Electric Shock

Written By: - Date published: 8:43 am, December 2nd, 2024 - 13 comments
Categories: climate change, Deep stuff, public transport, science, transport - Tags:

New Zealand is one of the slowest countries in the developed world to transition from combustion to electric vehicles. The shocks we are seeing in Europe to car makers and car buyers herald more trouble ahead.

This year about 10% of New Zealand’s new car purchases are some form of electric. Last year it was 27%. It’s not great. It’s expensive, subsidy or not. The electric cars on offer – until the Chinese makers arrive in bulk – are top-end ones like Tesla’s, Polestars, Ford Mustang’s and the like, to go with the solid base of second hand Toyota Prius hybrids and Nissan Leaf imports.

Some go-ahead entities like Auckland Transport are making a strong start to completely removing combustion engines from their fleet entirely – they are already there with trains, well on the way with buses, and their ferries are going electric as well.

To make sure we are living in political reality not just moaning and catastrophising about climate change, we only need to recall that when the Ardern government brought in the modest clean car discount scheme, it also put a fee placed on higher-emissions vehicles like utes and tractors, from January 2022. And the protest against it went nuts. The Clean Car Discount Scheme was to make lower-carbon-emitting cars more affordable for New Zealanders, paid with a fee placed on higher-emission vehicles, including utes, from January 2022.

In response, farmer action group Groundswell NZ organised ‘A Howl of a Protest’ in locations across the country in both July 2021 and in 2022.

Photo credit to RNZ of the 2022 Groundswell protest

Now we are seeing this kind of policy-driven protest play out across the whole of Europe.  

Car makers are struggling to adapt to the production of battery-electric vehicles, a transition Brussels is betting on as it prepares to phase out the production of combustion-engine cars by 2035. They are attempting to become the first climate-neutral continent. 

But car production in Europe is driven mostly by German car companies. That is deadly serious for Germany as one of its largest employers. Car making accounts for 7% of the entire European GDP. 

That’s something like telling New Zealanders that they can’t drink cow’s milk or cheese by 2035. That’s the scale of shock European car makers are going through now.

Like New Zealand, European registrations of electric cars dropped this year compared to 2023. Also, the total market for new cars is shrinking somewhat at the moment. In a recession you try and avoid major capital purchases when you’re trying to hold onto a job, got downsized to a lower one, or worse. A recent report suggested the 27-country bloc would need a €800-billion boost to support its clean energy transition and compete with increasingly aggressive global trading rivals.

In August, EU registrations of electric cars dropped by 43.9% compared to the same month in 2023, driven by an astonishing 68.8% decline in Germany, considered the bloc’s industrial powerhouse. 

Tariffs on the import of cheap, China-made EVs — which have recently flooded the EU market and driven down prices — are now in force and will last for at least five years. This is the EU trying to buy time for their manufacturers to catch up and generate cheap electric cars that can compete with the Chinese cheap ones that are surging through the world.  

In 2025 the EU legal limit for cars’ CO2 emissions will fall by 20% to 94 grams per kilometre. That pretty much wipes out new diesel vehicles. Manufacturers will also face annual targets for the emissions their vehicles produce, to incentivise the sale of zero and low-emissions vehicles.

The stress point will come in February 23 2025 when Germany has its snap Federal election. Volkswagen has demanded a 10% wage cut for 120,000 of its roughly 300,000 German staff. It is also threatening to close plants in Germany for the first time in its 87-year history. There will be a change of government, and with AfD on the rise it’s hard to see all of those EU regulations staying on current target.

Trade unionists of the metalworkers’ union IG Metall protest during a warning strike in front of the Volkswagen plant in Osnabruck. Photo: FOCKE STRANGMANN/AFP.

That’s a lot of mortgages, meals on the table, and votes.

New Zealand gets about 10% of its cars from Europe, but the crises going through European car makers are also going through our primary importer Japan where Nissan is close to collapse, and we’re mostly content with Toyotas which are at best hybrid. 

Toyota has little initiative to move to EV’s because EV’s require much less service, and that means their dealerships with service centres also lose massive amounts of profit every year. That means in turn those dealerships basically have to invent an entirely new business model to remain in business. In China, they are closing over 4,000 car dealerships a year. Volkswagen, BMW and especially Mercedes Benz make cars requiring continuous and very expensive (i.e. lucrative) servicing. So the motivation to change to EV’s is very low.

For those needing a new car and fortunate enough to have the wherewithal to consider buying one, the current overproduction of EV’s is generating dealership discounts that make it a good time to negotiate hard. Check out the latest electric Skoda Enyaq:

But back to the politics of this, the protest we saw here will seem small compared to what Europe is going through, and Japan will face similar as Nissan is stripped out for parts and Honda continues to lose market share across the world and shrinks to something much smaller.

The contest of the car is, for European and Japanese carmakers, a massive electric shock. And then it will hit here.

