Opportunity backs targeted tax incentives to accelerate business EV uptake 

Opportunity supports two targeted tax changes to speed up the electrification of New Zealand’s business fleet: fully accelerated depreciation and a two-year fringe benefit tax exemption for new electric vehicles purchased by businesses. Both measures would apply only to new EV purchases up to a vehicle price of $50,000, so support is directed to practical fleet vehicles rather than luxury cars. They would also have an automatic “sunset” in 2030, when EV uptake should be much higher and the market more mature.

Business fleets are the fastest way to build a stronger second-hand EV market in New Zealand. Businesses account for about 60% of around 150,000 new light vehicles registered each year. 

Fully accelerated depreciation would let businesses deduct the full cost of an eligible EV in the year of purchase, improving cashflow and largely offsetting the current EV price premium. The fringe benefit tax exemption would further strengthen the case for company EVs during the crucial early years of ownership, while also allowing for vehicles to be later on-sold to the secondhand market.

How much will this cost the Government?

We estimate the annual fiscal impact of accelerated depreciation will start at about $80 million and grow with further business uptake of EVs. Much of this cost will be recovered in later years as depreciation timing unwinds. We estimate the annual cost of the fringe benefit tax exemption to be about $25 million annually initially, growing to as much as $125 million with more extensive uptake. Both costs will be met from the “ringfenced” profits from state-owned gentailers set out in Opportunity’s Abundant Energy policy.