How to fix private enterprise failure in the used car market and save us all a bomb of money
The Government has provided subsidises for electric vehicles so New Zealand can urgently adapt to climate change. This is a carrot approach. A risk for providing a subsidy is that the producer or retailer simply raises their price to absorb the subsidy and the consumer gets no real benefit. Radio NZ article, 28 November, ‘Motor industry predicts used car prices will rise up to 25% under Clean Car Standard’ quotes ‘industry’ as saying ‘but price rises in Japan had soaked up consumer rebates so customers [in NZ] were not much better off’. A price is relative to what somebody is prepared to pay. If a firms knows customers were paying at a previous price; then a government rebate just means the firm can increase the base price of their product by the value of the rebate then they know the customer can pay the higher price because they could before. We can’t say this is what has happened here (yeah right).
But there is a deeper problem, the whole article content contributed by the interviewed people is to warn government to lay off change; its’ going too fast, not enough support, problems, and its going to drive up prices, wow 25%. And the warning acts as a signal to each other that price rises are expected and possible; it can drive inflation to make profit. In doing this the used car industry is actually showing that the private market is not able to adapt quickly to the need to minimise climate change. Private enterprise in this market is actually holding back necessary and urgent adaptation.
The governments carrot and stick approaches are failing to bring about critical economic and environmental change because private enterprise can’t adapt. The best option now is for the government to approach overseas producers directly with an option for a large one off import of EV’s. Overseas producers can tender. The best tender presumably based on the longest range and battery durability rather than a high sport performance (which so many EV producers seem to be going for)! Means a large influx of EV’s is possible. Government can sell them at the cost to get them here (no middle man profit cost for customers to pay) and we get a major transformation of our transport system. If the tender contract was big enough. It could be very cost effective for an overseas producer, one model, one standard, no bells and whistles (like radios) as they can be put in later. Or whatever to keep the cost down.
According to google New Zealand Motor Vehicle sales (for new cars) average 93,713 units a year. And 130,317 used cars were imported into New Zealand during 2021. So if a 100,000 new EV’s were imported you could definitely soak up a huge amount of that demand as the price would be low. And a lower price is likely to bring new people into purchasing an EV. A kick back for government could be trade in’s with the vehicles sold as scrap back overseas, or jobs in recycling.
Risks:
- Car yards go out of business…. Is that a problem or a benefit? Not a huge impact for used car as they are so much cheaper. Many new vehicle sales are luxury vehicles so the impact may not be catastrophic on the new vehicle market. It is possible the government imports could bring down inflation as firms lower prices to sell stock to stay in business.
- EV’s don’t sell; I don’t believe it at the moment. There is a huge amount of EV interest.
- Financial risk to government – Yes, but not this early in the market. Risk could be removed by preventing private car sales of this particular model. So no price undercutting on the one competition item and ramping up prices on all the others. But at the worst if sales did not happen then vehicles could be sold/rented/leased to the poor so they could get to work and have a life.
- People hate the design looks of the EV and won’t buy it. People bought Skoda’s, Hillman Imp’s… people need transport. And we are long way off great public transport; but this won’t stop that progress.
It all depends on the price. if you visit south or west Auckland car yards, they meet the demo-graphical market they serve with cars valued between $5K to $20K. Usually Japanese imports. It is what people can afford.
They are also heavily stocked with people movers (7 seaters) as families are larger (extended with grand parents and grand children).
Until EV’s hit this demo-graphical need. They wont find a way into the west or south Auckland market (or any poorer area of New Zealand).
So where will the state find a ready supplier off people moving EV’s valued at around $20K?
I suspect your scheme will be supported widely by the rich (as is the current scheme) not so much by the middle classes and even less so for the poor.
The trickle down of used Nissan Leafs do not cut the mustard. Too small and in used condition restricted in range for what the poor use the car for. Nor will home charging be of any use where a crowded housing situation (very common for the poor) may have three or four vehicles to charge. Blow a few fuses?
Great socialist idea but no soup. It simply will not meet the market for the poor.
Wait till the road user charges start being applied and the cost to monitor and collect are added. Another huge kettle of fish.
This is an interesting idea although it would be lots cheaper to have the radio fitted in the factory than getting them installed here.
More madness from Labour
We shouldn’t be letting any EVs into the country until we have the renewable generating capacity to power them. Every EV that goes on the road forces us to shovel more coal into Huntly power station.
RUBBISH. Justify that convenient ingnornant POV.
Most EV are powered from their owners owner solar cells on their own roof. See NZ EV organisation.
EV are easily charged overnight when electricity use is LOWEST and thus does NOT need coal power.
This comes across as paid for opinions via the Koch brother monies/propaganda.
Wake up people. EV’s aren’t the solution, but they DO buy us a LOT more time to be selfish and drive personal vehicles rather than do what NEEDS to happen, which is public transport.
In order to charge an EV off solar panels the owner would need about half a square kilometer of panels and then they’d only charge in the day when you’re out, if it wasn’t overcast.
