The electric vehicle (EV) market in New Zealand is experiencing a significant downturn, primarily attributed to the end of the Clean Car Discount and the introduction of road user charges for EVs. These changes have led to a marked decrease in sales, resulting in an oversupply of EVs in the market.
Recent data indicates a sharp decline in EV sales. In 2023, EVs accounted for approximately 27.2% of new passenger car registrations. However, by March 2024, this figure plummeted to just 9.28%, reflecting a substantial drop in consumer interest and market activity.
Analysts suggest that this decline is not indicative of a reduced environmental concern among consumers but rather a direct consequence of government policy changes.
“If you’d taken out the Government manipulation in the market over the last two years, EV sales would be higher now than they are at the moment,” EV commentator Richard Edwards said.
The overall vehicle market has also contracted, with total light passenger vehicle sales down by 34.9% compared to the previous year. This broader economic slowdown has compounded the challenges facing the EV sector, making it difficult for potential buyers to justify the purchase of EVs without the previous incentives.
The Clean Car Discount, which provided financial incentives for purchasing EVs, was terminated at the end of 2023. This policy shift, combined with the introduction of road user charges for electric and hybrid vehicles starting April 1, 2024, has created a disincentive for consumers considering an EV purchase.
The government’s stance is that the market will eventually stabilise without further intervention, as expressed by Climate Minister Simon Watts, who emphasised the commitment to meet long-term emissions targets.
As of mid-2024, only 2,000 EVs were registered in the first five months, representing less than 4% of new vehicle registrations. The current economic climate, characterised by tighter budgets and rising costs, has led many consumers to reconsider their vehicle choices. The EV market is now shifting towards buyers who are more price-sensitive and less likely to be early adopters, which could prolong the stagnation in sales.
The situation has resulted in an excess of vehicles on dealer lots, with some dealerships offering significant discounts—up to 50% off the recommended retail prices—to stimulate sales. This oversupply could have long-term implications for both the automotive market and environmental goals, as fewer EVs on the road may hinder progress towards carbon reduction targets.
The decline in EV sales in New Zealand is a complex issue driven by recent policy changes and broader economic factors. With the end of financial incentives and the introduction of new charges, the market is currently facing challenges that could have lasting effects on the adoption of EVs.