13 comments on “Electric Shock ”

  1. Champagne Socialist 1
    2 December 2024 at 9:54 am

    Not just EV's – generation of electricity is also transitioning towards renewables – solar in particular. But solar – like EV's – is cheap and does not provide labor intensive returns to the generators. Australia is 30% rooftop solar NZ is 2%. WA is building a solar farm big enough to meet all of Australia's power demand – NZ not so much.

    Countries that successfully transition to a much cheaper form of energy will gain massive competitive advantages.

    Reply
    • Tiger Mountain 1.1
      2 December 2024 at 3:03 pm

      Informative link, thanks CS.

      Reply
    • alwyn 1.2
      2 December 2024 at 3:51 pm

      "WA is building a solar farm big enough to meet all of Australia's power demand – NZ not so much."

      Would you have any qualifiers you want to add to that statement?

      If you were really to mean that they can, all the time, supply all the electric power Australia requires I would have to say that they are crazy, and that WA must be broke.

      Reply
  2. Mike the Lefty 2
    2 December 2024 at 10:02 am

    You didn't mention the Palmerston North urban bus fleet which has been 100% electric since March this year, first in NZ.

    Palmerston North may not be everybody's favorite city but is a relatively progressive place in some respects. Was also the first NZ city to have a fully urban CNG powered fleet in the 1980s. This is because they had leaders who looked forward rather than backwards.

    Reply
    • tWig 2.1
      2 December 2024 at 2:43 pm

      Palmy is a fantastic city with an extremely positive city council. They provide far more than nuts and bolts, work together across the political divide to deliver for the city, and have a thorough and transparent consultation process. They were also among the first of councils who voted to retain the Maori ward.

      You only have to look around at the well-maintained and innovative central city plantings, the quirky public statues, and the broad range of amenities carefully provided for us city-dwellers, in sports fields, parks and libraries. While maintaining a green policy, they also continue to develop social housing and support for policies helping poorer people, like food resilience funding for local volunteer groups.

      That said, the buses come from the Regional Council. I have been using them since they came in, and love their silent motion. So kudos to Horizons Council, too.

      Reply
  3. Dennis Frank 3
    2 December 2024 at 11:07 am

    Google's AI Overview is more bullish:

    The electric vehicle (EV) market is expected to continue to grow…

    • In 2023, EVs made up 18.6% of global passenger vehicle sales, and the global electric fleet reached 40 million. In 2024, sales are expected to grow by 25% compared to the same period in 2023

    This globalist org thinks so too:

    Electric car sales in 2023 were 3.5 million higher than in 2022, a 35% year-on-year increase. This is more than six times higher than in 2018, just 5 years earlier. In 2023, there were over 250 000 new registrations per week, which is more than the annual total in 2013, ten years earlier.

    Electric cars accounted for around 18% of all cars sold in 2023, up from 14% in 2022 and only 2% 5 years earlier, in 2018. These trends indicate that growth remains robust as electric car markets mature. Battery electric cars accounted for 70% of the electric car stock in 2023. https://www.iea.org/reports/global-ev-outlook-2024/trends-in-electric-cars

    Here last month:

    As of the end of November 2024, there are over 79,000 fully electric light vehicles (plus around 34,500 plug-in hybrids)… 9.5% of new light vehicles were plug-in EVs https://evdb.nz/ev-stats

    So the market's growing at 3x the rate of inflation here in Aotearoa. That's robust.

    Reply
  4. Adrian 4
    2 December 2024 at 11:40 am

    More problematic in NZ is the average age of our car fleet at something like 14+years and a large part of that is made up of second hand imports. We are careful consumers and don’t splash money on new cars, with the exception of show offs leveraging the mortgage which now is no doubt leading to a fair bit of sphincter clenching, so the catch-up period for everybody to own a new car to feed the EV target is a real problem and must go out to well past 2040. The only answer is to subsidise the cost of ownership through various schemes which Labour recognised last term.

    The answer probably does not lie with used import EVs either, as while the battery tech is now quite sophisticated the older stuff is well behind on range and to an extent reliability. A fiend has an older Nissan Leaf it has now a range of 72 kms which she has to manage carefully, here in the South Island 72kms won’t get you to the next town. That Japanese import market will disappear anyway as they don’t have many, if any, spare EVs as Nissan, Toyota et al put their chips down on hydrogen, one of the worst automotive industry decisions in history.

    Im doing my bit, I bought a new car last week, it’s 26 years old, so it has probably canceled the carbon input that went into its construction. Why didn’t I buy an EV? I would have liked to but who can afford one. We sunk what money we had on a roof full of solar panels instead.

    Reply
    • AB 4.1
      2 December 2024 at 1:17 pm

      “…the average age of our car fleet at something like 14+years and a large part of that is made up of second hand imports. We are careful consumers…”

      Yes. Careful because most of us have to be – as you say. I remember English work colleagues visiting in the late 1990's commenting with amusement that in NZ they had seen every model of car they had ever owned, and that their fathers had ever owned.

