Suggest we need to think about this from an electrification of homes and businesses point of view, not just EVs or other single technology angle. Total delivered energy spend is what we ought to seek to optimize - EVs are part of that picture, but not the only one. Electrifying your car and other appliances reduces spend on energy overall (ie, substitutes for petrol and gas).
Rewiring Aotearoa have done some good work in this space pointing to the necessary directions - https://www.rewiring.nz/
Also, as a side note on Hertz' experience with EVs, this is ultimately a business model problem, rather than a technology one. Hertz have tried to apply their same tried and tested rental cars business model to EVs, a fundamentally different technology. When you stop to think about it, it's not that surprising that it hasn't been successful. Think vinyl records v digital music, for example. Beyond the breathless headlines about Hertz 'stepping away from EVs', they have recognized this themselves and noted that they actually aren't stopping investment in EVs, but that they will look at alternative business models.
Thanks Ian. The future outlook for EV uptake is important to urban policy and urban planning too. There's strong aversion to enabling housing supply if it enables cars because of CO2 emissions, but those people don't seem to be factoring in future uptake of EVs.
I led a large CBA study on EVs in 2009 for Contact & Meridian Energy while at Hyder Consulting NZ. (I can't find it on the web now.) We modelled the input costs of production, and the whole of life costs to purchasers. We predicted BEVs and PHEVs would dominate the vehicle fleet by the late 2030s, and we predicted the timing of the initial uptake correctly. But we predicted a strong uptake about now as purchase prices became comparable and NPV whole of life costs were much lower. We saw only a supplementary reason for govt intervention, although if other govts subsidized them such that we couldn't compete to buy them that role could be larger.
But the actual uptake is much more modest than we at Hyder predicted. The biggest driver of our large uptake prediction was 2nd hand imports from Japan. But Japan isn't adopting EVs at the rate we predicted in NZ. I understand that's because their electricity generation is much more carbon intensive than NZ's, so the economics to them given carbon pricing etc is much weaker.
Given how important it is to fix the housing crisis with land supply, and given how contingent urban planning is on planners' expected EV uptake, I want to see Govt have good and transparent predictions and analysis based on the microeconomic fundamentals of EVs. Extrapolations of past uptake are not adequate for major technology shocks. Thanks.
This article nicely exposes the folly of have the government try to pick winners. We don’t know which of these technologies is in the end going to dominate the market and I’d argue we don’t fully incorporate the externalities associated with the options that are currently presented to us (where do the materials come from to produce EV batteries and where will they go at the end of their lifespan?). The market will solve this issue as technology advances. Best for government to focus on aspects where the market fails in the NZ context. Subsidizing high end luxury cars seems wrong through that lens. But focusing on aspects where the market is likely to do less well - eg how will a charging network evolve in NZs less populated areas? How will charging infrastructure evolve even in cities where most don’t have dedicated parking and car storage? How will low income households make the transition when there’s likely to be a dearth of second hand evs available at an affordable price point (and how to derisk the options that are available given EV battery longevity appears to be variable)? Focus on the market failure points rather than putting a thumb on the scale when the weights of the options is uncertain is a recipe for fiscal waste and economic damage.
Thanks a lot Chris for your comments and for raising the urban policy context. Good to hear from someone who's had to struggle with the detail of modelling and predicting uptake in the New Zealand context, and who understands the sensitivity of results to different assumptions.
Yes, the quote on Hertz in my post only provides a snapshot of a complex and evolving situation. And your point about the need for alternative business models is an interesting one. It would be good to hear from someone familiar with the car rental industry. What key changes are required for a successful adjustment to EVs?
Thanks very much for your comments John, and for drawing my attention to the Rewiring report. I agree that system wide perspectives on energy supply and use are helpful, and that uptake of EVs is just one of the challenges in this broader debate.
Suggest we need to think about this from an electrification of homes and businesses point of view, not just EVs or other single technology angle. Total delivered energy spend is what we ought to seek to optimize - EVs are part of that picture, but not the only one. Electrifying your car and other appliances reduces spend on energy overall (ie, substitutes for petrol and gas).
Rewiring Aotearoa have done some good work in this space pointing to the necessary directions - https://www.rewiring.nz/
Also, as a side note on Hertz' experience with EVs, this is ultimately a business model problem, rather than a technology one. Hertz have tried to apply their same tried and tested rental cars business model to EVs, a fundamentally different technology. When you stop to think about it, it's not that surprising that it hasn't been successful. Think vinyl records v digital music, for example. Beyond the breathless headlines about Hertz 'stepping away from EVs', they have recognized this themselves and noted that they actually aren't stopping investment in EVs, but that they will look at alternative business models.
Thanks Ian. The future outlook for EV uptake is important to urban policy and urban planning too. There's strong aversion to enabling housing supply if it enables cars because of CO2 emissions, but those people don't seem to be factoring in future uptake of EVs.
I led a large CBA study on EVs in 2009 for Contact & Meridian Energy while at Hyder Consulting NZ. (I can't find it on the web now.) We modelled the input costs of production, and the whole of life costs to purchasers. We predicted BEVs and PHEVs would dominate the vehicle fleet by the late 2030s, and we predicted the timing of the initial uptake correctly. But we predicted a strong uptake about now as purchase prices became comparable and NPV whole of life costs were much lower. We saw only a supplementary reason for govt intervention, although if other govts subsidized them such that we couldn't compete to buy them that role could be larger.
But the actual uptake is much more modest than we at Hyder predicted. The biggest driver of our large uptake prediction was 2nd hand imports from Japan. But Japan isn't adopting EVs at the rate we predicted in NZ. I understand that's because their electricity generation is much more carbon intensive than NZ's, so the economics to them given carbon pricing etc is much weaker.
Given how important it is to fix the housing crisis with land supply, and given how contingent urban planning is on planners' expected EV uptake, I want to see Govt have good and transparent predictions and analysis based on the microeconomic fundamentals of EVs. Extrapolations of past uptake are not adequate for major technology shocks. Thanks.
This article nicely exposes the folly of have the government try to pick winners. We don’t know which of these technologies is in the end going to dominate the market and I’d argue we don’t fully incorporate the externalities associated with the options that are currently presented to us (where do the materials come from to produce EV batteries and where will they go at the end of their lifespan?). The market will solve this issue as technology advances. Best for government to focus on aspects where the market fails in the NZ context. Subsidizing high end luxury cars seems wrong through that lens. But focusing on aspects where the market is likely to do less well - eg how will a charging network evolve in NZs less populated areas? How will charging infrastructure evolve even in cities where most don’t have dedicated parking and car storage? How will low income households make the transition when there’s likely to be a dearth of second hand evs available at an affordable price point (and how to derisk the options that are available given EV battery longevity appears to be variable)? Focus on the market failure points rather than putting a thumb on the scale when the weights of the options is uncertain is a recipe for fiscal waste and economic damage.
Thanks for your helpful comments Kelly, both on the broader issue of the government’s role in general, and the issues arising specific to EVs.
Thanks a lot Chris for your comments and for raising the urban policy context. Good to hear from someone who's had to struggle with the detail of modelling and predicting uptake in the New Zealand context, and who understands the sensitivity of results to different assumptions.
Yes, the quote on Hertz in my post only provides a snapshot of a complex and evolving situation. And your point about the need for alternative business models is an interesting one. It would be good to hear from someone familiar with the car rental industry. What key changes are required for a successful adjustment to EVs?
Thanks very much for your comments John, and for drawing my attention to the Rewiring report. I agree that system wide perspectives on energy supply and use are helpful, and that uptake of EVs is just one of the challenges in this broader debate.