Why electric vehicles matter

For the past hundred years or so, our vehicles have served one main purpose: getting us and the stuff we need from one place to another.  

These vehicles have transformed society for the better in numerous ways, whether it’s responding quickly to emergencies, growing economies, getting us to our jobs, allowing us to go on jollies, or creating drive-in movie theatres. 

But, like any technology, these fuel-burning machines also come with what economists call ‘externalities’. They have heavily influenced our urban environments through the development of roads, car parks and far-off suburbs, they cause carnage when they crash into each other (and, a relatively recent development, into shops), and they have also played a large role in filling up our atmosphere with invisible carbon pollution that traps heat in the atmosphere.

As technology changes and electric vehicles continue to grow in popularity, we are entering a new era where they will be able to do as they have always done and move people and objects around - at lower cost and without the emissions that come from burning fuel - but they will also start to serve other important functions that make them valuable to the energy system. 

Here’s the rub: 

• Cars need to be counted as part of a household’s energy use, rather than being lumped into the ‘transport’ category. 
• We can reduce emissions and still use cars where needed, as long as we upgrade to electric equivalents. 
• Modern electric vehicles - large and small - will not just be for driving in the future; their batteries will also play a part in our energy system.
• We can increase our country’s fuel resilience (and improve our balance of trade) by electrifying our fleet and generating cheaper fuel locally rather than relying on expensive, imported fossil fuels. 

Jump to sections: 

• The big picture
• On the road again
• No time to waste
• Big batteries (with free wheels)
• Talkin’ bout my generation
• Close to home
• The Norwegian story
• What about hydrogen? 
• Hot potato, hot potato!
• Life is a highway

Hop on in. It’s going to be a wild ride. 

TLDR? Check out our infographic

The big picture

Climate change is largely an energy problem. Around three quarters of the world’s carbon emissions come from energy, and vehicles that burn fossil fuels contribute around one quarter of that total. 

Solving that energy problem in practice is a machine problem. If we want to reduce emissions, we need to upgrade from machines that burn fuel to electric equivalents that run on renewable electricity and transport is one of the sectors where this is now most viable. 

Currently, New Zealanders rely on three primary forms of energy: imported oil (around $15 billion a year), gas (piped and bottled), and a centralised electricity system made up of big power plants and lots of poles and wires.

New Zealanders spend around $40 million per day on fossil fuels, primarily petrol and diesel for transport. And the price of those fuels is expected to keep rising, as it has for decades. 

Where electricity is cheaper it makes sense to electrify transport, rather than import fuel. There has been much discussion about the price of electricity in New Zealand recently, but it is still much cheaper to own and run an electric car over the lifetime of the machine if it is charged at home, and buses, trucks, side-by-side ATVs and tractors are cheaper to run on electricity over their lifetime.

On the road again

New Zealand has one of the highest car ownership rates in the world, at around 1.8 cars per household. There are around 3.5 million small/medium cars, 500k utes, and 200k vans. 

The average distance driven per year is around 11,000km, or just over 200km per week. Those living rurally or commuting long distances drive much further than that (Rewiring Aotearoa CEO Mike Casey, who lives on a cherry orchard near Cromwell, clocks in at around 35,000 electric kilometres per year). 

Around one fifth of New Zealand's total emissions come from transport and 90 percent of those come from road transport.

The bulk of total kilometres driven in New Zealand (and most other countries) comes from vehicles that are regularly moving and travel longer distances, like taxis and vans and larger vehicles like trucks and buses. 

Traditionally, private cars have been included in the transport category. But that makes it sound like decarbonising cars is a decision for the transport sector, like car companies or the Ministry of Transport. Really, these ‘dinner table decisions’ lie with everyday New Zealanders who own those millions of cars. That’s why Rewiring Aotearoa’s economic and environmental analysis has recategorised them as part of the home.  

Cars use around 60% of a home’s total energy, while hot water and space heating (and some cooling in warmer areas) use around 15% each. Even if you could halve your heating usage with thermal upgrades it would only remove about 7% of the energy you use, but when you electrify your car, you’re removing a large chunk of expensive petrol or diesel from your bills and instead filling up with much cheaper electricity. EV owners charging at home with solar can save almost $20,000 over 15 years or around $10,000 if charged via the grid. 

