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Motor Industry Association wary of forecasts by Fitch and the Climate Change Commission around the pace at which NZ's vehicle fleet can be electrified

Motor Industry Association wary of forecasts by Fitch and the Climate Change Commission around the pace at which NZ's vehicle fleet can be electrified

Motor Industry Association CEO David Crawford says "consultants" are the only people bullish about the electric vehicle (EV) market.

While vehicle manufacturers are scrambling to make lower-emitting vehicles, the uptake might not happen as soon as the Climate Change Commission and now credit rating agency, Fitch, are predicting, Crawford told interest.co.nz.

Fitch said the Government’s feebate scheme reinforces its bullish outlook for New Zealand’s EV market.

The scheme, announced on Sunday, will see buyers of newly imported, new or used, high-emitting vehicles pay a fee, and buyers of low-emitting vehicles receive a rebate.

Fitch forecasts the country’s EV sales growing at an average annual rate of 55.5% between now and 2030.

“This represents an EV penetration rate of 58.4% by the end of 2030, up from around 2% in 2020,” Fitch said.

“We also note that there is some additional room for stronger growth as New Zealand's government will likely… follow the European Union trend of banning the sales of ICE [internal combustion engine] vehicles before the end of this decade.”

The Climate Change Commission said New Zealand will need to stop importing ICE vehicles between 2030 and 2035 to meet its proposed emissions budgets.

“This is in line with decisions by other developed countries and with the latest modelling by the International Energy Agency,” the Commission said.

It said EVs could make up at least half of New Zealand’s total light vehicle imports by 2029. By 2035, 46% of all light vehicle travel could be in EVs and 36% of light vehicles on our roads could be electric.

“About 50% of vehicles imported into Aotearoa are used and about 90% of these used vehicles come from Japan. The speed with which Japan rolls out EVs will affect how quickly we can roll out EVs here in Aotearoa in the short term,” the Commission said.

“Historically EV uptake in Japan has been low. However, Japan is aiming for all vehicles entering their fleet from the mid-2030s to be low-emissions vehicles.

“We have reflected these constraints in our recommended emissions budgets. We heard from some submitters during consultation that our assumptions for EV uptake were too ambitious given these supply constraints.

“In our final advice, we have amended our assumptions and have highlighted different paths that could achieve our recommended emissions budgets.”

Indeed, Crawford said the manufacture of EVs was the issue.

He noted the market for New Zealand-friendly vehicles, where the driver is on the right-hand side of the vehicle, is smaller than the market for vehicles where the driver is on the left. So, the likes of the US and Europe stand to benefit more from developments in EV technology.

While demand for utes is high in New Zealand, it isn’t elsewhere. So electric utes are last in line when it comes to research and development.

Demand for electric cars, SUVs and vans on the other-hand is high in across all markets.

Crawford disagreed with Fitch, which suggested electric pick-up trucks could start hitting the domestic market in 2023/24, at which point the feebate scheme would reduce the cost differential between electric and petrol/diesel utes.

Fitch referenced the Ford F-150 Lightening, however Crawford said this sort of vehicle was larger than utes commonly used in New Zealand and targeted to the US market.

“Based on feedback from members of the Association, one or two brands are working hard to get in a fully electric ute,” Crawford said.

“But our expectation is plug-in hybrid (PHEV) utes might become more widely available by 2025 and full battery electric (BEV) utes after that.

“There are a range of BEV vans on the market now and we expect more models will become available in the next 12 to 24 months.

“Speculation by [government] Ministers of when models are coming to the market is unhelpful and potentially misleading. At worst it becomes a death nell to business continuity.”

The Climate Change Commission said: “We estimate the additional upfront cost for a EV in Aotearoa is currently around $16,000 excluding GST, of which about $11,000 is the cost of the battery.

“However, the outlook is positive, with leading international analysts such as Bloomberg New Energy Finance forecasting that electric cars will be cheaper to make than petrol cars by 2030.

“These expected cost reductions come through a combination of falling battery costs and other manufacturing cost reductions as automakers retool their production lines and scale up EV production. The cost of lithium ion batteries has already fallen 88% from 2010 to 2020 and is projected to more than halve again by 2030.”

Crawford said the Motor Industry Association supports the Government’s feebate scheme, having lobbied for it. 

He said New Zealand was playing catch-up with the policy. He maintained it would help distributors in New Zealand negotiate better access to lower-emitting vehicles.

He said the Government was still working out the formula that will be used to calculate fees and rebates.

The feebate scheme - overview

Under the feebate scheme, buyers of low-emitting cars will be able to get a rebate from July 1, 2021, while buyers of high-emitting vehicles will have to pay a fee from January 1, 2022.

The rules will apply to new and used vehicles that arrive in New Zealand. Fees and rebates won’t be applied to sales of already-registered vehicles within the domestic second-hand market.

The maximum fee will be $5175 for a new vehicle and $2875 for a used one.

The maximum rebate will be $8625 for a new vehicle and $3450 for a used one.

Rebates will be available for vehicles worth less than $80,000 that have at least a three-star safety rating.

They’ll be issued for electric and plug-in hybrid vehicles first registered from July 1. From January 1, a set of smaller rebates will be available for low-emitting vehicles that can’t be plugged in.

