15 Apr 2024

Road user charges: Are EVs still cheaper to run than petrol cars?

9:41 am on 15 April 2024
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Costs have ramped up for electric vehicle drivers this month.

Owners of battery-powered EVs are now liable to pay road user charges of $76 per 1000km, the same rate as diesel-powered cars and trucks.

But what effect does this actually have on an EV owner's back pocket?

Andrew Whiteford, a director at Infometrics, did the maths.

"I drive from Carterton to Wellington periodically because I live in one and work in the other," he said.

"Before the road user charges came into play, I could do the 170-kilometre round trip in my EV, which I charge during off-peak hours, for $5.50. That's now increased to $18."

It's a sizeable jump, but it's still a lot cheaper than a petrol car would be.

"That would be $40, so the EV is less than half the price."

However, there is a caveat. Whiteford's costing assumes he can charge his car at home during off-peak hours. If he had to rely on commercial chargers, the 170km round-trip could cost $35.20.

"If you go on a long trip and you can't charge at home, then the cost of driving an EV - including the road user charges as well - is similar to driving a petrol vehicle.

"So, the financial incentive disappears on long trips."

There are a lot of assumptions to be made when running calculations like these, but Whiteford isn't the only one to give it a go.

Terry Collins, a principal adviser at the AA, crunched the numbers while preparing a joint submission to the select committee before the charges came in.

He reached a similar conclusion - the cost of driving an EV would rise substantially with road user charges, but it's still cheaper than operating a petrol car.

"Eighty percent of New Zealand EV owners charge at home.

"If they were to do that, it would cost an average of $128 to travel 1000 kilometres," he said.

"For a petrol vehicle paying $2.95 per litre, that'd cost you $236."

Diesel was even more expensive again, averaging out at $312 per 1000 kilometres, he said.

Meanwhile plug-in hybrids, which use a mixture of electricity and petrol, would cost about $220.

So, to summarise those numbers - driving 1000km in an EV charged at home would cost, on average, $100 less than a petrol car.

But if the EV was charged using commercial chargers, that gap disappears.

Victims of a dual system

Terry Collins' joint select committee submission, which was co-signed by several motor industry organisations, called for a lower rate of road user charges for EVs than for diesel-powered vehicles.

As it stands, those paying road user charges contribute more money to the land transport fund, which is used to maintain and upgrade our roads, he said.

That's because calculation of charges by distance travelled works out substantially higher than the fuel excise tax that petrol cars pay.

"If I'm running a vehicle that uses eight litres of petrol for every 100 kilometres, I'm contributing an average of $64.42 to the fund," he said.

"And that's a fairly big gas guzzler, if I'm driving something that uses six litres, then it's only $48."

"But if I'm using a diesel vehicle, I'm paying $76 through the road user charges. And if I'm using battery electric, I'm also paying $76."

According to Collins, this is a historical holdover. Road user charges were first introduced to cover heavy vehicles that caused more damage to roads.

But as more and more light vehicles were designed to take diesel, and now the charges have been applied to EVs as well, a disparity has arisen.

While there is a political appetite to move all vehicles to a distance-based system, Collins thinks there's still a way to go.

"The current government has indicated that in 2027 it wants to increase the fuel excise by 12 cents, then another six cents the year after, and another four cents each year after that.

"To me, that indicates they don't think we will get a distance-based system in place before the end of the decade."

Kirsten Corson is chair of Drive Electric, one of the submission's co-signatories.

She said the current system is particularly unfair for EVs, because their impact on roading infrastructure and the environment is lower than other vehicles requiring road user charges.

And, with the fleet still transitioning, we still need financial incentives to switch to EVs.

"One of the biggest barriers to EV ownership is the higher capital cost when purchasing.

"We're not at parity yet. So, we need to be incentivising, like other countries, the uptake of EVs."

But according to Collins, it's not the introduction of road user charges that poses the biggest barrier to EV uptake.

That's the loss of the clean car discount.

"If you can charge at home, EVs are still substantially cheaper than petrol vehicles," he said.

"I think the road user charges are a bit of noise in the background compared to the discount, which was having a much bigger impact.

"That was the game changer."

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