EVs are often literally attached to the home: around 85 percent of EV charging happens there and, according to Consumer, around 60% of owners trickle charge with a standard plug. The owners are also pretty savvy: “70% of EV owners are on time-of-use plans, and of these, 96% take advantage of off-peak charging”.

You can’t make petrol at home, but you can charge your car via the grid (using a petrol price equivalent it’s around 60c per litre or 40c per litre at night) and you can make your own electricity through rooftop solar (about 30c per litre). Solar is the cheapest form of delivered electricity available to New Zealanders and the cheapest fuel for private vehicles. 

There's no time to waste

EVs are also a win on waste and material use because one of the biggest forms of waste is burning fossil fuels. A petrol car driven the average distance will consume its weight in fuel approximately every two years. Only around one quarter of that fuel is used to actually move the vehicle with the rest lost as heat, noise and vibration - and the pollution is basically buried in the sky. 

Modern electric car batteries are now expected to last longer than the car they’re propelling (more stopping and starting in real world conditions mean they are lasting up to 40% longer than in the lab). And when they’ve finished their life as people movers, more than 90% of the materials in a battery can be recycled and they can also be used for stationary storage. 

But shouldn’t we just have fewer cars? It’s something many environmental groups advocate for and we agree that fewer cars would be great. We want more electric public transport and more investment in infrastructure that incentivises active travel and makes it safer. But many New Zealanders - families with kids, the disabled, workers with strange hours, those with leisure pursuits that take them far from home, the elderly, or those living in rural areas - still need cars. 

Perhaps more importantly, they still want cars. We need to detach from the notion that a zero emissions future is about sacrifice. You can still tow your (electric) boat, go on your weekend (electric) road trip, and 4x4 better than ever before with electric motors on every wheel.

The cars that we do require need to be electric if we hope to address our climate issues. We don’t have enough time to wait for our cities and towns - and their residents - to completely change while we continue to burn fuel in our vehicles. Despite more investment into public and active transport in our cities (and the arrival of new businesses like Uber, Mevo and Lime) the vehicle fleet in New Zealand increased by almost two-thirds (around two million) between 2001 and 2021. 

Some argue that’s because there hasn’t been enough investment, but as a point of comparison, even in the Netherlands, which is often held up as a paragon of bike-centric transport policy, the vehicle fleet is increasing, especially outside of urban areas. 74% of homes have at least one car and the average distance driven each year by those cars is similar to New Zealand, even though it’s a much smaller country. 

Whether or not people like cars is not really a climate question, it's an urban development question. We can reduce emissions and still own cars as long as we choose electric versions, as we showed in a previous explainer ‘why going electric wins on emissions’. 

Basically, we believe it comes down to what should happen eventually vs. what can happen now. We can make this substitution with technology that exists today without waiting for city plans, central government funding and behaviour change. Climate change is an urgent and cumulative emissions problem, so the more emissions we reduce early, the lower the risks of climate destabilisation in future years. Carbon dioxide burnt in a vehicle can last 1,000 years in the atmosphere, so we are making decisions today that our children and their children will feel the impacts of.

We will still have congestion on our roads if we do a straight swap from fossil fuel to electric, but electric congestion is preferable in many ways because we will slash our transport emissions, improve air quality and reduce noise.

Big batteries (with free wheels)

Cars are crucial when we need them, but they sit idle for a large portion of their life. So what if they could be put to use when they’re not moving and act as energy storage? Technology like vehicle to home (V2H) or vehicle to grid (V2G) turns EVs from what many believe is a problem (‘the grid won’t be able to handle all this extra charging load’, which is BS, by the way) into a resource (‘batteries in cars could help smooth the peaks on the grid and power their home or their neighbours’ home and provide weeks of resilience in a natural disaster').

New Zealand’s electricity system has conventionally been dominated by large power stations generating electricity that is sent down all the poles and wires to homes, farms and businesses. But lots of a little is a lot and in the future, homes and farms with solar will be our biggest generator and all the electric vehicles will be our largest capacity battery. 

