Rising petrol prices fuel interest in EVs
Petrol prices racing towards $4 a litre has further enlivened Kiwi interest in new electric cars, but those taking the plunge are much more likely to find themselves on a waiting list than in a vehicle.
That feedback comes from the motor industry, which says the latest influence on pain at the pump, Russia’s conflict with Ukraine, could well inflict more than the punishing oil prices hitting Kiwi motorists’ pockets now.
David Crawford, chief executive of the Motor Industry Association which represents almost all new vehicle distributors, is concerned the invasion has exacerbated supply chain crunches already so disrupted some national distributors have ceased taking forward orders.
“Fuel prices were going up already, but they have spiked because of the Russia-Ukraine conflict.There is no doubt that heightened fuel price has increased the number of enquiries about (these) low emission vehicles. I am receiving that feedback from distributors.”
Whether distributors can meet this demand is far from clear. His feel is that few, if any, are in that position. The war is a blow to an industry already feeling stress from almost all new vehicles being subject to stock issues.
Franchises’ ability to supply new products has been steadily lessening for some time, but potential a new buyer having to wait at least a few months or perhaps more than a year for their vehicle has likely elevated even more now.
“Constraining that (demand) is disruption around availability of vehicles.”
Crawford says Russia and Ukraine manufacture semiconductors, vital to modern cars and already in short supply before Russia kicked off its incursion on February 24. Ukraine is a big supplier of car components, mainly to European makers. Russia supplies rare earth and precious metals.
The semiconductor crisis has already evidenced here with de-contenting of some popular cars. One example is the new petrol Mitsubishi Outlander. It launched late last year with a digital dashboard, but that only featured on the first shipment of 100 cars. It then regressed to an analogue display.
Electrified cars – whether in wholly electric or plug-in and hybrid forms – are especially reliant on semiconductors, Crawford says.
“Electric vehicles have a high number of chips. We already had a processing chip shortage in vehicles and this (conflict) has only made it worse.
“Historically every time fuel price increases by more than 50 cents a litre, and stays up, buying patterns change and people look for more fuel efficiency,” he says.
“Fifteen years ago that was smaller cars with smaller engines. These days they are looking at electric vehicles, PHEVs and hybrids.”
Government’s Clean Car rebate that discounted $8625 from the price of a new full electric with a recommended retail under $80,000, and lesser amounts from PHEVs below that ceiling (with hybrids due to benefit from April 1) has already clearly fed electric interest at new car level, but often the point where it far exceeds national allocations. There’s no solution to that.
“Some brands have stopped taking orders for some really popular models because wait lists are nine to 12 months out.
“It’s a common factor for EVs and PHEVs. The challenge is being able to get enough here to satisfy demand. People are going to have to be patient.”
Crawford wouldn’t like to forecast how long this scenario might stretch out.
“The longer that drags out the longer it’ll take to adjust… I’m not prepared to make a prediction about how long that conflict will last. A Westernised Ukraine is clearly untenable to Russia.”
Mark Gilbert, chairman of Drive Electric, a high-profile not-for-profit EV advocacy group, concurs with Crawford’s views.
A former car industry chief executive (he ran BMW New Zealand from 2004 to 2012), Gilbert believes more EVs will be registered here this year than in 2021, in itself a record period, with 13,247 new and ex-overseas’ used registrations, but only because of already cemented forward planning by companies.
“Most car companies would have been planning for more EVs in 2022 than they were in 2021, I feel confident in saying by the end of this year we will see more EVs sold in 2022 than last year.
“In January and February the combined uptake (of EVs) was 2500 vehicles so, if that trend continues, we are conceivably looking at 15,000 for the year.”
Yet the next two to three months “will be very interesting,” he said, adding that with the conflict, the microchip shortage and shipping issues “It’s a bit of a nightmare to forecast.”
With just under 40,000 electric vehicles in circulation overall, the sector is building off a low base, he says.
Crawford has suggested anyone seeking to step out of a vehicle that is becoming too expensive to run might, in some circumstances, simply be better off forgetting about buying into anything new at all.
However, those involved in that trade don’t see ex-Japan used stock being necessarily available in abundance to fulfil that.
David Vinsen, chief executive of the Vehicle Importers Association, the industry body for the used import trade, says as much as his members will likely focus more on sourcing efficient vehicles, this is a finite source.
New Zealand traders are competing with other countries, including Australia, to secure EV stock and, while it sounded facile to say it, “they (the Japanese car market) are not making any more five-year old cars.”
The VIA has just secured victory in its fight to achieve a 25 percent reduction in penalties against used vehicles that introduce when the Clean Car legislation enacts on April 1.
The association had originally expected penalties to be around half of those of new vehicles, acknowledging the shorter time used cars spend on the fleet, but instead the calculator issued by the Ministry of Transport showed they were the same.
Even with that impact halved, the VIA believes Clean Car will, at least for the foreseeable future, lead to increased prices and decreased options for car buyers.
Vinsen, who is on a Government-established low emission vehicle working group, is concerned the formula for Government’s emissions reduction actions still isn’t right.
He says the effect of the Clean Car discount on used import candidate vehicles has been that prices in Japan have climbed. “It has been an immediate wealth transfer from New Zealand to Japan.
“The price of petrol will increase demand for efficient vehicles, including EVs, which is what we have been advocating all along.
“If the Government was serious about driving the demand for fuel efficient vehicles and EVs they would do it through the Emissions Trading Scheme and put a proper carbon tax on petrol, let the user pay and let the demand fall where it should.
“Instead they won’t deal with the substantive issue. The Clean Car Standard and the Clean Car discount are only superficial exercises to make it appear the Government is doing something. What’s going to happen in two, three, five years’ time? They are going to look back and think ‘why on Earth isn’t this working?’
“We are bringing in every EV we can get our hands on and our colleagues in the new industry are doing the same. But there are finite supplies… with the pool of used cars internationally, but particularly in Japan, what is there is there.
“All it’s going to do is put the price of vehicles up.”
Gilbert, meanwhile, wonders how influential China might become.
He points out that Shanghai-based BYD, primarily a producer of budget fully electric models, has just announced intent to start selling in Australia. Even though the distributor also has rights to NZ, it’s not clear when the brand will start up here.
Yet China is a juggernaut, being the world’s top EV market and also the global leader in production.
“You have a lot of brands in China – they seem to be rolling out a new one every week,” says Gilbert.
“Even though not many are building in right-hand drive, if they don’t have the same supply chain issues, there is perhaps an opportunity.”
Regardless of how hard it might be to secure an electric car, those who already own one will be relieved to escape paying so much for petrol.
His own car, a premium sector Audi e-tron SUV, is proving increasingly cost-effective.
“It’s basically costing the equivalent of 30 cents a litre to fill. Putting in fuel that’s costing 10 times that has got to be making people think.”
Source StuffMarch 14, 2022