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New Zealand's longest-running online daily news and commentary publication, now in its 25th year. The opinion pieces presented here are not purported to be fact but reasonable effort is made to ensure accuracy.

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EV road tax... excuse me?

27 Mar 2024

Come Monday, all EV and PHEV drivers in New Zealand will have to start paying road tax on a "per 1,000Km driven" basis.

Nobody can be surprised by this, it was announced way back when EVs were just becoming "a thing" that once a threshold was reached, the drivers of those vehicles would have to pay for the privilege of using the roads. ICE drivers make this payment through the tax applied to petrol but EV drivers have been successfully and legally dodging that cost -- until now.

However, the implementation of these road user charges (RUC) are not without some quirks.

Firstly, those who drive plug-in hybrid electric vehicles (PHEVs) will still have to pay RUCs, even if they never charge from the wall-socket and are therefore always deriving their energy from petrol (on which they've already paid the tax).

To reflect the fact that most PHEV users will only be able to get 50Km+ worth of driving from the untaxed wall-socket before their vehicles switch to petrol, the RUC for these vehicles will be just half that paid by a pure EV.

However, if you're going on a trip of any distance (say 300Km) in your PHEV, you'll be crushed because the cost-effectiveness of that 50Km or so you get from the battery will be totally negated by the fact that for the remaining 250Km you will be double-taxed, paying RUCs and paying again through the fee that is already applied to the fuel you burn.

In light of this, anyone who does a lot of long-distance trips would be well advised to steer clear of PHEVs if you want to keep your costs to a minimum. Perhaps we'll see prices tumble on the second-hand market, as companies operating fleets of commercial travellers trade in their PHEVs for pure ICEs.

If you do have a Tesla, Hyundai, BYD or any of the growing number of pure EVs then you'll be paying $76 per 1,000 Km driven. I haven't crunched the numbers but I guess someone has and they figure this is a fair apportionment of the costs of maintaining and operating our roading network. It should be remembered that most EVs are a few hundred Kg heavier than their ICE counterparts and therefore do create a little more "wear and tear" but I doubt the beancounters have factored this in.

The real surprise is the fact that EVs up to 3 tonnes, such as your Model Y, Ioniq, etc are paying $76 per 1,000 Km under the new regime but EVs weighing more than 3 tonnes don't.

So, if you have the Cyberbeast version of Tesla's Cybertruck, you're exempt, at least for the time being.

The real slap in the face however, is the ridiculous "admin fee" that is applied every time you buy a block of 1,000 Km worth of RUC. This is a hefty $12.44 if you buy online and $13.71 if you do an over-the-counter transaction.

WTF?

In the day of computerised everything, how can it possibly cost that much to process a payment and update a database? Someone's having a laugh, surely?

Even worse, you can't reduce this overhead by simply purchasing an entire year's worth of RUC at once. You are in fact limited to holding a maximum of 6,000 Km worth of pre-paid RUC at any given time. For someone that does a lot of travelling (that sales rep) this constitutes extra cost and extra inconvenience.

Don't think you'll be able to dodge the RUCs by simply flying under the radar either. Every time you get a WOF you'll be invoiced for any unpaid Kms you've travelled and interest will be added to that bill on a monthly basis until paid.

Until battery tech improves and we have a more ubiquitous charger network in place, PHEVs would appear to be the best compromise for many people -- offering pure EV operation for around town but still allowing for towing, longer trips and the elimination of "range anxiety". The biggest benefit of a PHEV over an ICE is, of course, the reduced cost to our ecosphere but that appears to be something the current government doesn't care about at all.

Surely there has to be a better way to deal with RUCs on PHEVs than to double-tax them whenever they're used for longer journeys?

Ah well, it's likely only a matter of a decade or so before we're all driving EVs and anything with an ICE is considered a curiosity rather than a practical form of transport. Just as EV fast chargers are a bit of a rarity right now, petrol-bowsers may attract the same status within a few short years whilst EV fast-chargers become omnipresent.

Carpe Diem folks!

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