Electric vehicles already make economic sense because they are so much cheaper to run, but they also offer new opportunities. For example, someone installing a Tesla home battery today might pay about $15,000 for a 13.5 kWh battery, or about $1,100 per kWh of storage. In comparison, you can get a BYD Atto 3 with a 50kWh battery for about $50,000. In other words, it's a cheaper battery - that comes with a free car! The same is true of a $5,000 second hand Nissan Leaf.

It’s important to note than V2G chargers are relatively new to market, so they are still mostly in trials and not easily available, but that is expected to change soon. It’s also important to note that a battery by itself often still makes economic sense and provides home resilience when a vehicle is not parked, but the point to be made is that we are about to get a lot of energy storage that can help with the grid and can reduce the need for gas and coal fired electricity production - and it’s going to come free with our cars. A petrol tank doesn’t do that.

Some EVs can already run appliances (what’s known as Vehicle to Load). For example, you can already charge your laptop or run a fridge with some models, but these big batteries could be doing much more than that. A recent paper in Nature suggested “V2G can provide short-term storage when EVs sit idle, which is the case for over 90% of the time for privately owned cars. The technical feasibility of V2G has been demonstrated in over 100 pilot projects since 2002.”

This technology could also reduce the need for materials. “Equipping around 50% of electric vehicles with vehicle-to-grid or reusing 40% of electric vehicle batteries for second life each have the potential to fully cover the European Union’s need for stationary storage by 2040. This could reduce total primary material demand from 2020–2050 by up to 7.5% and 1.5%.”

Smart bi-directional chargers are able to distribute energy to the home or the grid when required (or stop charging if there is too much pressure on the network). Customers can also set limits via apps, so they can benefit from supplying energy to the market from their car but always maintain a minimum amount of charge so it is always ready to go. 

These chargers are also rapidly dropping in price and where cars are parked for a long time, like homes and workplaces, they make more sense. 

Recently, energy minister Simon Watts talked positively about batteries and EVs playing a key role in the future energy system, indicating broad political support for this tranche of decarbonisation. As reported in interest.co.nz: “I believe there should not be any barriers to consumers doing this now if their vehicles and electricity networks enable it."

Some of the changes proposed by the Energy Competition Taskforce around paying customers more fairly for their contributions to the network at peak times and other work on increasing export limits will make EVs with this capability more ‘bankable’ (i.e. owners can sell the energy in their batteries at peak times, charge them up when the price is lower and reduce the payback period). 

Australia is a fair way down this path and there is currently a national roadmap being created for V2G that will hopefully be implemented in New Zealand given assertions about fast following. With 1.5 million EVs expected to be on Australian roads by 2030, it is estimated that just 10% of them with V2G capability could meet around one third of the National Energy Market's total storage needs.

‍A trial in Baltimore using Ford F-150 Lightning utes, which come with a ‘back-up mode’ that can power homes that install extra kit, paid owners to take pressure off the grid. 

“EV owners simply plug in their trucks, and they automatically discharge to cover home energy usage between 5:00 and 9:00 p.m. on summer weeknights, when the electricity system is stretched thin cooling homes. Then the trucks automatically recharge overnight, when demand is lower and supply is more available.”

While many large vehicles like public buses are in use at peak times, some are well-suited to V2G. In the US, a scheme using electric school buses to support the grid (and get paid for it) has shown promise. 

Farmers often require a lot of machinery and, again, they are largely designed for one main purpose. But, as Forest Lodge Orchard has shown, if those machines are electric they will be cheaper to run - and if they can be plugged in at peak times and dump the energy stored in their big batteries automatically when the price gets high enough, it will make those machines more valuable. Anything that historically came with a petrol tank will now come with a battery that can reduce peak and earn money for the owner while it supports New Zealand’s energy system. Yes, that includes electric tractors, and 'household resilience' could even be a good argument for why you 'need' that new boat. 

It is clear that any energy strategy being developed needs to think of cars and other vehicles not just as consumers of energy as they have been in the past, but as providers of energy storage in the future. 