Waka Kotahi New Zealand Transport Agency will administer the feebate scheme, and will issue rebates/collect fees directly from vehicle purchasers, not dealers.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

57 Comments

Me thinks Fitch should stick to credit ratings! Is this where the brains trust have been getting their advice from?
Make no mistake, I have no issue with EV's. I have a massive problem with the hocus pocus forecasts of EV uptake and availability being thrown about. Fitch now "experts" on all things EV! Give me a break!
I notice that the EV Ford 150 is shown. It will be a long time before we see these here. There will be no incentive for Ford America to produce a right hand drive version as they wont be able to keep up with left hand drive demand if it takes off in popularity. It will also be hugely expensive and is just to big for most ute applications here. Same goes for any Tesla or other US derived ute.
Adhern's and co can make whatever claims they like but the fact is there is not and will not be anytime soon a practical affordable EV ute to replace our Rangers and Hilux's!
These halfwits don't give a stuff about tradie's and farmers or anyone requiring a ute for work or play!

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I for one will be quite glad if the EV utes don't arrive for a while. Take the driving attitude/driving ability of your average ford ranger driver and imagine them in something larger, heavier and with the acceleration that 10years ago was only available to supercars and sports bikes.

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If we want EV pickup trucks we'll just have to remove the rules around importing left hand drive vehicles. We never expressed any interest so they didn't bother building any RHD models.

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So, since we are replacing the entire fleet, and need access to new models, then why not just change NZ to LHD at the same time?

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Your perception of what vehicles we need, needs to change.

We are currently living an unsustainable existence. Part of that is using Finite energy resources to power large trucks to tow large recreation boats to the Water where they zoom around burning even more Finite energy resources... just for the fun of it.

So this equation needs to change. Either we find alternative tech /vehicles, or the activities need to stop.

You may not like this, but it's this simple. The sooner you accept it the easier your upcoming life will be. The changes are now happening and the pace of change will only quicken from Here.

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So can’t we use large EVs to tow large EV boats to the sea and still hoon around? Might even catch more fish cos electric motors are quieter. And just what is wrong with fun?
One thought: how will Clark Gayford’s TV show where he tows his huge boat with a huge car sit with Ms Ardern’s ‘nuclear’ moment re climate change? I foresee some sleeping on the couch.

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Yes of course, this is the alternative tech needed. Hence why its good that we are now about to be penalized for non-EV vehicles. People/industry will not change on its own accord.

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And THAT is what the article should have been about.

Asking a vested-interest what might be ahead, is only going to get predictable replies. There is no way we make it to the mid-2030's with the 'global economy' still intact - I wonder whenever Japan is mentioned, whether anyone realises that's where the world is headed too, but that if we're all there it can't work?

This is the core of the problem:
https://surplusenergyeconomics.wordpress.com/2021/06/07/202-the-shape-o…

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I'm a big fan of this scheme, but can't get past a logic gap

- The rebate starts 6 months before the extra charges for emitting vehicles
- They've said it's a cost neutral plan, and they'll put it on hiatus if costs exceed fees

So it will rack up bills for 6 months, which immediately puts it on the back foot?

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Cost neutral? If you believe that I have an on budget city rail link to sell you.

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There are two parts. The feebate is cost neutral (over time), but only starts in 2022. The discount referred to in the article is for July-Dec 2021 and is not cost neutral, the money for it was in the budget.

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In Ford F150 news (from this morning).

2021 Ford F-150 Recall
Item Affected: STEERING: RACK AND PINION
Date Announced: 05/29/2021Description of Recall:Ford Motor Company (Ford) is recalling certain 2021 F-150 vehicles. The steering gear may have internal damage, which could result in difficulty steering, or the inability to rotate the steering wheel while driving.

https://www.dealerrater.com/recalls/Ford/F_150/

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You don't really need to steer a Ford just somehow point it towards a cliff and push it over.

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These are what the government consultants want you to have.

We had the same thing happen before, got Russian Belarus, tractors forced on us. Terrible things. Worse than Zetor & Skoda ( remember the Fiat knock-offs).

During the cold war, the Belarus tractors that were sold in western markets were infamous for their low quality compared to western manufacturers tractors.
https://en.m.wikipedia.org/wiki/Belarus_(tractor)

The recently launched Crystal HD model resurrects a name that first appeared in 1968. It will be remembered for its utilitarian design and a cab larger than most Kiwi baches of the day.
https://www.ruralnewsgroup.co.nz/dairy-news/dairy-machinery-products/is…

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HT - perhaps read the link I put up, upthread?

I find chosen ignorance (it happens when people choose NOT to read stuff) tends to lead to things like inbuilt prejudice. My guess is that you are trying to warn of a 'command economy', by associating the products of Eastern Europe with inferior performance, correct? And by association, dissing other than laissez-faire society. Would that be a fair appraisal?

Actually, Russians rebelled against arrogant repression, as did the French a century earlier. They reached flash-point. The problem with most such moments is that there is a power vacuum, typically filled by those least likely to champion the flash-point crowd. Animal Farm states it perfectly. And the tyrant's need to permanently repress, rigidifies the systems they rule. Simply, the worker's aim becomes survival, not turning out a quality product.

