NZ Motoring News Weekly: Audi, Lordstown, & The New EV Rebate Scheme

Date Jun 18, 2021
Blog category car loans
By Huey A
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Heading out for your next drive? Catch up on the latest stories and developments in the auto industry in NZ and beyond. From possible new penalties and rebates to sudden shifts in manufacturers and vehicles, get the latest motoring articles here.

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Kiwis may pay up to $3,000 penalty for polluting utes

Under new government rules, Kiwis may pay a $3,000 penalty fee for their favorite utes, according to the Automobile Association (AA). These new regulations are most likely to affect the likes of the Toyota Hilux and the Ford Ranger. AA national policy manager Simon Douglas said the penalty will occur at the point when the vehicles were first registered in NZ, regardless if they were new cars or imported second-hand vehicles, coming into effect in January 2022.

The new penalty was questioned by Motor Trade Association (MTA) strategy manager Greig Epps, saying that “country folk who need larger vehicles paying penalties that fund discounts for city folk to use on a low emission run-about.”

According to Motor Industry Association chief executive David Crawford, the amount paid for utes may even increase further, with the Clean Car Standard expanding in January 2023. The standards will include a requirement of vehicles to achieve certain carbon dioxide emissions per kilometre across all cars sold. If the average emissions of vehicles sold went above this requirement, the penalty applies, especially on high emitters like utes.

Not all is lost though. Sellers may choose to spread this penalty across the entire range, rather than having it target individual offending vehicles, if it’s more convenient for them.

Alternatives?

While Crawford said that electric utes were already expected by 2030, and hybrid versions coming into the market in the middle of the decade, DairyNZ chief executive Tim Mackle said utes are essential for farm work, so rural businesses should be exempt from the rule at least until other options are made available.

“While electric utes are hitting the market overseas, until they are on our shore farmers simply can’t adopt them. Today’s government initiative is skewed to urban options, we want to see a plan for how our rural communities can access transport options too.”

“It would be great to see some innovation and creativity from the government to create a test-bed for e-utes in New Zealand - just as we did with EFTPOS or other tech.”

On the other hand, Crawford did clarify that there were mixed responses regarding the fairness of these penalties, especially as alternative options aren’t readily available yet. He did say that he considers the penalty fair for farmers, especially since their industry is already exempt from the Emissions Trading Scheme.

Light commercial operators like bricklayers and tradies would be the ones to receive the short end of the stick as a result of the new standard. Many ute drivers may choose to run their old and polluting much longer because of it, according to Crawford.

Despite the reservations from different sectors, AA organisation’s spokesman Simon Doulas said the new clean car package has a good mix of its “carrot-and-stick” approach and that it was “a well-balanced and positive package.”

“The measures will introduce rebates of thousands of dollars for those purchasing new or used electric or hybrid vehicles from July 1, add a levy to higher-emitting vehicles like utes when they are imported and advances plans for New Zealand to use more biofuels to reduce emissions from internal combustion engine vehicles”, he said.

Douglas also added that while utes are affected, there’s still a good range of other vehicle types that won’t be hit by the penalty, providing more alternatives. The MTA has also supported the package, and even implied that it might be possible to further.

“This can be done by making the rebate process easier for consumers, increasing the size of the rebate and focusing on carbon reduction rather than just electrification”, according to Epps. He also added that the proposed rebate process would now require vehicle purchasers to have enough cash in order to buy the vehicle first, before applying for the rebate.

“This could still be a hurdle for the average Kiwi family”, he said. “While dealers will be happy to help with making applications, perhaps the Government could look at allowing the buyer to access the funds at the time of purchase.”

On the other hand, some retailers are not convinced. David Boot, owner of Christchurch’s EV City, said that the rebate may not be the best thing for the industry in the long term. Supposedly, the money will just end up in other countries where the EVs were imported from, with offshore manufacturers supposedly pushing the prices up once they find out that the New Zealand Government was paying a rebate.

Importers will be put under pressure to buy as many EVs as possible, making them compete with each other.

“It will not be me making the extra money. It will be the Japanese.” Boot said. He prefers that the Government puts a more gentle set of incentives across a wider industry. He wanted more benefits for EV users such as free parking, ability to use transit lanes on motorways, a $300 credit on their annual power bill, and exemption from paying road user charges. These would supposedly make EVs more attractive to own while ensuring the money stays in the country.

People would have about two months before new orders are placed, which is the time when prices are likely to increase. The announcement had also led to a lot of buyers on Sunday, with Boot selling seven cars up from the average of three.

EV sales surge in Auckland, price hike may ensue

Following the rebate scheme, Electric Vehicle (EV) dealers have been swarming with customers. Thanks to the government’s Clean Car Discount, people buying new EVs can receive a discount of up to $8625 from July. This comes as mixed news to EV dealerships in Auckland thanks to the surge in demand but they have also sounded warnings regarding limited stock, potentially sending prices upward.

According to Auckland City Electric Vehicles (ACEV) owner Hadley Hargadon, the dealership has seen a 20% rise in sales since the scheme was announced.

“There’s been a surge in sales of people pre-buying cars for a July 1 delivery,” he said. “I think smart people are doing that, because come July 1 when people go out to buy cars there’s going to be perhaps a shortage.”

