Electric Vehicles in New Zealand:from Passenger to Driver?

Scott Lemon, Allan MillerElectric Power Engineering Centre (EPECentre)

University of CanterburyChristchurch, New Zealand

Abstract—This paper aims to provide a global review ofelectric vehicle (EV) developments so as to inform a New Zealandroadmap for electric vehicle adoption and infrastructure. Thisencompasses a discussion of the New Zealand and worldwidemarket for EVs, the policy decisions and regulations that influencethe manufacture and adoption of EVs, and the resulting effecton the environment. It is shown that it is unlikely New Zealandwill be a key driver for electric vehicle development and uptake.The upfront price of EVs is too high to appeal to the majorityof consumers, and the technology still has significant range andlifespan limitations that must be addressed. This is likely to limitany considerable EV uptake until at least 2020. Furthermore,potential measures to subsidise or reduce EV costs would proveuneconomical given the size of the New Zealand market and theprice premium commanded by imported vehicles. However, NewZealand could significantly benefit from an electrified fleet, withreductions in local air pollution, improved health and reducedgreenhouse gas emissions. It is concluded that while EVs are notcurrently a feasible option for many New Zealanders, the gov-ernment should start planning now to develop the infrastructurerequired to support EVs, as well as working towards a greenerenergy system.

I. INTRODUCTION

Since the development of the internal combustion enginein 1807 and vehicle mass production in 1908, petrol anddiesel vehicles have become a fundamental part of modernindustrialised living [1], [2]. This is particularly evident in NewZealand which has the third highest rate of private vehicleownership and use per capita in the OECD, with over 2.6million registered light passenger vehicles, and over 30.75billion vehicle kilometres travelled (VKT) in 2011 [3], [4]. Yet,despite their inherent usefulness and importance in daily traveland work, it is becomingly increasingly evident that the over-reliance of the transport sector on fossil fuels poses a numberof key societal and environmental issues for the future [5].

Behind the agricultural sector, transport is the primarycontributor towards greenhouse gas emissions in New Zealand[5]. Private light passenger vehicles alone are responsible foran estimated 12 percent of New Zealand’s total greenhousegas emissions, corresponding to 9.3 million tonnes of carbondioxide equivalent1 annually. This is reflected throughout theOECD and indeed the world, with the transport sector being

1Carbon dioxide equivalent (CO2e) is a measurement of total greenhousegas emissions, factoring in the warming potential of other gases relative tocarbon dioxide. Methane (CH4) and nitrous oxide (N2O) are the two othermain greenhouse gases emitted in fuel combustion. A mass of CH4 has 23times, and N2O has 296 times, the warming potential of the same quantity ofCO2. Therefore V (CO2e) = V (CO2) + 23V (CH4) + 296V (N2O) [6].

one of the main global sources for carbon dioxide emissions.This has implications not only for New Zealand and itscommitments under the Kyoto protocol, but also the near-universal issue of global warming [7].

Furthermore, internal combustion engines are also the lead-ing source for many local pollutants, especially in dense urbanareas. This includes carbon monoxide, sulphur and nitrous ox-ides, hydrocarbons, and particulate matter[8]. Elevated levelsof these substances resulting from traffic pollution may in turnexacerbate respiratory problems and issues of cardiovasculardisease [9]. Reducing road transport emissions is thus animportant factor in improving the overall health and well-beingof local communities.

At an economic level a reliance on fossil fuels, primarilyderived from unstable regions overseas, has an impact onnational energy security and sustainability. As the majority ofNew Zealand’s petroleum products are imported from overseas,New Zealand businesses and consumers are vulnerable to oilsupply fluctuations and geopolitical issues outside their control[10]. It also constitutes a significant proportion of local revenuethat is being channelled overseas. By switching to a transportsystem that relies on local energy production, it not onlyinternalises spending on transport and energy supply issuesbut could also have the effect of stimulating businesses andencouraging job growth [11].

These worldwide concerns over global warming, air pollu-tion, and matters of energy security have resulted in increasedinterest in, and consequent development of, more fuel efficientand environmentally friendly vehicles. A key part of this trendhas been the introduction of alternative fuel vehicles that aimto at least partially reduce the reliance of the transport sectoron fossil fuels. In particular, electric vehicles are touted as oneof the most promising technologies for achieving truly greentransportation [2].

In contrast with traditional petrol and diesel vehicles, EVsforego the internal combustion engine, instead using electricmotors and high-density battery packs to power the vehicle.There are three main forms of electric vehicle, ranging fromhybrid electric vehicles (HEVs), through pluggable hybridelectric vehicles (PHEVs), to battery/full electric vehicles(BEVs/FEVs/EVs) [12]. HEVs and PHEVs can be viewed asintermediary technologies that retain the internal combustionengine and drive alongside a smaller battery and electric drivemotor. The internal combustion engine is then used to drivethe transaxle alongside the electric motor (parallel hybrid) or torun a generator that powers the electric motor (series hybrid).

As HEVs still consume fossil fuels and cannot be rechargedexternally they can essentially be considered as more efficientinternal combustion vehicles, and thus are only referred to inthis report for comparative purposes. Alternatively, PHEVs andEVs both allow the vehicle to be ’refuelled’ or recharged usingelectricity supplied by the national grid [13].

This paper aims to provide a global review of electric vehi-cle developments in a New Zealand context. This encompassesthe New Zealand and worldwide market for electric vehicles;the policy decisions and regulations that influence this market,as well as the manufacturing and transport industries; and theresulting effect of electric vehicle uptake on the environmentand health. From this it is determined whether or not NewZealand could act as a driver for EV adoption and policy, andin turn become a leader in green transportation systems.

II. MARKET

Current generation electric vehicles are a disruptive inno-vation, displacing existing internal combustion vehicles and,in some countries, other alternative fuel vehicles such ashydrogen, biodiesel and natural gas vehicles. The rate at whichthis diffusion of electric vehicles into the market occurs ishighly variable and ultimately depends on a range of uncertainfactors such as: consumer perception; supporting policy andregulations; and industry advancements in manufacturing andtechnology [14]. Consequently, to investigate the potential mar-ket for electric vehicles in New Zealand the current transportsector is examined, as well as the potential benefits and costsof operating and running an EV for consumers, and the currentrates of EV adoption globally.

A. New Zealand’s Current Vehicle Market

The current market for light passenger vehicles is wellestablished in New Zealand and is dominated by petrol and,to a lesser extent, diesel vehicles [15]. Since the cessation oflocal vehicle manufacturing in the 1990s the demand for newvehicles has been satisfied by both new imports and secondhand ex-overseas vehicles [16]. As shown in Fig. 1 there wereapproximately 2.6 million registered light passenger vehiclesin New Zealand as of 2011 [17]. The total number of vehiclesis nearing market saturation following rapid growth up to 2007.As such, the yearly sales of new vehicles from 2012 onwardswill primarily be due to fleet turnover and population growthrates [18].