Don't confuse that societal form, with the problem facing humankind at this moment in our irruption's history. Laissez faire allowed everyone who could, to do as much consuming as they could, as fast as they could. Unsurprisingly, we did this until we hit the ceiling (there was always going to be a ceiling somewhere; this is a species we're talking about; ecology applies, as do physics, chemistry and biology (they all overlap). So now we have to curtail the irruption, or die off. Indeed, some of us think we're past the point where feed-back-loops trigger, and that the die-off will happen anyway.

In light of that, control/curtailment is the only valid leadership option. I find it interesting that when you start with one false premise (that your house and vehicle are built of technology, and your tank is filled with it too - did I get that right?) you end up having to try and fit others around your narrative. You end up having to deny that ecology is even a thing; you end up having to deny Limits, in the end (like mainstream economics, as taught and as reported endlessly) you have to deny physics. And to not be found incorrect, you have to strenuously avoid learning anything which would upset the construct.

Interesting, eh? I was well aware we were headed for interesting times; I was unaware how interesting the reactions to the interesting times would be.

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moved

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There is a good opportunity here for suppliers of new EVs to make a bigger profit by increasing their prices by up to $8k.

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Was at an EV dealer yesterday buying a used EV. They are going gangbusters since Sunday. They won’t increase prices unless costs increase (i.e. auction prices in Japan) and are more than happy to undercut anyone who increases theirs as more sales for them.

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Now with the Ford. F150
EVs are priced higher than normal vehicles.

https://www.trademe.co.nz/a/motors/cars/ford/f150/listing/2987513597

Price is $149,800.00. This is the 3 litre diesel.

Or
https://www.trademe.co.nz/a/motors/cars/ford/f150/listing/2973249052

Price $239,800.00. This the go-fast version. AUTOMATIC (10 SPEED) 5.0L V8 WHIPPLE SUPERCHARGED (755hp).

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Two great YouTube from Engineering Explained.

Energy density is a big problem.
https://youtu.be/Hatav_Rdnno
- how do you charge the car it you only have street parking?

And
https://youtu.be/oJL9MasBFvM
- range limits for EVs
- why large trucks, semi, don't yet work.

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Most New Worlds seem to have chargers nowadays. Charge it when you're getting your groceries?

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That'll bump the your basket of groceries up while you do some extra shopping waiting. Good ploy by NW and others

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A change (change not charge!) you battery whilst you wait or overnight service. Or Fuel cell tech (Japan is heading this direction) which utilities refuel stations.

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There is a precedent:

https://www.theatlantic.com/technology/archive/2011/03/the-electric-tax…

"When a cab drove into the station, technicians secured and centered it with hydraulic shoes. They then hitched the 1,300-pound battery tray, which ran underneath the cab, to a hydraulic piston that pulled out the whole thing and sat it on a table, where "an overhead crane plucked it from the table and deposited it in the charging room." They slotted in a new battery and off the cab went again into the wild Manhattan streets."

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The other precedent (as per Formula E) is to have an entire second car. Maybe we are going back to the wild west days of the Pony Express. Change stations every x km where you just jump into a new fully charged car.

But seriously, it is looking a bit pointless. The issue is the sheer volume of cars and related infrastructure. Changing the power source of the car wont fix much. It is akin to swapping the engine on the titanic for a sparkly new Electric one moments before the inevitable.

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In Japan only 25% of their electricity is generated by Hydro and other renewable energy sources, so EVs are a very poor choice for them as they will have to burn fossil fuel to produce electricity to then charge the car battery. Rather like DOC using a diesel generator to charge up their PHEV on Stewart island (commendable enthusiasim, but daft). All up less efficient and far more CO2 producing (coal fired power stations) than just burning Petrol in a normal efficient ICE car.
Hybrids are in the order of 50% more efficient than nomal ICE cars, so Hybrids are by far the least poluting option at the moment untill we can crank up a much larger supply of renewable energy. (Where are the plans to quickly crank up renewable power generation. That is far more importantand it is the horse that must precede the cart.) The Japanese know this however and the head of Toyota has made statements to this effect. Accordingly I would not expect the Japanese to purchase a lot of EVs so, do not expect large numbers of used import EVs to be available.
Looking at the rest of the world, 88% of it's power is generated by fosill fuels and the bulk of that from coal, so wholesale switching to EVs right now would be an absolute disaster for the environment.
My ideal vehical would be to see if a mash up between the Toyota aitkinson cycle and the Mazda compression/spark ignition motors could be made to run on natural gas. Then use this in a PHEV car that only could be charged when surplas renewable energy was available.

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That's why the Leaf, although garbage when it comes to battery tech (and arguably looks), had one major advantage to it - it was an early promoted of V2G. You could have, in theory, used your Leaf to power your home. Of course this would have added wear on an already rubbish battery, but the initial idea was that the car could charge itself when power was cheap and then give a little bit back to your home when it wasn't. It never really took off here, although I think some places were charging about $20K for the option - but for that you could have bought a huge solar setup + stationary battery and charged your EV AND run your home for the same money.

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Yes that is right. Vector had some trials of that. Home lithium batteries at the moment on their own make no sense to me because the value of the energy you store and use over its life will never pay for the capital cost. However the use of the battery in the car is a different proposition as you are comparing it to inefficient use of fossil fuel in a car. Perhaps these new Panasonic/Toyota solid state batteries will improve the ecomics

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Chris M - great posts.

