Tariff challenges for electric vehicles in New Zealand

The New Zealand government has acknowledged potential problems with road user charges (RUCs) for electric vehicles (EVs). The documents, released under the Official Information Act, cite concerns about rate non-compliance and debt accumulation for customers entering the system. The current road user charging system is ill-prepared to meet these challenges, prompting discussions about strategic changes to charging as part of wider regulatory reform of the transport sector.

Road user charges have been waived to encourage the adoption of electric vehicles, but this exemption has led to a reduction in revenue collected from fuel sales for road maintenance. However, from April 2024, EV owners are expected to pay $76 per 1,000 km of driving, adding to the $2 billion generated by other drivers, particularly trucker and diesel vehicle owners.

Government officials are exploring options to modernize the regulatory system, including examining changes to low-emission road user fees, such as electronic fees for electric vehicles. However, specific details of the published documents remain limited, as much of the information has been redacted. However, it is clear that there are concerns about non-compliance with rates and customer debt accumulation.

The Ministry of Transport has been actively participating in presentations on road user charges, but has chosen not to release any information as ministers are still reviewing the recommendations. Although the New Zealand Herald reported that a government spokesman said no current changes to RUC rules were being considered, general sentiment suggested change was imminent due to mounting pressure and challenges from emissions reductions.

New Zealand transport agency Waka Kotahi has sought high-level guidance from its board of directors to establish a desired future regulatory structure and framework, prioritizing regulatory reform and modernisation. The agency acknowledges that recent efforts to reduce emissions have significantly expanded the regulatory mandate in the land transportation sector. As a result, tariffs specifically for industry are being reviewed and adjusted to address a funding gap of about $20 million a year.

The National Party has indicated that the exemption for light electric vehicles will not extend beyond March 31 next year. The original intention was for the exemption to be maintained until electric vehicles make up around 2% of the national fleet, a milestone expected to be reached by April.