In Fig. 2 the origin of new vehicles entering the marketin New Zealand is shown. It can be seen that of all new carsales in New Zealand, 55 - 60 percent are second-hand, ex-overseas vehicles [19]. The predominance of cheap second-hand vehicles in New Zealand results from the premium paidfor new vehicle imports and New Zealand’s relatively lowpurchasing power compared to other countries. In turn, untilcheap second-hand or refurbished electric vehicles are ableto enter New Zealand, it is likely that electric vehicles willhave relatively little appeal for this portion of the market. Anysales for electric vehicles must instead come from the 60000- 70000 purchases of new vehicles each year. It is importantto note that even if 100 percent of new vehicle sales werecomprised of electric vehicles, it would take approximately 40years to replace the entire 2012 fleet. It is also notable that the

current average age of a vehicle in the New Zealand fleet is13 years, indicative of both a high proportion of ex-overseasvehicles and a relatively slow vehicle turnover rate [20]. Thesefactors highlight not only the prevalence of internal combustionvehicles in modern lives, but the challenges faced by electricvehicles in achieving any significant share of the market.

2.0

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Fig. 1. The number of registered light passenger vehicles currently in NewZealand. Data from [17].

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Fig. 2. The number of sales of new light passenger vehicles in New Zealandincluding new imports and ex-overseas/second-hand imports. Data from [19].

B. Electric Vehicle Characteristics

Electric vehicles have a number of key characteristics thatdifferentiate them from both established internal combustionvehicles and other competing alternative fuel vehicles. It isthese characteristics, including price, running costs, relativefunctionality, safety, complexity, and environmental perfor-mance that define the consumer appeal and subsequent rateof market adoption. At a more general level Everett Rogers’theory of Diffusion of Innovations’ defines five key character-istics that influence consumers’ adoption of a new technology[21]. This includes:

1) The advantages of the technology relative to existingalternatives.

2) The complexity of the technology and how difficultit is to use.

3) The compatibility of the technology with existingbehaviours and lifestyles.

4) The ease with which a potential adopter can test andtry out the technology.

5) The visibility and awareness of the technology whenothers have adopted it.

Each of these factors must be evaluated in relation to petrol,diesel and hybrid vehicles for conclusions to be drawn inrelation to consumer’s perception and subsequent adoption ofEVs.

Subsequently, Table I highlights the main characteristics ofelectric vehicles on sale around the world 2. As with traditionalinternal combustion vehicles there are a range of electricvehicles with specific performance and price characteristicstailored to different segments of the market. Smaller EVssuch as the Smart EV-II have the lowest cost but also thelowest capacity, performance and range. They are intended forshort trips and often as a secondary vehicle, with the mainmarket being in urban European centres. The midrange 5-doorhatchback vehicles such as the Nissan Leaf and Mitsubishi i-MiEV are expected to comprise the majority of the electricvehicle market, offering mid-range performance features andcapacity similar to standard vehicles. Finally, the luxury rangeof EVs such as the Fisker Karma and Tesla Model S areintended for consumers who desire range and performancecapabilities equal to or greater than existing vehicles, and whoare willing to pay a considerable premium for it [31].

However, despite these differences all electric vehiclesshare some key characteristics. The key advantages of anyEV are the elimination of local tailpipe emissions, lowerrunning costs from using electricity instead of fossil fuelsand decreased maintenance costs [32]. However, this comes atthe cost of a much higher purchase price, reduced range, andlonger refuelling times due to battery recharging. Alternatively,PHEVs compromise the reduction in emissions and higherbattery efficiency for range, driving performance and lowerprices. All of these factors conflate to form a consumer’sperception of alternative fuel vehicles, and in turn influencetheir decision to buy one.

C. Consumer Perception and Preferences

The likelihood of a consumer purchasing an EV whenlooking to buy a new car depends on their perception ofEVs and their preference for buying one form of car overanother. A number of consumer surveys pertaining to EVs havebeen conducted by research institutes, vehicle manufacturers,consultancy firms and government agencies, in preparation forthe introduction of electric vehicles and as part of EV pilotprojects.

Deloitte conducted a survey in 2010 of almost 2000 currentvehicle owners in the United States. When questioned aboutthe key factor that would deter them from purchasing anEV over a standard internal combustion vehicle, 32 percentindicated the higher price of EVs as the key deterrent, 22percent the limited range of the car and 12 percent did notwant to ’downsize’ to an EV. For vehicles in general 69

2Note that the prices quoted in $USD are only accurate for the Americanmarket, and correspond to the recommended retail price of the respectivevehicle before subsidies. Where prices are not stated the vehicles are currentlyonly available under lease schemes.

percent identified the purchase price as the key cost influ-encing their decision to purchase a vehicle as opposed to 31percent who were more concerned about fuel costs and run-ning/maintenance costs. This suggests that for electric vehiclesto achieve any significant market share the upfront cost mustdecrease significantly. For instance, 73 percent of consumersexpected EVs to be between USD$8000 and USD$35000 [33].

The report also highlighted a key disparity between theactual performance the respondents required of their vehicles,and what they expected. For example, while 85 percent of thosesurveyed stated that they travelled less than 100 miles per day,almost 70 percent expected a driving range of 300 miles beforethey would consider purchasing an EV. This indicates that EVtechnology and in particular battery capacity must increasesignificantly or that improved consumer education about EVsand driving habits is required. Furthermore, increased charginginfrastructure and publicly accessible fast-charge or batteryswap stations may also alleviate range anxiety. This is furtheremphasised by the fact that 54 percent of those surveyed wouldnot contemplate purchasing an EV until charging infrastructurewas widely available [33].

In the first quarter of 2011, PricewaterhouseCoopers carriedout the ’Charging Forward Survey’ in which over 200 partici-pants involved in the EV space in the United States of Americawere surveyed. This encompassed vehicle and componentmanufacturers, government departments, electricity retailers,finance companies and educational institutes. In regards toconsumer preference, 68.8 percent of those surveyed statedthat hybrid and plug-in hybrid electric vehicles would be thepreferred option for consumers interested in alternative fuelvehicles, in the short term. 51.4 percent identified the inferiorrange of EVs and their higher cost as the key factors limitingvehicle uptake. For consumers to adopt EVs in higher numbers,48.2 percent believed that consumers would be willing to paya premium of up to USD$5000 for an EV (similar to thepremium commanded by HEVs). By way of comparison, theaverage EV in the United States currently costs $15000 morethan a similarly sized petrol vehicle. The main motivatingfactors for the purchase of an EV were savings in runningcosts (identified by 41.6 percent as the key incentive) and thepositive environmental effects (32.2 percent) [34].