My guess is that the grids of this world will attempt to transition to renewables, and stop the attempt some way along the track. The reason for that curtailment is in the link I put up, upthread (surplus energy economics). A that point, EV's make little sense, and in any event, in an energy-curtailed world lugging a ton of car with you to short-haul move (adding to your health problems no doubt) makes no sense. Look to disruptive technologies; e-bikes, e-scooters, and I'm guessing we'll see e-small-motorcycle and e-wheelbarrow/e-shopping cart crossovers.

Too many change their thinking too slowly (which is why advanced-styled ot advanced-tech cars never sell) so we're still in our 'car' mindset. When we realise that energy is money, and that it is getting harder to access, expect a phase-change - as long as the trading system stays intact!

Bikes will work until the rubber perishes, feet do fairly well too; no parking problems with either.....

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Feet only do well while there is leather, rubber or FF derived soles for your footwear. Given there's a push to reduce FF, livestock numbers and therefore leather supplies we may need to get used to wearing flax woven footwear. ;-)

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CVTs are rubbish for towing, and towing puts significant pressure on them. All hybrids have a CVT.

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Some hybids use CVTs but Toyota use a continuous mesh epicyclic transmission, where both electric and IC engine are continuously engaged. A subtle and brilliant arrangement that in principle is very robust and if enginered adequately should be very good for towing. I haven't checked but I imagine that the new RAV should be fine for towing. Note that I think later this year a hybrid HILux may be released. I cant imagine that it will not have good towing capacity. Toyota being very risk averse.
CVTs, well the earlier ones were a bit fragile and not recomended for towing, but things have moved well past. Look at some of the big beasts that Nissan are making. Even the current Hilux uses a CVT.

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"By 2035, 46% of all light vehicle travel could be in EVs..."

I'd love to see the calculations behind this forecast. The average age of a car in New Zealand is about 14 years old so for this to occur pretty much every vehicle sold to 2035 would need to be an EV to hit that target.

My daughter asked me about getting an EV which would suit her well but she parks on the street, there's no way she could charge the thing overnight. Except for charging stations we don't have the infrastructure. You go to Europe and they are installing plugs on every urban street light to make the transition possible.

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In this thread on Reddit they are talking about outdoor charging, even on-street charging.

https://www.reddit.com/r/newzealand/comments/nz5jwb/question_for_ev_own…

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There are lots of opportunities to charge a car - it spends most of its life sitting still somewhere e.g. home, work, supermarkets, malls, when you are out on town. As EV numbers increase, so will chargers and they will be in places that cars go. Worst case, you spend 20 mins a week at a fast charger and you still pay less than petrol.

When I used to work in Sweden in the 90s, every work car park had a plug to it so you could plug your car in to keep the heater running so it would not freeze over by the time you had to go home. It is not hard to setup this kind of infrastructure and add a smart layer for billing if required.

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A prediction. There'll be more money made in tax for at least three years than handed out in rebates. %10-20% more, provided Labour are still in. Could even go out to five years if Labour can hold on. I've noted the price of the Nissan Leaf Entry model for future reference.

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The rebate scheme is just there to soften the blow of RUC on EVs as from 2022. That's where the real money is.

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So to summarise the above.
Change is bad.
Long live Fossil fuels.

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No it doesn't. Don't get dishearted.
Saving the the planet by reducing CO2 is good and the only choice we have. But we need to know the full impact of what we are doing, the unintended consequences and choose wisely and with sound analysis to base our decisions, rather than charging arround like headless chooks.

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Why focus on the ford tank?. The Chinese already have NZ size work vehicles. And before any mention s quality, the ldv vans are already outlasting the transits, at half the price.

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An orchardist I know is looking to import 3 EV ute type vehicles for his business - this year.

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One thing in EVs favour is their sheer performance! For example, the new Ford Ute does 0-100 in 4 secs. A lot of diehard petrol heads will be unable to resist that. The fun factor and cheap running costs could well mean a new motoring boom, for those who can afford to buy one. I’m certainly going to take advantage of my $8000 free gift from that very nice Mr Shaw.

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The devil is in the detail.
Firstly you won't be getting a $8000 free gift for a high performance EV (or any electric ute for that matter) because in NZ they won't cost less than $80 000.
And secondly you'll now be paying roughly $16 000 in RUC over the life of the EV.
So all of a sudden a $8000 gift has turned into a $16000 "fee" ...

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Our PM is complete muppet!
Toyota New Zealand says it's "disappointed in misinformation" after Ardern suggested it's in discussions to bring an electric version of its famous utes here.
"Within the next - we're hoping the next 12 to 24 months - the likes of Toyota are talking about bringing in EV utes. My hope is then people might delay their purchase in order to start building the market," she told The AM Show on Monday.

But Toyota New Zealand put out a statement saying it isn't true.
"I'd like to reiterate that we do not have any plans for a battery electric Hilux in our line-up in the next 18-24 months," says Toyota New Zealand's CEO Neeraj Lala.
"It is irresponsible to suggest that customers stop buying non-electric vehicles immediately until there is an electric option available. The range and volumes of EV's needed to meet demand is simply not available."