Likewise, Hargadon did add that the scheme may also “hurt” people who already bought EVs prior to July 1 since their vehicles will now have a reduced value once they sell or trade in their cars.”

Autolink EV owner Henry Schmidt has also echoed the same observation, saying that there had been a “mad rush” to buy EVs since the subsidies were announced. “There has been an increase in sales, phone calls, queries, and at the rate we are going we will sell all our stock by the first of July. We have never done [that] before in seven years”, he said. Despite this, he did share the same concerns about limited stock and high prices.

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“We know what we paid for these cars two months ago, we are now paying more. If Australia goes full swing like New Zealand we’ve got a big problem”, he said. “If the demand really starts to grow here, there’s not enough used EVs to bring in to fill the New Zealand market. There’s not enough stock in Japan.”

Likewise, GVI Electric owner Haydon Johnston said that 55 people have put down deposits on EVs to pick up on July 1, once the subsidy kicks in. “People who were on the fence have committed. But it’s hard to know whether there will be an uptake in interest in the long term it will largely depend on what the prices do”, he said.

Like Schmidt, Johnston also imports their EVs from Japan, and he also believes that EV sellers are now increasing the prices in response to the subsidy and the limited stock. For one, there were only 8 EVs for sale on auction in Japan on Thursday.

“The dealers monitor the market very closely.

“Now with this incentive in place they’ve seen that, and they have simply increased their reserve price on vehicles, knowing that New Zealanders receive a subsidy”, Johnston added.

“There will be no reduction in the price.

“The price to supply will go up, so by the time you apply the subsidy, the vehicles will cost the same as they used. The only people who benefit are the suppliers.”

Taking a pre-owned 2014 Nissan Leaf for $18,000 on Tuesday. The same vehicle, before the subsidy was announced, would’ve sold for $15,000.

“That’s an unprecedented increase that has resulted purely because of the subsidy. The vehicles are going to cost us more.”

Lordstown Motors reverses statement

Just days after its company president confirmed that they have enough to maintain production through 2022, Lordstown Motors just confirmed that it actually doesn’t have enough firm orders for any of its vehicles. This comes as questions have been raised regarding the startup electric truck maker’s financial ability to stay in business amidst its claims that it had supposedly presold 100,000 of its Endurance pickup trucks. 

Both Lordstown CEO Steve Burns and Chief Financial Officer Julio Rodriquez resigned on Monday, the same day the company acknowledged that one buyer that committed a large amount of preorders didn’t really have the resources to complete the transaction, with other preorders too vague or too weak to be relied on as a guaranteed purchase. A day later, Lordstown President Rich Schmidt said in a meeting with the Automotive Press Association of Detroit that the company was on track to building the Endurance in the fall, with enough orders to keep the company going until 2022.

However, the company confirmed on Thursday that the statements regarding its orders weren’t accurate.

“Although these vehicle purchase agreements provide us with a significant indicator of demand for the Endurance, these agreements do not represent binding purchase orders or other firm purchase commitments,” the company said during filing with the Securities and Exchange Commission.

The company has also confirmed last week that it might not even be in business next year due to difficulties in securing funding for its production at the former General Motors plant in Ohio, Youngstown. In their quarterly regulatory filing, the company confirmed that it had US$587 million on hand as of March 31 which is nowhere near ready to start full commercial production. The price of its shares, which had already been cut in half this year, further slid at the opening bell last Thursday before recovering.

Despite this, Angela Strand, Lordstown Motors’ new chairwoman, said the upheaval from the previous weeks won’t interrupt the company’s day-to-day operations. She confirmed that Lordstown still has plans to build their Endurance electric truck soon.

Audi doubles down on combustion vehicle phase-out

Audi doubles down on its commitment towards adopting electric power, reiterating their plans to phase out fossil-fuel powered vehicles a few months ago. This time, the German car brand had given themselves a 2026 deadline to stop building petrol and diesel-powered vehicles altogether, with this legacy brand exclusively moving into the electric space.

These plans were revealed by Audi board chairman Markus Duesmann to the company’s executives and labour representatives. It’s a bold move but one that it shares with the stance of its parent company, Volkswagen Auto Group, which is looking to challenge Tesla in the market of battery-powered vehicles.

It’s not the only brand to offer and focus on the EV space of course. Competitors like BMW and Mercedes-Benz also sell electric vehicles though neither brand has shown much interest in going all-electric the way Audi has. 

Mercedes-Benz has said that it’s keen on phasing out combustion engines by 2039 but that’s already over a decade after Audi’s petrol ban. On the other hand, BMW is yet to say when it’ll go all-electric, seeing as how the German brand still believes that petrol will remain relevant for many years to come.

Enjoy the latest stories? Take care on your weekend drive!

The future seems to be heading into a more sustainable model, with battery-powered and non-petrol cars dominating the road in decades to come. Nonetheless, it seems that the road ahead still has a few challenges on the road to get there. Price seems to be a main concern and even as rebates and subsidies kick in, there remains some skepticism with regards to availability.

Still, if you’re interested in purchasing an EV now, you may want to look at different car loan options in order to get the best rates and deals. Use our FREE car loans comparison tool here at glimp to easily see all the available deals in NZ. Get the most out of your cover and your budget today!

Have a great weekend! Stay safe and happy driving!

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