Another study conducted by Deloitte at the start of 2011found that similar trends persisted among consumers world-wide. Over 13,000 consumers across 17 countries were sur-veyed, including Australia, Canada, the United Kingdom,France, Japan and China. It was concluded that due to thedisparity between consumer’s expectations and actual vehicleprice, range and charging time only 2 to 4 percent of con-sumers would actually have their expectations met and thusconsider being an early-adopter. In general the majority ofconsumers wanted an electric vehicle that could travel over300 km between charges, have a charging time of less than2 hours and a price equal to or less than a comparable petrolvehicle. For example 69 percent of respondents in Australia,66 percent in Canada, 67 percent in Japan and 71 percent inthe U.K. would only be willing to pay the same price or lessfor an EV as for a petrol vehicle. This indicates that despiteconsiderable consumer interest in EVs, vehicle manufacturersand governments face significant challenges in encouragingconsumer uptake in the short term [35].

TABLE I. COMPARISON OF EV AND PHEV CHARACTERISTICS

Model Year Type Body Motor Battery Electric Range Efficiency Price

(kW) (kWh) (km) (kWh/km) ($)

Mitsubishi i-MiEV [22] 2012-2013 EV 5-door hatchback 47 16 100-160 0.168 (NZD) 59,990

Nissan Leaf [23] 2012 EV 5-door hatchback 80 24 115-175 0.189 (NZD) 69,600

Smart Fortwo Electric Drive [24] 2013 EV 2-door coupe 35 17.6 140 0.151 -

Toyota RAV4 EV [25] 2012 EV 4-door SUV 115 35 (ext.) 165 0.27 (USD) 49,800

Tesla Model S (40kWh) [26] 2010-2012 EV 4-door fastback 175 40 260 0.24 (USD) 59,900

BMW ActiveE [27] 2012 EV 2-door coupe 125 32 160 0.14 -

Chevrolet Volt [28] 2013 PHEV 5-door hatchback 111 16.5 60 3 0.22 (USD) 39,000

Toyota Prius Plug-in Hybrid [29] 2013 PHEV 5-door hatchback 60 4.4 20 3 0.27 (USD) 32,000

Fisker Karma [30] 2012 PHEV 4-door sedan 210 20.1 80 3 0.40 (USD) 102,000

D. Cost-Benefit Analysis

While the environmental benefits and specific performancecharacteristics proffered by electric vehicles are importantadvantages, they are not the main determinant for consumerswhen purchasing a vehicle. Instead, as identified by consumersurveys, EVs must compete with ICEs, HEVs and alternativefuel vehicles on the basis of upfront price and overall runningcosts. This means that although there will always be inno-vators and early adopters willing to pay a premium for newtechnology, for electric vehicles to become established in themarket they must meet more mainstream expectations for cost.This can be examined by comparing the cumulative and yearlyrunning costs for a number of different vehicle technologies,including:

• New petrol vehicles• Ex-overseas petrol vehicles• New diesel vehicles• Hybrid vehicles• Electric vehicles

For each of these vehicle categories the purchase price, fuelcosts, operational costs and overall cost profile are analysed.

1) Purchase Price: The purchase price of a vehicle isdefined as the upfront price that a consumer would pay whenpurchasing the vehicle from a retailer in New Zealand in2012. Table II shows the five main categories of vehicleconsidered, as well as the two best selling models in 2011for each category and the average price across vehicles inthat range4. As expected the relatively newer electric andhybrid technologies command a significant premium over themore well-established petrol vehicles. However, it should benoted that some hybrid vehicles such as the Toyota Prius C($30,990 - $34,990 retail) are starting to reach price paritywith newer petrol vehicles like the Toyota Corolla GX Hatch2013 ($34,490 - $35,990) [37].

2) Fuel Costs: The average fuel cost per kilometre,whether for petrol, diesel or electricity, is a key determinantof the yearly running cost of a vehicle. Indeed, uncertaintysurrounding oil prices and the fear of price peaks is a major

3Note that this only refers to the electric range of the vehicles. The fullICE range is similar to that of a standard petrol vehicle.

4Vehicle popularity was determined based on the number of new modelregistrations recorded by the NZTA in 2012 [19]. Vehicle prices were averagedacross similar models based on pricing data from [36], [37].

TABLE II. COMPARISON OF VEHICLE PURCHASES PRICES (2012)

Type Best-selling Models Price ($NZD)

Petrol - New Toyota Corolla GX (2013) $30,000

Suzuki Swift GLX (2013)

Petrol - Old Toyota Corolla (2005) $12,000

Suzuki Swift (2005)

Diesel Ford Mondeo (2012) $35,000

Kia Rio (2012)

Hybrid Toyota Prius (2013) $40,000

Toyota Prius C (2012)

Electric Mitsubishi i-MiEV (2012) $60,000

Nissan Leaf (2012)

motivating factor for the transition to electric vehicle tech-nology. The fuel cost is a function of the fuel unit price,and the efficiency of the vehicle (the average number of unitsconsumed per kilometre). The average fuel cost for each of thevehicle types over a year is subsequently given by (1), whereD is a constant representing the average distance travelled peryear, η is the fuel efficiency of each vehicle type, and puis the unit price of fuel for a given year t ($NZD/litre or$NZD/kWh). Note that the average distance travelled by lightpassenger vehicles in New Zealand is an estimated 12200 km,with this figure being used for all subsequent calculations [4].

cf (t) = D × ηf × pu(t) (1)

The corresponding fuel efficiency and price parameters foreach of the vehicle types outlined in Table II are given inTable III for 2012. Given that the average fleet vehicle in NewZealand has a fuel efficiency of 0.084 L/km, an EV wouldsave approximately $1500 each year. Assuming that the EVwas charged on overnight tariff rates of 10-15 cents/kWh, thiscould rise as high as $1800.

To calculate the cumulative cost of a vehicle over a numberof years it is important to know both the current fuel price andits predicted behaviour in the future. In regards to this Fig. 3and Fig. 4 show the average yearly prices of petroleum fuelsand electricity per unit in New Zealand since 1980 [38].

From these graphs future price trends can be predictedbased on linear forecast models and estimates previouslydeveloped by the Ministry of Economic Development and theAuckland Regional Council [39], [40]. The resulting unit price

TABLE III. COMPARISON OF VEHICLE FUEL EFFICIENCY AND COSTS

Type ηf(avg) pu(2012) cf (2012)

units/km $NZD/unit $NZD

Petrol - New 0.074 2.129 1923

Petrol - Old 0.088 2.129 2286

Diesel 0.056 1.519 1038

Hybrid 0.039 2.129 1013

Electric 0.190 0.277 643

forecasts for petroleum products and electricity are given inFig. 5 and Fig. 6.

3) Operational Costs: The operational costs of a vehicleare defined as all costs, excluding fuel, that are paid on aregular basis for the upkeep of the vehicle. This includes:

• Relicensing• Road user charges (RUC)• Insurance• Warrant-of-fitness (WOF)• Oil• Tyres• Maintenance

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Fig. 3. The average yearly price of petrol and diesel at the pump forconsumers in New Zealand since 1980 . Data from [38].