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Osty123 - This is a classic classic example of the lies and deception that Ardern spills out of her mouth, she talks bullshit and should be held to account.
Very unauthentic I for one don't trust her.

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Out of all the major car manufacturers, Toyota are the most backward when it comes to EVs. They have too much invested into hybrids and fuel cells. They are also full of BS marketing like "self-charging hybrids" and "electrified" vehicles. They sold 3,300 EVs in 2020 compared to 500,000 by Tesla and 220,000 by VW.

So don't expect an electric Hilux any time soon. Chinese electric utes will be here late this year and early next year.

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I'm all for improving the environment but all these numbers are just guess's !
I would love to see the maths behind all this or maybe no calculations have been done ?
Like how many charging stations would we need to support say 50% penetration of our fleet to Evs ?
How much does the Power generation and distribution grid need to grow to support this ?
What type of expanded power Generation are we going to use ? More Hydro and stuff up more rivers ? more thermal, Gas, Wind, Solar, Coal, Nuclear, tides ??????
To me all the numbers are no more than rubbish from our Government like the 100,000 Kiwibuilds, the billion trees !!!!!!!

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Jones did get a lot of trees planted, actually. Sadly all of the line weed variety. I’m beginning to miss Winston. Is he OK?

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Pietro - The Jones boy had the same trouble as Ardern, good at telling porky's.
I'm involved in Forestry investment and what they did, as opposed to what they said they won't do, is counted the private sector plant numbers.
Their target was 100 mil trees a year, private sector already plant approx 50 mil trees a year, unfortunately these 50 mil trees were included in their bullshit numbers.
What was really unfortunate was the 50 mil private sector plants are on average 80% re-plants so the figures were ..... Porkies nothing but Porkies......

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Shore man
Point taken. I am opposed to hydro as it turns things of natural beauty into concrete eyesores. If I was involved in policy planning, I would do as little harm as possible, balancing our climate obligations with the greater good for the greatest number [utilitarianism] until viable safe nuclear options are available, as they will be. The EV feebate and the $1 billion for yuppie cyclists would be better spent on subsiding LED lighting (that cut my power bill drastically), home solar, heat pumps, ultra efficient insulation, encouraging biofuel crops, converting existing waste to diesel, carbon capture for coal. It is folly to think that people want to live in tiny apartments, become vegan, and never enjoy the pleasure of driving and travel. Gosh, millennials will probably want to travel to infinity and beyond! The amount of available energy is vast. Common sense is all we need, not ideologically driven dogma.

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Pietro - "until viable safe nuclear options are available, as they will be."

That is not only self-justification, it defies logic, vis-a-vis your next sentences. What do you think nuclear energy produces?

Electricity. Period. You cannae put it in a tank at the gas station. To keep on motoring, you'd still have to electrify the fleet.

cart, horse maybe?

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It is rubbish - but from us. That's is OUR narrative they're peddling, and it was an incorrect one.

Your points are valid - there's a hydro lecture today, I'll link to it when/if the recording is put up or I'll report back - covering just that stuff. We can expect less glacier-storage, but maybe that means more winter rain. We need to talk storage - water at height is the most benign and easiest maintained, but how much?

Actually, here it is: https://www.otago.ac.nz/news/events/otago829218.html

Nobody is getting their heads around the fact that this is a phase-change and BAU isn't a given. Probably by some orders of magnitude.

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The details are all in the Climate Commission report. Charging stations: need to continue installation as fleet expands, eventually to be in many petrol stations and large car parks as has already started. Power: Sorted for the next 10 years, longer term we will need to continue to build wind and solar farms at the present rate.

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The current monthly emissions of the Huntly power station burning coal 250000 T of coal are roughly equivalent to the monthly emissions of the entire active NZ private vehicle fleet. We need a massive energy use reduction campaign focused on Auckland (where the majority of Huntly power is consumed). The financial effects on the Gentailer shareholders should not be of concern. Do we care about emissions or not?

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We do care, but the Huntly situation is short term and will be fixed in the next year or two from new power stations now under construction, while the vehicle CO2 is longer term and much harder to reduce. The Huntly coal thing has really captured people's attention though and illustrates how a little forward thinking 4 or 5 years ago would have avoided this problem.

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PHEV suits NZ better.

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China sensitive about crop reporting; Japan and Australia take China to WTO court; Delta variant threat rises; another large supply chain threat; UST 10yr stays at 1.44%; gold and oil soft; NZ$1 = 69.3 USc; TWI-5 = 72
David Chaston's picture
21st Jun 21, 7:19am
by David Chaston

Here's our summary of key economic events over the weekend that affect New Zealand with news there are new or renewed threats to the global recovery emerging.

But first in China, reports are filtering out that Beijing is detaining and arresting analysts who report on crop yields. This sort of work is very hard to do unless you tour and observe crop regions first hand (which is how it is done is most countries). But independent reports have been snuffed out in China over the past few weeks. It does raise the question about why Beijing needs to be so heavy handed on this arcane, technical corner of market assessments.

China is looking to grow its passenger car market by +10% this year. And a key part of that is an expected nearly +50% surge in sales of new energy vehicles. This rise would put them on track to sell a quarter of all cars as NEVs by 2025. Lithium mining is set for an even bigger boost if this transpires and lithium mining is an especially dirty process at present. If SRI funds aim to avoid polluters, why should they think battery cars are 'green'? At present, Australia is the top lithium miner and China's NEV drive will benefit them most. Although most of the known lithium reserves are in South America.

