. In the long term internal combustion powered private vehicles will all be replaced, with a few exceptions for historical vehicles. Show some leadership, set a new and worthwhile target of 50% and promote that. Stop ruining the environment to win votes.

Electric Vehicles are a vehicle and use the roads, they are more dangerous in a crash due to the extra weight of batteries.

Anyone who mentions non-accident illness/death in relation to EV ACC charges, completely fails to appreciate this is an ACC forum. Any such submissions should be presented to a more appropriate forum such as the health ministry as they are the ones who will pay for any non-accident costs.

Stay focused.

Electric vehicles should've been paying the same since day one. Vehicle is a vehicle. Nothing about electric makes it inherently safer.

Removal of other incentives such as CCD and RUC-introduction have lead to a decline in EV sales. Partly due to hybrid cars having a similar running cost, as they pay less fuel tax than an EV (about half).

If the Government plans on moving all petrol vehicles to RUC, it should wait until that happens and incorporate the levy from petrol to RUC in addition, for fairness, but until then leave EV's alone as it is not a level playing field.

Just to clarify, if 3000 deaths a year are caused by motor vehicle pollution (primarily diesel I think), which deaths would be preceded by lengthy illness and disability in many cases, is this accounted for in ACC charges?

The government is engaged in a multi-pronged war on EVs and on the environment in general (eg RUC, feebate, fuel efficiency standards) supported by misinformation and distortion. For example, the information here does not tell readers that exploring extending the RUC exemption was part of the emissions reduction plan that was in force at the time of the decision to revoke it. Likewise for the fuel efficiency standards, this was based on undisclosed lobbying and implausible numbers from industry. Nothing the government says about transport or the environment can be trusted.

I don't like this idea at all. Why make electric cars more expensive? We're supposed to be helping the environment right? If you do this, less people will buy electric cars, and we'll have more pollution. It's not fair to people trying to do the right thing by buying cleaner cars.

By handicapping our EV industry, we're not just missing the boat on green technology—we're deliberately sinking it. While other countries race ahead in the clean energy economy, this backwards policy threatens to relegate New Zealand to the status of a fossil fuel dinosaur. The government must immediately scrap this shortsighted plan and instead double down on EV incentives to secure our place in the future global economy.

By disincentivising EVs, the ACC is effectively choosing to fill our air with more pollutants, our children's lungs with more particulates, and our hospitals with more respiratory patients. It's a dereliction of duty that borders on criminal negligence. The ACC should be ashamed to even consider a policy that so blatantly disregards the health of New Zealanders.

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