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Fig. 5. Estimate of maximum and minimum petrol and diesel prices between2012 and 2030 [39], [40].

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Fig. 6. Estimate of maximum and minimum average electricity prices between2012 and 2030 [39], [40].

Each of these costs varies based on the type of vehicle and,in the case of maintenance costs, how much the vehicle hasbeen driven [32]. Subsequently, all operational costs are treatedas constants based on 2012 rates except for maintenance costswhich increase linearly with the age of the vehicle. These costsare summarised for the different vehicle types in Table IV [41],[42].

TABLE IV. COMPARISON OF VEHICLE OPERATIONAL COSTS

Type Relic. RUC Insur. WOF Oil Tyres Maintenance

Petrol 288 0 890 46 70 267 500 - 700

Diesel 418 620 910 46 58 321 600 - 700

Electric 410 0 890 46 0 267 300 - 400

4) Vehicle Cost Profile: Given the purchase price, fuel costand other annual operating costs for a vehicle, its overall costefficiency can be evaluated. To determine the amount of time ittakes to pay off an electric vehicle relative to the other vehiclesthe cumulative cost can be analysed. This is given by the initialpurchase price plus the sum of the yearly costs since purchase,as shown in (2).

cc(t) = Cp + cf (t) + Co +m(t) (2)

Cp is the purchase cost of a given vehicle v, cf (t) is the

annual fuel cost given by (1), Co is the sum of the constantoperational costs and m(t) is the approximate maintenancecost of the vehicle given by:

m(t) = mi +mf −mi

T(t) (3)

mi and mf are the initial and final maintenance costsrespectively over the lifespan of the vehicle, T .

Subsequently the cumulative costs of an average petrol,diesel, hybrid and electric vehicle can be calculated for aperiod of 10 years (the manufacturer-stated lifespan of anelectric vehicle). The calculation is carried out using the highprice estimates for fuel shown in Fig. 5 and Fig. 6 in whichan EV owner might be expected to benefit the most fromlower fuel costs. However, as can be seen from Fig. 7, due tothe substantial purchase price difference between an electricand petrol vehicle, it is unlikely an electric vehicle will beable to pay back its upfront costs during its lifespan. Inthe short term, second-hand petrol vehicles with a purchaseprice of approximately $10,000 will continue to be the mosteconomical option for many consumers. Alternatively hybridelectric vehicles are the most cost effective option in themedium term, having a higher fuel efficiency than a standardnew diesel or petrol car and near equivalent purchase price.

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Electric VehiclePetrol VehicleDiesel VehicleHybrid Vehicle

Fig. 7. The cumulative cost of owning a petrol, diesel, hybrid and electricvehicle over 15 years assuming an initial purchase in 2012.

The cumulative cost for electric vehicles will improve ifan electricity tariff scheme is in place. As is the case in NewZealand, consumers often pay a lower rate for electricity useduring off-peak periods such as the late evening and earlymorning. If it is assumed that the majority of charging iscarried out at home during the evening, then the price coulddrop as low as NZD$0.10 per kWh. However, from Fig. 8 itcan be seen that even if an EV was never charged for electricityuse and petrol rose to a high of $4.00 per litre it would stilltake over 10 years to reach price parity. This indicates thatwithout significant price reductions by manufacturers or priceintervention by the government, electric vehicles will continueto be uneconomical for consumers.

In summary, the key factor currently limiting the uptakeof electric vehicles worldwide is their cost, driven by new

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Fig. 8. The cumulative cost of owning a petrol and electric vehicle assumingEV recharging is carried out off-peak and remains constant at $0.00 or $0.10respectively between 2012 and 2027, and that petrol prices rise to $3.00 or$4.00 over the same 15 years.

battery technology and low production volumes. Due to theconsiderable price gap between electric vehicles and new andex-overseas petrol vehicles, New Zealand’s adoption of electricvehicles is likely to remain marginal in the short- to medium-term until external factors drive the price down. While theyearly running costs of electric vehicles are significantly lowerthan petrol, diesel and hybrid vehicles, it is insufficient tooffset the high purchase price. Instead the initial market forenvironmentally friendly vehicles is likely to be satisfied byhybrid vehicles with high fuel economy ratings and price levelsnear those of traditional petrol and diesel vehicles.

III. POLICY AND REGULATION

A number of options are available to governments lookingto encourage the market adoption of electric vehicles fromconsumer education and parking benefits, to loan and rentalschemes and direct price subsidies. In countries such asthe United States of America and Japan with large vehiclemanufacturing plants, government incentives and policies aretwo-fold: firstly encouraging increased supply and decreasedproduction costs of EVs by providing research grants andflexible business loans, and secondly encouraging consumerdemand through price, tax, and usage incentives.

As outlined by Kley et al. in [43], each of the governmentmeasures available for supporting the market adoption of alter-native fuel vehicles can be divided into four broad categories:

1) Economic2) Suasive3) Regulatory4) Organisational

In turn each of these measures can be evaluated in termsof the effectiveness with which the target market goals areachieved, the cost efficiency of implementing the measuresrelative to the goals, the feasibility and practicability of imple-menting the new measures, and the acceptance of the measureand its associated costs at a political level.

A. Economic Measures

Economic measures involve direct intervention by the gov-ernment in the market on the supply-side and/or on the demandside. For the supply-side, governments aim to increase thetotal number of electric vehicles being manufactured, as wellas improving technology and reducing manufacturing costsper vehicle. This encompasses loan incentives and grants tocarry out new research and invest in new technology, as wellas minimum quotas for electric vehicles or maximum quotasfor inefficient vehicles. Such measures are only available togovernments that have a local vehicle manufacturing industry,although they can also be applied to vehicle importers.

Alternatively, on the demand-side economic measures fo-cus on reducing the price difference between electric vehiclesand normal internal combustion vehicles. This includes sub-sidies provided for the purchase of new electric vehicles, areduction in the sales tax charged for the vehicle, a reductionin annual taxes or charges levied on the vehicle, and scrappageschemes that fund vehicle exchange programs. Alternatively,rather than incentivising electric vehicles, other schemes pro-vide disincentives for buying on using inefficient internalcombustion vehicles. This comprises increased taxation onpetrol and diesel, congestion charges, and bonus/malus or’feebate’ schemes that increase taxes on vehicles that emitmore carbon dioxide and then reduce taxes on vehicles thatemit less carbon dioxide [43].