Despite its drive to control commodity prices, China is still not getting iron ore or coal prices down. Threats against 'speculators' are growing, but so far it seems this latest rise is more a reaction to regulators limiting supply.

As we have reported previously, Australia is challenging the Chinese tariffs on barley aimed at it. Now Australia is doing the same at the WTO against the Chinese for the tariffs the middle kingdom has applied against it for its wine exports. Neither action will be resolved soon and if the decisions go against China they will almost certainly appeal, stringing out the 'illegal' tariffs. But Australia's action won't be impressing Beijing as it ramps up its efforts to stand up to them. Beijing isn't used to being challenged.

They are also annoyed at Japan who have started an action against Chinese tariffs on stainless steel products.

In Australia, an influential economist now says their official cash rate will start rising in 2023.

Separately in Australia, their largest home loan lender has told brokers that they will assess borrowers on the basis of a 6.77% mortgage rate. This is now well above the assessment floors of the other major banks in Australia where ANZ is at 5.1%, Westpac 5.05% and NAB 4.95%. (We have an update of New Zealand serviceability test levels here.)

In Germany, producer prices are zooming higher, with input prices up +7.2% in May from the same month a year ago. That is their steepest annual rise in 13 years.

In virus news, the Delta variant (B.1.617.2) that first emerged in India, is now in a serious surge in Russia and parts of Europe, especially in the UK where it is well established. A key concern is its ease and speed of transmission. This is the strain raging in Fiji now and the one causing concern in Sydney. It is also causing concern in the US.

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In the US, a key Federal Reserve official said that he sees the first rate hike by the American central bank coming as early as 2022. This is way earlier than the recent indications from the Fed's own meeting dot-plot. Some people like the new shift. But it is a view that unnerved Wall Street, delivering an almost -1% retreat. Oddly, bond markets reacted by driving down yields, an unexpected shift.

Along the US-Canada border, there are two events to report that affect trade. First, the Americans are unhappy the Canadian government is keeping the border closed to people movements based on the pandemic risks. But perhaps more importantly, the Lake Ontario/St Lawrence Waterway levels are now so low they are affecting shipping in one of the world's busiest waterways. This is adding to supply-chain difficulties and adding to shipping costs with echoes internationally.

Canadians took out almost C$18 bln worth of new mortgage debt in April, the fastest monthly increase on record and enough to bring their total housing debt to almost C$2 tln and a +7.8% annual rise. (In Australia, and economy just slightly smaller than Canada, total housing debt exceeds AU$1.8 tln, and it is rising at about +6% pa.)

The UST 10yr yield starts today down -1 bp at 1.44% and giving up all of its gains since mid-June. The US 2-10 rate curve is holding at +119 bps. Their 1-5 curve is also unchanged at +80 bps, while their 3m-10 year curve is still at +140 bps. The Australian Govt ten year benchmark rate starts today at 1.51% and down another -2 bps. The China Govt ten year bond is still at 3.15%. And the New Zealand Govt ten year is now at 1.80% and unchanged at its higher level.

The price of gold starts at US$1764 which is down another -US$4 from this time Saturday.

Oil prices are a little softer at just over US$71/bbl in the US, while the international Brent price is just over US$72.50/bbl. The slow pick-up in drilling rigs in operation accelerated last week. In North America, there are now 300 more operating than this time last year, so they have now more than doubled in that time and are back to year-ago levels.

The Kiwi dollar opens today at 69.3 USc and starts this week a full -2c lower than this time last week, its lowest since November 2020. It is really all about a surging greenback. Against the Australian dollar we are little-changed at 92.7 AUc. Against the euro we are unchanged at 58.5 euro cents. That means our TWI-5 starts today at just 72 and a six month low.

The bitcoin price is now at US$34,555 and down another -3.0% from this time Saturday and -11% lower than this time last week. Volatility in the past 24 hours has been very high at +/- 4.2%.