Talkin’ ‘bout my generation

Obviously, when someone buys an EV, the need for petrol is reduced, but the need for electricity rises. The electrification of transport will require a lot more electricity, with some estimates suggesting double the current amount.

Some of that will come from new large-scale generation, but rooftop solar should provide a lot of it as it is the cheapest electricity available to customers. As we wrote in our last explainer ‘why solar makes sense’, rooftop solar is not really about reducing emissions from the grid (because our grid is already around 80% renewable), it’s about creating more electricity to offset fossil fuels in the wider energy system, particularly petrol and diesel for vehicles. Around two thirds of the country’s total energy still comes from fossil fuels and this is what we need to reduce. 

It’s also about reducing costs for everyone on the network. If these vehicles are charged during the solar window or outside of peak times, they will actually improve the utilisation of our existing assets and we can do more with less, lowering electricity prices for all New Zealanders. 

Like a highway, there is pressure on the grid at certain times but most of the time it flows pretty smoothly because it’s nowhere near full. The average utilisation rate of our poles and wires is around 40% – as in, on average, they are only 40% full. So the grid can definitely handle more vehicle charging, without the need for new poles and wires to be built. We just need to harness technology and charge smartly.

The more efficiently we use these existing assets, the higher that average utilisation rate will be, and the lower the cost for all customers. 

Close to home

When you think about the current system, it’s kind of crazy that we’re so reliant on expensive, volatile, imported fossil fuel molecules. It’s an inefficient system and if the boats don’t turn up - either due to a dodgy ship (like the one that can’t make it to the Chatham Islands), a natural disaster that takes out some of our ports, or geopolitical strife that moves us down the priority list - things will quickly grind to a halt in New Zealand. We are very vulnerable to sea-borne oil.

Instead, we could be using locally produced renewable electrons - many of them generated cheaply on our homes, farms and businesses - to power more efficient electric machines. More distributed generation creates a more resilient network, as there is less vulnerability to one point of failure affecting the whole network. 

China, which also felt it was vulnerable to sea-borne oil, has invested heavily in electrification and renewable generation and it has led to improved energy security, emissions reductions, less air pollution, sector growth and what some call the first modern ‘electrostate’.

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A recent MBIE report on fuel security in New Zealand compared different options based on cost and effectiveness and showed that re-opening the Marsden Point Oil Refinery to support the use of more fossil fuels would be very expensive and not very effective. 

At the other end of the scale, accelerating the transition towards electrification outlined by the Climate Change Commission is about double the "usefulness" and 17% of the cost of Marsden. 

Electrification is also a better option than increasing biofuel adoption (which has long been talked about but is tough to source and much more expensive than standard fuel).

Rebooting Marsden Point would be the government equivalent of buying a Blackberry after the iPhone came out - and paying more than five times the price for it. 

This MBIE report only looked at fuel security and didn’t factor in the broader economic and climate benefits of electrification, which are arguably even bigger. As we pointed out in our Investing in Tomorrow report, a rapid rollout of electrification would see New Zealanders saving $29 million per day or $11 billion per year by 2040 as a result of avoiding fossil fuels.

The Norwegian story

In Norway, a long, thin, sparsely populated, wealthy country with lots of cheap hydro generation (sound familiar?), over 90% of new car sales were fully electric in 2024, in large part due to government incentives aimed at increasing adoption and investment in charging infrastructure (Denmark is currently next on the podium at 50% share). For new urban buses, the EV market share reached 72% by the end of 2024 and it has goals for new larger vehicles to be zero emissions by 2030. 

Despite having a large oil and gas industry, it is set to be the first country to stop selling petrol and diesel cars, something that could happen as early as this year. They’re doing this even though they still drive a lot: the average distance driven each year is similar to New Zealand at around 11,000km. 

Its policy aims to reduce emissions from transport by 50% compared to 2005 levels by 2030. Road transport emissions decreased by 18.5% from 2015 to 2022. 

All the incentives - no carbon taxes, no road user charges, lower tolls, no VAT below a certain price - are expected to cost the Norwegian government $8 billion in 2025 compared to 2007 tax levels. But the country has wisely seen this as an investment in improving the environment and reducing transport costs. 