1) Sales Tax Reduction and Subsidies: As discussed inthe section on the electric vehicle market, the major barrierto widespread electric vehicle adoption is their significantlyhigher price. By reducing registration taxes, value added taxes(VAT) and other vehicle taxes at the point of purchase theprice of an electric vehicle can be significantly lowered. Thisis generally most beneficial in countries with high vehicletax rates such as Norway, where exemption from the taxleads to much closer prices between electric vehicles andstandard internal combustion vehicles [44]. Studies have in-dicated that consumers prefer direct tax-based reductions inthe sales price of a vehicle as opposed to a deferred incometax reimbursement. Indeed, in earlier studies on hybrid electricvehicles, direct sales price reductions had almost twice theeffect of deferred tax benefits in encouraging vehicle uptake[45]. Currently over half of the countries in the EuropeanUnion have some form of sales tax incentive for the purchaseof EVs [43].

In the case of subsidies, the consumer is paid a specificamount, conditioned on their purchase of a certain car. Whilethere is generally higher support by consumers for directsubsidies as opposed to tax reductions, governments generallyfavour tax reductions due to the lower administrative overheadsand costs [46]. Currently EV subsidies are generally onlybeing implemented in countries with strong EV policies andlarge vehicle manufacturing sectors such as France, the UnitedKingdom and the U.S.A [47].

2) Bonus/malus Systems: In countries such as Austria andFrance a bonus/malus or tax-deduction/tax-penalty schemeis used to incentivise the purchase of more fuel efficientvehicles. A higher level of tax is paid on all vehicles above acertain emission threshold, which in turn is used to fund taxcuts for vehicles that meet the required emissions standards.

For example, in France a tax-deduction of USD $6500 isgranted for all new light passenger vehicles with emissionsbelow 60 gCO2e/km [48]. This has the advantage of not onlyencouraging a greater uptake of electric vehicles, but alsoensuring that there is a gradual market trend towards morefuel efficient vehicles. Historically bonus-malus schemes havea good record of decreasing average fleet emission levels,although the additional administrative overhead, monitoringand regulatory requirements can make governments reluctantto adopt such schemes [49].

Although bonus/malus schemes will offset some of thecosts of lowered tax revenue from fuel efficient vehicles byraising it in other areas, there is usually a net loss resultingfrom a higher share of tax deductions. To mitigate the lossesfrom tax- and price-based incentive schemes, most govern-ments have typically placed an upper cap on the number ofeligible vehicles. The aim then becomes to reach a criticalmass of electric vehicles in the population such that the generalpopulation is more aware of, and thus more inclined to buy,electric vehicles once the incentives expire [49], [50], [51].

Concern has also been raised over the socioeconomic parityof any such bonus/malus schemes. The schemes can ofteninadvertently punish low income households who can onlyafford less efficient second-hand cars, and conversely benefitwealthier individuals most capable of purchasing hybrid andelectric vehicles. To prevent this from occurring support mustbe supplied to lower income households to alleviate the costsof the increased tax burdens, or make vehicles with higher fuelefficiency more affordable for them [43].

3) Scrappage Schemes: Scrappage schemes provide a di-rect subsidy towards the price of a new electric vehicle con-ditioned on the consumer trading in their older, less efficientvehicles for scrap. Scrapping old vehicles has the benefit ofpartially funding the subsidies for the new electric vehicles, aswell as ensuring that there are fewer inefficient vehicles on theroad. This in turn increases the renewal rate of the fleet. Atan economic level it will also stimulate the purchase of newvehicles and thus potentially boost the vehicle manufacturingand sales industries. However, scrapping a large number ofvehicles may also have undesirable secondary environmentaleffects if recycled or placed in landfills [52], [43], [53].

While scrappage schemes have previously been imple-mented in a number of countries such as the United Kingdom,the United States, Canada, Austria and France, these schemeswere not specifically intended for electric vehicles. Suchschemes have relatively high running costs that usually meanthey are only run for a limited period of time or up to abudgeted cap, thereby limiting their long term effectiveness[54]. In addition, the cost effectiveness of the schemes isquestionable given the relatively high price that must be offeredper vehicle, and the fact that many vehicles scrapped are notfrequently driven or would have been retired regardless of theprogram [55].

4) Annual Tax and Cost Reductions: Instead of directlytargeting the initial, upfront price of an electric vehicle, gov-ernments may try to make them more attractive by reducingthe cost of yearly taxes and fees. Studies have indicated thatsales of HEVs increased relative to more polluting cars whenannual taxes were waived. In fact, the decision for purchasing

an HEV was shown to depend more on lowered operating costsas opposed to direct price reductions. However, this situationgenerally only holds true for vehicles that are in a similar pricerange [43]. As such, in the case of electric vehicles, consumersstill generally consider the upfront price as the key determiningfactor in purchase. This means that while a reduction inannual costs will accelerate EV adoption in the long-term asthey reach near-price parity with internal combustion vehicles,during the early stages of market adoption it is likely to havelittle effect [56].

5) Fuel Taxation: Increasing fuel prices are a key motivat-ing factor in the purchase of vehicles with higher fuel economyratings. Historically, increasing fuel prices have correspondedwith higher efficient vehicle sales [43]. For example, in NewZealand the peaking of petrol prices around 2008 led tosignificantly higher sales of hybrid vehicles and new, morefuel efficient vehicles [57]. However, moves by governmentsto increase fuel economy by raising petrol prices are gener-ally politically and socially unpopular. Such measures oftendisproportionately affect lower income houses with less fuelefficient vehicles who cannot afford to upgrade their vehiclesor pay increased tax rates. In addition, fuel taxation often hasrun on costs for other industries and sectors, disadvantagingbusinesses which then pass the costs onto consumers [58], [59],[60].

B. Suasive Measures

Suasive measures pertain to the use of informationalsources to encourage consumers to purchase electric vehicles,as well as the formation of standards and guidelines to informmanufacturers. So as to help consumers choose more efficientvehicles the majority of countries in the OECD, including NewZealand, have introduced special labelling and/or advertisingand informational campaigns to inform consumers about theimportance of fuel efficiency and the potential cost savings.These measures are often used in conjunction with other eco-nomic and organisational measures to ensure that consumersare aware of any additional benefits of purchasing an electricvehicle [43].

C. Regulatory Measures

Regulatory measures cover mandatory emission targets forall new vehicles manufactured by OEMs as well as legislationdefining vehicle standards and required production methods[43]. For example, in the U.S.A the Corporate Average FuelEconomy (CAFE) regulations specify the average level of fueleconomy that all vehicles produced by manufacturers mustmeet. This means that if an OEM produces large numberof inefficient vehicles, then by law they are also required toproduce sufficient numbers of more efficient vehicles so asto meet the average fuel economy level. Failure to meet thisstandard results in fines levied across all vehicles produced.This is currently set at USD$55 per vehicle for each mile pergallon below the required level [61].