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The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Daily exchange rates
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Oct 19, 2020 0.663
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Nov 2, 2020 0.659
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Nov 4, 2020 0.668
Nov 5, 2020 0.67
Nov 6, 2020 0.677
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Nov 9, 2020 0.68
Nov 10, 2020 0.683
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Nov 12, 2020 0.69
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Nov 16, 2020 0.688
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Nov 26, 2020 0.701
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Dec 18, 2020 0.715
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Dec 21, 2020 0.71
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Dec 28, 2020 0.712
Dec 29, 2020 0.711
Dec 30, 2020 0.716
Dec 31, 2020 0.72
Jan 4, 2021 0.718
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Jan 6, 2021 0.726
Jan 7, 2021 0.729
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Feb 26, 2021 0.735
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Mar 1, 2021 0.727
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Oct 19, 2020 0.663
Oct 20, 2020 0.659
Oct 21, 2020 0.659
Oct 22, 2020 0.665
Oct 23, 2020 0.667
Oct 24, 2020 0.669
Oct 26, 2020 0.669
Oct 27, 2020 0.668
Oct 28, 2020 0.67
Oct 29, 2020 0.665
Oct 30, 2020 0.663
Oct 31, 2020 0.662
Nov 2, 2020 0.659
Nov 3, 2020 0.663
Nov 4, 2020 0.668
Nov 5, 2020 0.67
Nov 6, 2020 0.677
Nov 7, 2020 0.677
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Nov 10, 2020 0.683
Nov 11, 2020 0.683
Nov 12, 2020 0.69
Nov 13, 2020 0.683
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Nov 16, 2020 0.688
Nov 17, 2020 0.691
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Nov 19, 2020 0.69
Nov 20, 2020 0.691
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Nov 23, 2020 0.696
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Nov 25, 2020 0.698
Nov 26, 2020 0.701
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Dec 18, 2020 0.715
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Dec 21, 2020 0.71
Dec 22, 2020 0.709
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Dec 24, 2020 0.71
Dec 28, 2020 0.712
Dec 29, 2020 0.711
Dec 30, 2020 0.716
Dec 31, 2020 0.72
Jan 4, 2021 0.718
Jan 5, 2021 0.717
Jan 6, 2021 0.726
Jan 7, 2021 0.729
Jan 8, 2021 0.726
Jan 9, 2021 0.723
Jan 11, 2021 0.72
Jan 12, 2021 0.717
Jan 13, 2021 0.723
Jan 14, 2021 0.719
Jan 15, 2021 0.722
Jan 16, 2021 0.713
Jan 18, 2021 0.713
Jan 19, 2021 0.713
Jan 20, 2021 0.712
Jan 21, 2021 0.719
Jan 22, 2021 0.722
Jan 23, 2021 0.718
Jan 25, 2021 0.719
Jan 26, 2021 0.719
Jan 27, 2021 0.724
Jan 28, 2021 0.713
Jan 29, 2021 0.717
Jan 30, 2021 0.718
Feb 1, 2021 0.718
Feb 2, 2021 0.716
Feb 3, 2021 0.721
Feb 4, 2021 0.721
Feb 5, 2021 0.716
Feb 6, 2021 0.72
Feb 8, 2021 0.719
Feb 9, 2021 0.722
Feb 10, 2021 0.723
Feb 11, 2021 0.721
Feb 12, 2021 0.723
Feb 13, 2021 0.722
Feb 15, 2021 0.722
Feb 16, 2021 0.724
Feb 17, 2021 0.719
Feb 18, 2021 0.72
Feb 19, 2021 0.722
Feb 20, 2021 0.73
Feb 22, 2021 0.731
Feb 23, 2021 0.733
Feb 24, 2021 0.734
Feb 25, 2021 0.744
Feb 26, 2021 0.735
Feb 27, 2021 0.723
Mar 1, 2021 0.727
Mar 2, 2021 0.727
Mar 3, 2021 0.73
Mar 4, 2021 0.726
Mar 5, 2021 0.717
Mar 6, 2021 0.716
Mar 8, 2021 0.718
Mar 9, 2021 0.712
Mar 10, 2021 0.717
Mar 11, 2021 0.719
Mar 12, 2021 0.723
Mar 13, 2021 0.717
Mar 15, 2021 0.72
Mar 16, 2021 0.72
Mar 17, 2021 0.719
Mar 18, 2021 0.725
Mar 19, 2021 0.72
Mar 20, 2021 0.716
Mar 22, 2021 0.715
Mar 23, 2021 0.711
Mar 24, 2021 0.699
Mar 25, 2021 0.698
Mar 26, 2021 0.697
Mar 27, 2021 0.7
Mar 29, 2021 0.698
Mar 30, 2021 0.701
Mar 31, 2021 0.699
Apr 1, 2021 0.698
Apr 2, 2021 0.698
Apr 3, 2021 0.703
Apr 5, 2021 0.706
Apr 6, 2021 0.706
Apr 7, 2021 0.706
Apr 8, 2021 0.701
Apr 9, 2021 0.705
Apr 10, 2021 0.704
Apr 12, 2021 0.702
Apr 13, 2021 0.701
Apr 14, 2021 0.706
Apr 15, 2021 0.714
Apr 16, 2021 0.716
Apr 17, 2021 0.714
Apr 19, 2021 0.713
Apr 20, 2021 0.72
Apr 21, 2021 0.718
Apr 22, 2021 0.721
Apr 23, 2021 0.717
Apr 24, 2021 0.72
Apr 26, 2021 0.72
Apr 27, 2021 0.722
Apr 28, 2021 0.72
Apr 29, 2021 0.728
Apr 30, 2021 0.725
May 1, 2021 0.716
May 3, 2021 0.717
May 4, 2021 0.718
May 5, 2021 0.717
May 6, 2021 0.723
May 7, 2021 0.724
May 8, 2021 0.728
May 10, 2021 0.728
May 11, 2021 0.726
May 12, 2021 0.725
May 13, 2021 0.718
May 14, 2021 0.718
May 15, 2021 0.725
May 17, 2021 0.722
May 18, 2021 0.724
May 19, 2021 0.724
May 20, 2021 0.718
May 21, 2021 0.719
May 22, 2021 0.717
May 24, 2021 0.717
May 25, 2021 0.722
May 26, 2021 0.726
May 27, 2021 0.728
May 28, 2021 0.728
May 29, 2021 0.725
May 31, 2021 0.725
Jun 1, 2021 0.729
Jun 2, 2021 0.726
Jun 3, 2021 0.723
Jun 4, 2021 0.714
Jun 5, 2021 0.721
Jun 7, 2021 0.721
Jun 8, 2021 0.722
Jun 9, 2021 0.72
Jun 10, 2021 0.718
Jun 11, 2021 0.719
Jun 12, 2021 0.713
Jun 14, 2021 0.714
Jun 15, 2021 0.714
Jun 16, 2021 0.713
Jun 17, 2021 0.71
Jun 18, 2021 0.701
Jun 19, 2021 0.693
Jun 21, 2021 0.693
Daily benchmark rateSource: RBNZ
BONDSGOLDCURRENCIESOILTWINZ$PRECIOUS METALSBITCOIN
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by richard1965 | 21st Jun 21, 7:47am
15
up
Congratulation to Jacinda Arden and Mr Orr for making NZ on top of the list for Housing Bubble in the world :