This level of incentivisation is unlikely in New Zealand, but the economics of EVs already stack up over the lifetime of the vehicle and there is potential to roll out low-interest long-term loans for electrification upgrades, which would come at no or negative cost to the government and help speed up adoption. We have some of the most expensive petrol and diesel in the world, and this makes us one of the first countries where electric car economics clearly enable us to save money.

What about hydrogen? 

Some still believe hydrogen vehicles have a future, but they are 2-3 times less efficient than electric vehicles, and clean hydrogen needs to start with electricity anyway. As such, they are much more expensive to drive than electric vehicles. They are also much harder to fill up, as many early adopters have discovered.

We don’t have hydrogen pipelines (and hydrogen is notoriously difficult to store) and very few filling locations, but we already have an electricity system going to every home and business.

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Hydrogen might have a role in some very difficult to decarbonise sectors, like aviation, shipping or cement making where the advantages outweigh the inefficiencies, but generally anything that can be done with a battery will be much cheaper than doing it with hydrogen.  

We are seeing this play out every year with more and more big machines like buses, trucks and even huge mining equipment moving away from hydrogen plans and towards battery electric plans (it’s not all about the batteries, however: at Macraes mine, one of their electric excavators is actually plugged in). 

Hot potato, hot potato!

There is quite a lot of talk about EV price depreciation and resale value, but we are not really talking about petrol car price depreciation. In the next five years or so, we may start to see a big game of petrol car hot potato, first between New Zealanders, and then between other countries. 

We are likely less than 2-5 years away from reaching the parity point where new EVs are the same price as internal combustion carsat the showroom. Gartner believes it could come as soon as 2027 and in New Zealand there are currently massive discounts on many EVs of between $30-60k. Some EV models are cheaper than the equivalent ICE small/medium SUVs and these deals keep coming. 

At this point it becomes even more obvious that owning a petrol car is a bad economic decision, because they cost more to run and service.

This means it will rapidly become much harder to sell any petrol car, meanwhile petrol prices will keep going up as people use petrol stations less, and more car owners will try to sell off their petrol vehicles, creating a vicious cycle or ‘death spiral’.  

As EV adoption grows, petrol stations and petrol supply lines will start to shrink and prices will increase further (something we are also starting to see happening with the gas network). 

A bunch of New Zealdners will be left holding the hot potato of a petrol car they don’t want and it will be costing them far more than their neighbours’ electric equivalent of the same car. We will then try to palm off our hot potato petrol cars to other countries, but whoever does this too late in the transition will be left holding all the old cars. And it is very unlikely to be a tourist attraction like Cuba. 

This is an important consideration for our country. If the Government doesn’t incentivise this shift with good policies and better regulation, it may be too late and New Zealanders will pay the price for a lack of vision and lack of understanding of energy economics. 

Life is a highway 

Cars are important tools for many in the modern world, and other vehicles are literal engines of prosperity. Fossil fuels have taken us a long way - quite literally in the case of transport. But like the horse and cart, the fax machine or the Blackberry, the fossil fuel vehicle will soon be a novelty. 

An electrified vehicle fleet will no longer rely on expensive, imported, polluting fossil fuels, and instead will rely on homegrown renewable electricity, much of it coming from solar on rooftops, farms and businesses. 

Right now, the number of electric vehicles in New Zealand is small as a percentage of the total fleet, but sales continue to grow as the upfront costs keep dropping and the technology keeps improving. New Zealanders are starting to see the economic, environmental and resilience benefits of driving with electrons. And the other roles these electric machines will play in energy storage will make them an even better investment.  

Petrol has a mass density of 750g/Litre, which is about 37.5Kg per tank (of 50Litres).

A petrol car weighs about 1,600 Kg (Corolla = 1,300kg, RAV4 = 1,600kg, Ford Ranger = 2,000kg).

The average car drives about 11,000km per year, and consumes about 10L/100km. In total, that is 1,100 litres, weighing 825kg.

So the average car consumes its weight in about 24 months. Or if driving a lot, maybe 12 months.

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