Electric vehicle owners hit with big increase in ACC levies

Electric vehicle owners are being hit with a big increase in ACC levies, but commentators say it might not affect demand a lot.

As part of a wide range of levy increases that the government has decided to adopt, EV owners will have their ACC levy increase from $42.09 in the current year, the same as a petrol car, to $109.05 in the next financial year.

At the same time, a petrol car lifts to $49.38.

By the 2027/28 year, the levy for electric vehicle owners will be $122.24, twice the petrol rate.

It comes after the government introduced road user charges for electric vehicles and plug-in hybrids.

Miles Workman, senior economist at ANZ, said the impact on demand from the increase was likely to be small, given the other factors that affected the total cost of buying and owning an EV, like the exchange rate, shipping costs and interest rates.

Demand for EVs was also not purely motivated by price because many people bought them for environmental reasons, Workman said.

Brad Olsen, principal economist at Infometrics, said even at $122.24 the levy was relatively small compared to the cost of buying an EV.

"It's also not nothing.

"It's part of a wider move to reduce incentive support for EVs now that EVs have become more normal and mainstream."

It could have a very marginal impact on use and uptake of the vehicles but would not be significant, Olsen said.

ACC Minister Matt Doocey this week announced an independent review of ACC because of concerns about declining rehabilitation rates and increasing costs.

"ACC provides critical support to New Zealanders in times of need, but I am concerned that ACC's performance has been declining for a decade.

Rehabilitation rates are down, weekly compensation costs are up and average costs per claim are up," he said.

"This imposes significant costs on households."

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