A key disadvantage of regulatory measures is that it canlead to OEMs compromising other features of the vehicles tomeet emission targets. For example, a simple and cost effectivemethod to increase fuel economy and decrease net emissionsis to reduce the overall weight of the vehicle by using lighter

materials. However, this can in turn have implications for thesafety standard of the vehicle. There is also the problem that iffines levied against non-compliant companies are too low thenit may be cheaper for the OEM to pay the fine as opposed toimplementing new technologies or manufacturing processes.This in turn leads to a decrease in the overall effectiveness ofthe measures [62], [61].

Consumer surveys have also indicated that while emissionregulations lead to improved fuel efficiency across the fleet,this does not necessarily correlate to increased sales of EVs.Indeed it was found that in countries like the United Statesand China, reaching an average fuel efficiency of 50 mpg(4.7 litres/100 km) for new vehicles would lead to 57 percentand 68 percent of consumers respectively being less likely toconsider an EV. This suggests that there might be reluctanceamong vehicle manufacturers to invest large amounts in EVtechnology alongside improved fuel efficiency technology [35].In addition, as recommended by the International EnergyAgency, governments may benefit more in the short term byencouraging increased fuel economy as opposed to specificnew technologies such as electric vehicles [63].

D. Organisational Measures

Organisational measures consist of policies involving localgoverning and supervisory bodies. This includes the devel-opment of local-charging infrastructure and the introductionof usage incentives for electric vehicles. These efforts toencourage consumer interest in electric vehicles include arange of secondary benefits that make the vehicle cheaper andeasier to run. For example, some countries such as Canada havea green license plate or sticker that provides access to high-occupancy vehicle (HOV) lanes and dedicated free electricvehicle parking. In practice while these incentives are easyand relatively inexpensive to implement, research suggeststhat they have little real impact on the initial motivation topurchase an electric vehicle. However, once an individual haspurchased an EV the measures can lead to more frequentusage of the vehicle, which can stimulate public interest in,and awareness of, electric vehicles . It should also be notedthat many organisational measures such as waiving congestioncharges and providing HOV lane access are not viable in thelong-run as the number of EVs increases [43].

E. Electric Vehicle Incentives Globally

Around the world countries have introduced, or are plan-ning to introduce, some of the electric vehicle incentivesoutlined above. Table V gives an overview of these measuresfor the 34 countries in the OECD as well as 6 other majorvehicle markets. It can consequently be seen that there arelarge differences between the amount different countries arespending on electric vehicle incentives, and the form thatthese incentives take. In general, however, countries withlarge vehicle manufacturing industries have proportionatelyhigher spending on electric vehicle measures and are morelikely to provide direct price cuts in the form of subsidiesor decreased sales tax. Electric vehicle incentives are alsomore prevalent in countries with high emissions standardsand strong sustainability roadmaps. This is evident acrossmany European countries which are required to meet the tight

TABLE V. COMPARISON OF NATIONAL EV MEASURES

Country Policies, Legislation and IncentivesArgentina No EV specific incentive measuresAustralia Reduced luxury car tax for EVs (higher tax threshold)

Exemption from vehicle stamp duty (Australian CapitalTerritory)AU$100 reduction in annual registration fee (Victoria) [64],[65]

Austria Exemption from Normverbrauchsabgabe (NoVA) taxExemption from motor-based insurance tax10-20 percent reduction in EV insurance cost by insurersBonus/malus tax on new vehicle emissions [48], [66], [67]

Belgium 120 percent tax deductibility of zero-emission vehicles forbusinessesIncome tax reduction for EV purchase equal to 30% ofpurchase price (up to e 9,510) [48], [66]

Brazil No EV specific incentive measuresCanada Quebec

Point-of-sale rebate up to USD$8000 for new PHEV/EV50 percent subsidy of 240V residential charging station upto USD$1000Green license plate for access to EV only parkingChanges to building code to require wiring for 240V charg-ing stationOntarioPurchase subsidy ranging from USD$5000 to $8500 depend-ing on EV battery sizeGreen license plate for use of High Occupancy Vehicle(HOV) lanes and future dedicated charging/parking facilitiesSaskatchewan20 percent rebate on insurance premiums and registrationfeesBritish ColumbiaUSD$5000 off sticker price of BEV/FCEV/PHEV/CNGRebate up to USD$500 for residential charging stationRequirement for all new single-family homes to have dedi-cated plug outlets for EVsRequirement for 20 percent of all parking spots in new multi-unit buildings to have charging infrastructure for EVs [47],[68]

Chile No EV specific incentive measuresChina EV subsidies for 5 selected cities for private EVs up to

USD$7900 and for private PHEVs up to USD$9500 [47]CzechRepublic

EVs and hybrids used for business exempt from road tax[48], [69]

Denmark USD$39 million for EV demonstration projects from 20102013EV/FCEV below 2000 kg exempt from registration tax andannual taxAnnual tax based on energy consumption and CO2 emis-sions [70], [48]

Estonia No EV specific incentive measuresFinland Emission-based purchasing tax

Subsidy on EVs up to 30 percent of vehicle valueFree charging at public stations [66]

France Bonus-malus system for newly purchased vehicles based ontailpipe emissionsBonus of e 5,000 for light vehicles with emissions below60 gCO2/kmLower insurance rates for EVs offered by some insurers50 percent subsidies for local governments to install localcharging infrastructureSetting aside a quota of parking areas for EVs and chargingspotsBuilders required to install charging points at multi-unitresidences if requested by inhabitantsLocal governments required to install charging points atpublic carparks [47], [71], [72], [73]

Germany EV owners exempt from motor vehicle tax (5 year span)Focus on funding research with no additional incentives [74]

Greece Exemption for EVs from registration tax, special consump-tion tax and circulation taxes [74]

Hungary No EV specific incentive measuresIceland No EV specific incentive measures

Country Policies, Legislation and IncentivesIndia 20 percent subsidy on the ex-factory price of an EV, up to

Rs100,000Exemption from road tax and/or VAT in specific regions [69]

Ireland Grant support for purchasing an EV (up to e 5,000) or aPHEV (up to e 2,500)Complete exemption for EVs from Vehicle Registration Tax,and partial exemption for PHEVs (up to e 2,500)Accelerated Capital Allowances for company EV purchase[74], [69]

Israel Reduction in tax on EVs equivalent to USD$1600-2600Italy EVs exempt from ownership tax or circulation tax (5 year

span from registration) [69]Japan Suspension of acquisition and tonnage taxes until 2015

(USD$1347)Purchase subsidies for a mini-vehicle (USD$602) and forstandard vehicles (USD$1205) when replacing an oldervehiclePurchase subsidies for a mini-vehicle (USD$1506) and forstandard vehicles (USD$3012) when not replacing an oldervehicle [47]

Luxembourg Subsidy of USD$4200 for EVs emitting below 60 gCO2/km[66]

Mexico No EV specific incentive measuresNetherlands EVs/FCEVs exempt from registration tax and yearly road

taxLeased EVs/PHEVs exempt from standard 25 percent tariffRebate of up to e 5,000 available for businesses purchasingEVs [66]