https://www.domain.com.au/news/these-are-the-biggest-housing-bubbles-in-...

And this lady's main election promise was to solve housing crisis.

Power corrupts.

REPLY REPORT COMMENT
by Tom Joad | 21st Jun 21, 8:09am
14
up
With the pandemic turning off the immigration tap for over a year where is the demand side being driven from?

Is it still not clear that this is all about supply of credit into residential housing? Turn that tap back and you will start to fix the problem - though the squealing of the banks and all other cheerleaders will be deafening.

REPLY REPORT COMMENT
by Ezy | 21st Jun 21, 8:34am
3
up
For many developed countries, the price ratios are now higher than they were before the financial crisis

Evidence that everything that led to 2008 has been amplified rather than fixed.

REPLY REPORT COMMENT
by rastus | 21st Jun 21, 8:39am
2
up
MSM waking up? About 10 years too late...

https://www.msn.com/en-nz/news/national/it-s-about-time-new-zealand-revi...

REPLY REPORT COMMENT
by Audaxes | 21st Jun 21, 8:12am
3
up
Beijing isn't used to being challenged.
Hmmmm,,, - The US’s greatest danger isn’t China. It’s much closer to home

The greatest danger we face today is not coming from China. It is our drift toward proto-fascism. We must be careful not to demonize China so much that we encourage a new paranoia that further distorts our priorities, encourages nativism and xenophobia, and leads to larger military outlays rather than public investments in education, infrastructure, and basic research on which America’s future prosperity and security critically depend.

There is More to BlackRock Than You Might Imagine
How Biden Can Leverage Missile Defense ... Read more

REPLY REPORT COMMENT
by murray86 | 21st Jun 21, 9:28am
0
up
Too late? A common tool of Governments to distract their populations from internal issues (seizures of power) is to create an external threat. The US has been doing it since the 50's, it is clear the CCP is doing it, Russia does it - nothing changes. It is how a powered elite hold onto their power. The trick for populations and media is to recognise the problem, call it for what it is, and use elections to hold Governments to account. Not as easy as it sounds!

REPLY REPORT COMMENT
by mikekirk29 | 21st Jun 21, 8:18am
4
up
China last week on here reported 3-4 times annual increase in sorghum and corn imports. I smell a rat

REPLY REPORT COMMENT
by powerdownkiwi | 21st Jun 21, 8:48am
1
up
https://www.scmp.com/economy/china-economy/article/3122680/chinas-food-s...

https://www.futuredirections.org.au/publication/china-struggles-with-foo...

https://blogs.timesofisrael.com/chinas-food-insecurity-and-supernatural-...

This is a problem that isn't going away: https://www.scientificamerican.com/article/only-60-years-of-farming-left...

REPLY REPORT COMMENT
by rastus | 21st Jun 21, 9:32am
0
up
Whoever created the video simulation of the Three Gorges Dam collapsing in link three will be on their way to a re-education camp. Crazy scary stuff.

REPLY REPORT COMMENT
by mikekirk29 | 21st Jun 21, 8:22am
3
up
Build to rent
Safe haven
Etc
Take a look at first quarter of Mauldin article
Perhaps this explains partially how demand exploded without immigration, apart from leverage and QE of course

https://ggc-mauldin-images.s3.amazonaws.com/uploads/pdf/TFTF_Jun_19_2021...

REPLY REPORT COMMENT
by rastus | 21st Jun 21, 8:43am
0
up
"China looking to grow its passenger car market" That seems a short sighted thing to do. Modernising itself by going backwards.

REPLY REPORT COMMENT
by Noncents | 21st Jun 21, 8:47am
1
up
"China is looking to grow its passenger car market by +10% this year. And a key part of that is an expected nearly +50% surge in sales of new energy vehicles."

I am guessing that their 50% of 10% growth is still 2-3 times more than the entire combined fleet of NZ.

REPLY REPORT COMMENT
by jimmyH | 21st Jun 21, 9:34am
0
up
When they have bargain priced popular EV like Hong Guang Mini EV,at $6500 NZ equivalent pricing, and those selling at 40000 units a month,maybe they can get to 50% new sales . Actually..if our rebate is $8500 on a new EV , why cant we land 10000 of them here? Getting paid to own one,at that price....rebate being 2k higher than the chinese locals purchase price...

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