In NZ the ‘capacity factor’ for solar panels is only 14%, meaning they only deliver on average 14% of what their nameplate says. This is because of our high latitude and ‘long white cloud’. By comparison my friend’s new Tesla uses so much power to charge it, he had to get his house rewired to handle the additional load!
Your comment about charging at night is quite a common misunderstanding: The problem isn’t instantaneous load on the grid which would indeed he assisted by charging at night, it’s the total annual MWH capacity of our generators. We are only about 82% renewable in this country most of which is hydro and geothermal, with the rest having to come from fossil fuels. So, any additional demand placed on the grid has to come from fossil fuels. This is why coal consumption at Huntly is shooting up.
If the government was both green AND technically literate, they would be first focusing their efforts on adding renewable generating capacity to the grid before electrifying the fleet. Once we were 100% renewable, we could begin serious electrification.
We will need more than twice the current power generation capacity in order to electrify our entire vehicle fleet and a new grid to transmit it. Think about that for a minute and tell me how that is going to be achieved (hint: Wind & solar cannot do it)
I can not understand where you get your supposed facts.
I’ve had an EV for 5+ years and 90+% of the time I charge from my solar panels and in winter it’s done at night at half rate because there is such low demand for electricity, according to the electricity business that make a profit from selling ‘it’.
So I don’t even know where to start with your reply.
The Tesla chap ONLY needs to rewire for two probable reasons.
1) His house wiring is too old
2) He wants to charge at MAXIMUM ampage rather than the most cost effective and most sensible rate.
Differentiate between NEED to and WANT to.
His house is less than 5 years old, and he needed a 3phase supply to charge his $150,000+ Tesla SUV.
On the one had you say you charge your car with the panels on your property, then you say you charge your car at night. Hmmm. Really.
People with solar panels often have a storage battery, your mate probable wanted to fast charge his Tesla which requires a larger power supply, I don’t know where your 14% number comes from, since they are called solar panels they will only be about 50 % producing due to the lack of sunshine at night, cloudy days, rain & early morning /evening also reduce production. My panels make over 7 Kw when the sun is shining so they make a good reduction in the power bill. Maybe if you had not over indulged in fuel when younger your comment would be correct.
If you think about it for a minute you come up with carbon free thorium nuclear.
Seriously? Socialism in the sale of new cars. Why not supermarkets, why not clothing, or indeed anything where there is a wide range of choice to suit many different consumer requirements?
So far as I can see the market for new EV’s is working fine. Tesla EV’s are quite the rage where I live. The Model Y, the base model of which qualifies for the clean car rebate, is probably the hottest new thing in Devonport/Bayswater. An extremely practical electric vehicle
In other places the MG is doing better. So it should, as a full BEV it is quite a bit cheaper than the Tesla.
In short, the market and the clean car rebate, is working extremely well to boost sales of BEV’s. And the thing is, car buyers get to choose which BEV they want, not what the government imposes on them. Which is why for something like vehicles, where there is a wide range of different models to suit different buyers, the market is infinitely preferable to the government making that decision for car buyers. Let the car buyers choose. They know what they want or need far more than any government bureaucracy would ever do.
Importing used EV is just silly. Surest way to face the battery disposal problem sooner.
Why this obsession with personal EV virtue signalling? Government should invest in electrification of public transport. Functioning public transport. Use bulk purchasing power to buy standard electric buses everyone else buys. But no, it will have to be “bespoke vehicles optimised for harsh NZ climate conditions”.
Not to mention the heaviest polluters – trucks. Electrify that istead of taking the easy option of convincing those who can afford 80k EV they are “saving the Planet” and making those who can not “killers of the Planet”.
Ban Bunker-C fuelled cruiships from N Z waters, allow only less dirty alternatives.
The current rebates and subsidies (no road tax) are unsustainable in the long term . The present arrangement was designed to benefit city at the expense of rural and provincial Nz where electric vehicles are less attractive – basically another way of favouring city dwellers at the expense of the rest. Like covid wage supplements – what proportion of the 50 billion was paid to city dwellers – about 80% or more just another subsidy to cities.
Spoken like a true civil servant . This government is wanting control of water and they have centralized health now you want them to get involved in the car market. I suppose it is on the cars as used car salesmen and politicians are joint last in people we would have trust in.
Yes, the price of a good or service is relative to what someone is prepared to pay. This is why I’m against subsidies, mostly. In the end, all they do is take away government revenue and the whole point of it is often rendered useless by the end of the whole exercise.
If you want to do something to tackle environmental pollution, then look at farming. Provide them with subsidies while they transition out of it.
Does bringing in thousands of immigrants and giving them citizenship interfere with the market?
I agree with you but the main flaw here is the lack of generation needed to meet the demand of so many EVs switching from petrol to electricity. The opportunity and costs and timescale to build the needed generation are all issues going forward, unless the status quo changes rapidly.