Fines loom for EU car makers - EV Torque

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Words: Mark Gilbert
13 Sep 2020

We are closing in on an election that gets more interesting by the day. So far, no one has laid out a plan with regards to EV adoption in NZ, and how to address the issues that accompany it.

The only “whisper” I have picked up is that the Prime Minister is (apparently) writing to crown entities, requesting they fleet up on EVs by 2025. This is the complete opposite to what NZ First had intimated last year; that being no EVs in Government departments before 2025. As I suggested last month, best to pose this question to your aspiring local MP, as it’s getting very confusing with NZ First again opposing the Green’s feebate proposal without offering an alternative.

Regardless of what little ol’ NZ decides, it has been reported in the UK that Europe’s 13 top car manufacturers are predicted to miss their 2021 CO2 emissions targets and face fines of more than Euro14.5bn (NZD25.2bn), according to analysis by PA Consulting.

It’s the popularity of large SUVs that is creating the problem, as the manufacturers lack low emission options for such models. This has caused average CO2 emissions to increase across the board. The trend is similar in NZ with our adoration of utes and SUVs. And those utes enjoy FBT relief due to being a workhorse despite their high emissions! But then NZ doesn’t have any emission targets to counter this.

The potential fines in the EU are staggering, and it goes without saying that accepting such costs is not in a manufacturer’s DNA. Trying to pass this onto consumers is unlikely to work, as is suggesting shareholders wear the burden.

This requires some urgency, so it’s no surprise European brands are all spending up large converting plants for the manufacture of electric vehicles, while shedding staff to do so.

PA’s analysis suggests that car brands would need to sell more than 2.5 million extra battery electric vehicles to stand any chance of meeting their targets. This would represent a whopping 1280 per cent increase by 2021.

We would need a similar exponential increase if we wish to get close to the recognised target of 64,000 EVs in NZ by 2021. Used imports are still driving the volume due to price competitiveness, but with more EV models on the way, I do believe we will see more price parity in the coming years.

I think the PM’s EV fleet message is the right one. Couple this with an accelerated depreciation structure, some FBT relief, and turn these over every two years and we will generate a good supply of well priced EVs within our own market. And start straight after the election please.

But back to those EU carmakers, and analysts say they will need to adapt to an enormous change in what they do as they move to EVs. Manufacturers cannot underestimate the complexity, cost and cultural change required in adopting EV tech. This should signal to those in the industry here that this change needs to be managed, and the starting point may well be the creation of a new industry plan for the light fleet in NZ.

I’m not convinced having one of the oldest, and least safe fleets in the world is very satisfying. The changes have been signaled and I feel most, if not all manufacturers, will find ways to reduce their exposure to the costs signaled earlier. The alternative is quite clear - they will be gone, or wrapped up by someone else, regardless of any Covid support Brussels may dish out.

This article first appeared in the August 2020 issue of NZ Autocar magazine.

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