      Reply
  5. Matiri 5
    2 December 2024 at 12:09 pm

    We have just bought a plug in hybrid EV to replace a 12 year old ICE. There are very good deals to be had at the moment if you are able to take advantage of them. The PHEV is a used dealership demonstrator with 6000kms on the clock.

    We live in a small rural community 130kms from Nelson, close to the Alpine fault so range is important, also having the battery to connect up communication to the outside world when the big one comes. We have changed to a power retailer offering good night rates and reconfigured our entire usage to take best advantage. We are also considering solar panels (had them on previous house) but may need to paint or replace tin roof first!

    Reply
  6. Jack 6
    2 December 2024 at 12:28 pm

    Call them old fashioned, but the Australians take renewable electricity generation and carbon emission targets seriously. This is lead by their government and accelerated by business. The actively support projects where EVs' are part of the storage and transmission network.

    https://arena.gov.au

    https://reneweconomy.com.au/energy-insiders-podcasts/

    Leadership and inspiration sorely lacking here.

    Reply
  7. lprent 7
    2 December 2024 at 2:36 pm

    Currently we have an old ICE Caldina station wagon circa 2005, and a newer 2014 very peppy hybrid Fit (replaced a 2011 Fit hybrid that got drowned last year in the Auckland floods). Both brought second hand. Only reason we have two is to handle the odd time we either need wagon, or when we are both running around at the same time.

    Since we do somewhere between 5,000-10,000 kms per year across both cars. Neither guzzle gas so we'll replace them when they die or get unreliable. Probably without accidents – more than a decade away. They get serviced annually and maintained to reliable standard. Cars are a relatively minor operational cost for us. My operational budget for cars has the largest cost (by far) being the total cost of insurance against accidents or theft or breakdowns in awkward locations.

    This year by biggest car cost has been buying gear for them to transport bikes. Just looking at the horrendous cost of putting a towbar on the Fit for the bike rack! We have two e-bikes. Both for local, and also for just having exercise (I have a osteoarthritic large toe issue that makes walking even moderate distances painful).

    I do around 500-1500kms on bikes annually mostly based on weather conditions and holidays. Mostly I just bike around where I live. Sometimes hopping on a train and finding some bike paths in Auckland that I haven't been to. Or now dropping bike or two on the bike rack and doing a trail further away. Sometimes my partner comes to pace me. The side-trip to Paeroa was to have a look at biking the Hauraki rail trail early next year.

    For me, cars aren't the electrical investment I'd make. When we finally buy a house and move out of the apartment, I'll have roof space and no body corporate to constrain what I can do. We'd move because we need to two offices.

    But I'm planning on installing solar for power + wind for power + batteries + solar for hot water and probably dropping off the electrical grid.

    That is because our power bills are now averaging about $200/month over the whole year varying from $150 to $260. This is in a apartment that is nearly perfectly insulated, mostly runs computer systems for heating and has done so for a long time, doesn't do any aircond. The kW consumption has actually gone down over the same period despite having more computers and more devices because I've been actively replacing old electrical equipment with one that chew way less power. Plus encouraging sleep modes.

    I figure that the cost of electricity per kW/h for the two of us has risen by about 50% over the last 7.5 years in this apartment. I have to have batteries anyway in the form of UPS'es for critical equipment – ie computers. Have to replace their batteries every 18 months because they're lead-acid. That is because of the occasional outages. I'd like to add lights, TV, cooking, and hot water to that backup 🙂

    May as well go the whole hog and invest some capital to get rid of an otherwise unavoidable operational cost. It is likely to pay itself off and be increasingly cheaper to maintain and increase as prices drop.

    The line charges are now $1.38/day (up from 0.345/day in 2020). That is more than $500/year. That plus the cost of equipment (and its added complexity) to receive and feed AC power back to the network indicates that I should not be line connected at all.

    It is way too expensive as a insurance system. I'm pretty sure that I could afford a bigger battery system more cheaply.

    I'm discounting the idea of getting paid for feeding power to the grid because the power companies don't pay enough, the extra capital equipment is too costly, and anyway I think that almost everything could be done using DC.

    Computers are inherently DC, most of my devices are actually DC – they have AC to DC converted already, heating and cooling of all types is actually easier as DC, etc.. Local systems should be regulated DC. The only reason we use AC is because of transmission over low-tech grid line systems.

    Reply
  8. Bearded Git 8
    2 December 2024 at 2:45 pm

    The tariffs being put on EVs in Europe and the USA is pure luddite behaviour.

    It didn't go well for the luddites.

    The GWM Ora EV is now being sold for $30k in NZ.

    BYD which makes EVs and plug in hybrids in China outsold the Ford Motor Company in the last quarter.

    Reply
  9. ianmac 9
    2 December 2024 at 4:14 pm

    All of the contributions above are gratefully received. We are keeping the 24 yo Holden going as a workhorse/tow bar and aware that maybe I won't be driving much longer.

    I wonder if an all electric plug/in will be the future rather than a hybrid or an ICE.

    Reply

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