Clean Car Upgrade Trial 2023
Decisions about the locations of the trial are yet to be announced. However, we expect that the trial will commence in 2023.
An evaluation of the trial will be completed in 2024. The evaluation will inform Cabinet’s decisions on the future of the Clean Car Upgrade, including whether it will be expanded and if so, any improvements that would be made.
The trial
The reason we are running a trial is to see how effective the Clean Car Upgrade is at assisting low- and moderate-income New Zealanders into low emissions transport.
The scheme is based on the successful Clean Cars 4-All programmes that operate in California, USA. These programmes are effective at helping to create a just transition in the shift to clean transport.
There are a lot of differences between California and New Zealand, so we need to learn how we can make the scheme more effective in the New Zealand context.
We want low- and moderate-income New Zealanders to be able to take advantage of the opportunity the scheme offers. If the trial scheme is successful, the Government hopes to make it more widely available so it can benefit more New Zealanders.
The trial will also help us to identify how we may be able to strengthen the programme if it is rolled out at the national level.
Eligibility
Officials are working through the eligibility criteria for the Clean Car Upgrade as quickly as possible. The initiative’s design, including amount, location and participant eligibility is yet to be confirmed. These criteria will be decided by Cabinet in the coming months.
Participants: vehicle owners will need to meet income thresholds. It is likely that these thresholds will be set to include people on low- and moderate-incomes.
Vehicles for removal: to maximise emission reductions and improvements in vehicle safety, there will be criteria for accepting vehicles for scrapping. It is likely eligible vehicles will be high-emission and still being used on the road.
Replacement options: decisions on how the grant can be used are yet to be announced. It is likely that the grants will be set up so that the replacement vehicles with the lowest emissions receive the highest grants.
Targeting of the Clean Car Upgrade
The Upgrade will target low- and middle-income New Zealanders. Over the next decade, low emissions vehicles, such as EVs, will become cheaper to run and high emissions vehicles will become more expensive to run. The Clean Car Upgrade aims to make sure the long-term savings people can make by switching to low emissions vehicles are passed on to those who need it most.
Low-income households are already spending on average 28 percent of their income on transport. This compares to 8 percent for high income households.
By targeting those with the least ability to adopt EVs, this scheme can speed up emissions reduction and increase vehicle safety. The financial support achieved by the targeting of the scheme can help get more New Zealanders into safer and cleaner vehicles.
Purchasing a vehicle under the scheme
The Clean Car Upgrade will subsidise the purchase of low emission vehicles, either new or used, or a low-emissions alternative form of transport. Decisions about an age requirement, the retail price-cap and whether low-emission ICE vehicles will be eligible have yet to be announced.
It is expected that used-imported hybrids will be eligible under these criteria. We have a good supply of large hybrid people movers on our market such as the 7-seater station wagon Toyota Prius V hybrid.
Scrapping a vehicle under the scheme
Cabinet will decide on the process for scrapping vehicles and securing replacement transport in November 2022. This process includes what happens to vehicles that are scrapped.
Scheme misuse
Specific measures will be designed into the scheme to ensure that only low- and moderate-income people are assisted in shifting to lower-emissions travel modes. The criteria will be specifically designed to minimise any possibility of people misusing the scheme. These could include:
- verifying applicants’ income
- requirements around the driveability and minimum state of the vehicle,
- a minimum period of ownership to be eligible to scrap
Reducing greenhouse gas emissions
The Clean Car Upgrade will have a co-benefit of reducing transport emissions which has been estimated for the trial of the Upgrade. This estimate assumed 2,500 vehicles would be scrapped and replaced during the trial, leading to a reduction in CO2e of between 500 - 4,500 tonnes.
The Clean Car Discount and the Clean Car Upgrade
This trial is designed to complement the Clean Car Discount, which incentivises the purchase of zero and low emission light vehicles by reducing the cost of eligible new and used vehicles coming into New Zealand.
Even with current rebates, many low- and moderate-income households will not be able to afford to switch to cleaner vehicles for some time. This creates a significant risk that low-income households will be locked-in to high-emission vehicles because they are more affordable to buy. However, high-emission vehicles cost much more to run. By not being able to switch to cleaner vehicles, low- and moderate-income New Zealanders are vulnerable to rises in fuel prices.
In comparison, wealthier New Zealanders, especially with the assistance of the Clean Car Discount, can switch to EVs, PHEVs and hybrids. This allows them to benefit from reduced vehicle running costs and protects them from rising fuel prices.
It is unlikely that participants would be eligible to benefit from both the Clean Car Upgrade and the Clean Car Discount. This will enable more people to benefit from these types of assistance.