NewZealand

Road User Charges (RUC) waived on electric vehicles until2013

Norway Exemption from sales taxExemption from annual road taxExemption from parking fees and toll paymentsAccess to bus lanes and priority parking [47], [69]

Poland Informational EV campaign in KracowFree HEV/EV parking in specific zonesAccess for EVs to bus lanes and limited traffic zonesNo tax incentives or subsidies planned [48]

Portugal EVs exempt from vehicle acquisition and circulation taxesTax deduction for corporate fleets with EVsInstallation of EV chargers in parking areas of new buildingsis mandatoryEVs given access to priority lanes and specific circulationareasPreferential city parkingState and municipal fleets renewed annually with 20 percentEVs [47], [66]

Russia No EV specific incentive measuresSlovakia No EV specific incentive measuresSlovenia No EV specific incentive measuresSouthAfrica

No EV specific incentive measures

SouthKorea

Exemption from vehicle taxes up to USD$36005 percent reduction in special consumption tax7 percent reduction in acquisition taxDiscount up to 20 percent on EV bond purchases50 percent subsidy on EV price for government organisa-tions up to USD$20000Public organisations required to purchase 50 percent EVvehicles when renewing fleet [47]

Spain 15-20 percent subsidy on the market price of a vehicle (upto USD$6600 - USD$9300) [69]

Sweden 85 percent of all cars purchased/leased by public authoritiesmust be eco-vehiclesEco-vehicles exempt from annual vehicle tax averagingUSD$200 (5 years)Rebate of approximately USD$5700 for vehicles with emis-sions below 50 g CO2/kmEVs/PHEVs exempt from congestion charges [47]

Switzerland Reduction or exemption from vehicle taxes based on emis-sion levels [47]

Turkey Vehicle sales tax reduction for EVs (excludingHEVs/PHEVs) [47]

Country Policies, Legislation and IncentivesUnitedKingdom

Plug-in car grant providing 25 percent off electric car priceup to USD$7800Plug-in van grant providing 20 percent off electric van priceup to USD$12500Exemption from Vehicle Excise Duty (assuming tailpipeemission below 100 g CO2/km)Exemption from Company Car Tax for employees andemployersExemption from Van Benefit Charger for employees andemployersExemption from Fuel Benefit ChargeCongestion charge waived for EVsLocal exemption/charge reduction for parking [47]

UnitedStates

Tax credits for EV purchase up to USD$2500 - USD$7500based on battery capacityTax credits for EV conversion kits up to USD$4000Access to high occupancy vehicle lanes, priority parking andregistration for specific statesEmission-based benefits for specific statesTax rebates and grants for specific statesPurchase incentives for specific states [47]

emission reduction targets specified by the European Union[47].

Ultimately, Table V highlights the fact that the policies,regulations and incentive measures that a country adopts arehighly specific to that country’s circumstances. So while somecountries can afford to invest heavily in charging infrastructureand price subsidies, others must rely on industry partnershipsand small scale adoption plans.

F. Electric Vehicle Incentives in New Zealand

The key factor currently limiting increased uptake of elec-tric vehicles in New Zealand is the price. The high pricedifference between electric vehicles and internal combustionvehicles is expected to persist in the short- to medium-term.This would suggest that over that period the most effectiveoption to stimulate vehicle uptake would be tax reductionson sales prices, subsidies and potentially scrappage schemes.However, due to the price premium New Zealand pays forelectric vehicles, this subsidy would have to be relatively high.It is unlikely that such an expense would be justifiable in theNew Zealand context. In addition, as New Zealand has no localvehicle manufacturers any subsidy would effectively be a netloss in revenue overseas. This would have a negative effect onthe economy and only a marginal improvement in overall fleetemissions given the size of the potential market [75].

As such, in the short-term New Zealand should continueto focus on regulatory and suasive measures that increaseconsumer awareness of the importance of fuel economy whiletightening fuel economy standards on imported vehicles. In themedium-term organisational measures should be introduced,with the installation of charging stations and requirements fornew homes and car parks to include provisions for these. Thisshould also include provision for the introduction of smart gridtechnologies to monitor and regulate charging. Once electricvehicles near price parity with internal combustion vehicles inthe long term, scrappage schemes and decreased annual taxesand fees could be introduced to increase fleet turnover rate andspeed the transition to a green transportation system.

IV. ENVIRONMENT

A. Greenhouse Gas Emissions

Concerns about the environmental impact of increasing fos-sil fuel consumption, and in turn the long-term sustainability ofthe transport sector, are the key factors motivating governmentsto shift from internal combustion vehicles to electric vehicles[76]. In 2011 the average new vehicle entering the NewZealand fleet emitted 186 gCO2e/km, while the average usedpetrol vehicle emitted 193 gCO2e/km [4]. Given an annualaverage travel distance of 12200 km [20], a standard lightpassenger vehicle owned by a New Zealand household willemit between 2 and 3 tonnes of carbon dioxide equivalent gasannually.

While an electric vehicle will have zero ’tailpipe’ or tank-to-wheel emissions, greenhouse gases will still be produced asa result of electricity generation used to charge the vehicle’sbattery. Given the current grid mix in New Zealand withapproximately 70 percent renewable energy, this correspondsto around 30 gCO2e/km [3]. As shown in Fig. 9, this cor-responds to an EV emitting up to 170 grams less of carbondioxide equivalent gas per kilometre travelled, compared to anaverage fleet vehicle. This potentially amounts to a reduction ingreenhouse gas emissions of 2 tonnes per vehicle per year, or80 percent per vehicle given the 2012 grid mix. As the averageNew Zealand household produces approximately 8 tonnes ofgreenhouse gases per year from electricity and transport alone,this constitutes a major saving. Furthermore, as this assumesthat the EV is charging from the standard grid mix, it is likelyto achieve even higher emission reductions as the proportionof renewable energy supplying the grid increases.

Domestic transport is responsible for 20 percent of theoverall greenhouse gas emissions in New Zealand. As shownin Fig. 10 this is slightly behind agricultural methane emissions- the largest greenhouse gas contributor. Within the transportsector 91 percent of emissions are attributable to road transport,followed by domestic aviation at 6 percent and shipping andrail at 2 percent and 1 percent respectively [7]. In turn, asdepicted in Fig. 11, 65.5 percent of these road transportemissions are due to light passenger passenger vehicles. Thisimplies that if 100 percent of the New Zealand light passengerfleet transitioned to electric vehicles, New Zealand’s totalgreenhouse gas emissions could be reduced by 10 percent.

Agricultural

Methane

32%

Agricultural

Nitrous Oxides

16%

Transport

20%

Stationary

Energy

15%

Electricity

Generation

9%

Industrial

Processes

6%

Waste

2%

Fig. 10. A breakdown of greenhouse gas emissions by source in New Zealand

0

50

100

150

200

250

Country

Veh

icle

Em

issi

on

s (g

CO

2e/k

m)

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Belg

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Bra

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ina

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Germ

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y

Gre

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Icela

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Ind

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Irela

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Jap

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No

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Po

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Afr

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So

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Ko

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Sp

ain

Sw

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en

Sw

itze

rlan

d

Tu

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UK

USA

Average Fleet Vehicle

Electric Vehicle

Hybrid Vehicle

Fig. 9. The estimated amount of carbon dioxide equivalent that would be emitted by an average fleet vehicle, electric vehicle and hybrid vehicle per kilometrein each country.

Light

Passenger

65.5%

Light

Commercial

13.6%

Heavy

20.4%

Motorcycle

0.5%

Fig. 11. A breakdown of greenhouse gas emissions from road transport byvehicle type in New Zealand

0%

2%

4%

6%

8%

10%

0% 20% 40% 60% 80% 100%

Red

ucti

on

in

New

Zeala

nd

's T

ota

l

CO

2 E

mis

sio

ns

(%)

EV Market Penetration (%)

Fig. 12. The estimated percentage decrease in New Zealand’s total greenhousegas emissions resulting from specific levels of electric vehicle uptake

Consequently, on the basis of emission reduction alonethere is a real impetus for change within the New Zealandtransport sector. With one of the highest rates of carbon dioxideemissions per vehicle in the world and a rapidly aging fleetwith an average age of 13 years, there is a need for newtransport policies and environmental regulations to maintainNew Zealand’s ’clean and green’ image. In particular, due tothe high proportion of renewable energy within the nationalgrid, electric vehicles present a significant opportunity foremission reduction.

Globally, however, the case for electric vehicles comparedto pre-existing technology is less well-defined. For significantemission reductions to be achieved EVs should be chargedfrom predominantly renewable sources. This means that forcountries with a high proportion of coal and oil based thermalgeneration in their electricity grid, the emission reductionsachieved by transitioning to electric vehicles are likely to beminimal. Indeed, as can be seen in Fig. 9, for some countriessuch as Australia, Greece, Poland, China, India and the UnitedStates of America, greater emissions reductions would actuallybe achieved by fuel efficient hybrid vehicles than electricvehicles. This highlights the importance of concerted ’green-developments’ in both the road transport and power supplysectors. It should also be noted that while countries suchas France, Sweden and Switzerland can achieve significantgreenhouse gas emission reductions via EVs, their reliance onnuclear power for energy generation also introduces separateproblems for future sustainability. To truly reap the benefitsof an electrified road transport fleet, countries must continuedeveloping and introducing smarter and greener power supplysystems.

B. Local Emissions

For New Zealanders the main immediate benefit of atransition to electric vehicles is likely to be a reduction of airpollution in main urban centres, and consequently improvedhealth. As shown in Fig. 13 and Fig. 14, approximately 1-2% of a vehicle’s tailpipe emissions are made up of car-bon monoxide (CO), nitrogen oxides (NOx), sulphur dioxide(SO2), hydrocarbons (HC) and particulate matter (PM10) [77].However, it is these substances that contribute to the mainurban pollution and health effect of vehicles. For example,approximately 83% of carbon monoxide and nitrogen oxidesin New Zealand’s urban centres are attributable to vehicles [9].

Nitrogen

71%

Carbon

Dioxide

14%

Water

13% CO 1.6%

NOx 0.2%

CxHy 0.2%

Other

2%

Fig. 13. The average composition of exhaust gases from a petrol vehicle[77].

Nitrogen

67%

Carbon

Dioxide

13% Water

11%

Oxygen

9%

NOx 0.15%

CO 0.05%

PM10 0.05%

SO2 0.025%

CxHy 0.025%

Other

0.3%

Fig. 14. The average composition of exhaust gases from a diesel vehicle[77].

Each of these trace gases is capable of causing or exacer-bating existing medical conditions. Elevated levels of nitrogenoxides can potentially lead to inflammation of the lungs andrespiratory problems [78]. Carbon monoxide is absorbed fromthe lungs to form carboxyhaemoglobin in the blood, therebyreducing its oxygen carrying capacity and in turn impacting thebrain and the heart [8]. Heightened levels of sulphur dioxideand particulate matter can also lead to increased respiratoryproblems and cardiovascular disease [79]. Hydrocarbons con-tribute towards smog and the formation of ozone in the localenvironment and, in the case of chemicals such as benzene,may be carcinogenic [80].

The 2006 report Health and Air Pollution in New Zealandconducted for the Health Research Council of New Zealandestimated that approximately 1175 New Zealanders die eachyear from anthropogenic air pollution. A further 607 are

admitted to hospital due to respiratory and cardiac issuesstemming from the same pollution. Approximately 22% of theadverse effects are attributable to vehicles, while the majority,at 56%, are due to domestic fires. However, this trend wasfound to be reversed in dense urban areas such as Aucklandwhere the air pollution health impact of vehicles is twice thatof domestic fires. In addition, as the report only focused onPM10 pollution, it is likely that the additional health effectsdue to nitrogen oxides, sulphur dioxide and carbon monoxidewould be even greater [81].

While harmful emissions are disproportionately causedby large diesel vehicles, in particular PM10, any reductionin overall ICE vehicle volumes is likely to have a positiveimpact [82], [79]. In addition, even for countries with highlevels of coal, gas or oil power generation, any additionalemissions produced from the electricity grid are likely to occurin more remote locations that are further from urban centres[83]. Hence, while hybrid vehicles may lower the levels ofgreenhouse gas emissions more than EVs in some countries,EVs remain the best option globally for reducing local urbanpollution.

V. CONCLUSION

In conclusion, in the short to medium term it is unlikelyNew Zealand will be a key driver for electric vehicle develop-ment and uptake. The significant price premium commandedby electric vehicles, especially relative to second-hand ex-overseas vehicles, is the main factor limiting their marketuptake both locally and worldwide. Until lithium-ion batterytechnology decreases in price or alternative battery technolo-gies are developed, over the next ten years the upfront vehicleprice will deter a large proportion of the market. Furthermore,without a levelling off or decrease in electricity prices, coupledwith an increase in petroleum prices, the annual running-costdifferential and environmental benefits may not be sufficientto motivate new buyers.

However, in the long term New Zealand is well situatedto benefit from widespread electric vehicle adoption. Its largeshare of renewable generation and relatively robust electricityinfrastructure means that considerable carbon dioxide reduc-tions could be achieved. In the short term government policyshould focus on improving New Zealand’s current emissionsstandards and vehicle regulations, as well as educating con-sumers about vehicle emissions. In the medium term improve-ments should be made to local and national infrastructure toaccommodate for the later introduction of electric vehicles.This includes housing policies for the installation of suitablecharging points into new homes and smart grid developmentsto control and manage the additional charging demands.

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