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EV, PHEV, ICE? Do we even need cars at all?

8 Feb 2024

I've already written about the fact that the New Zealand government is about to introduce road-user charges for EVs.

In the past week or so I've spoken to a number of EV owners who all seem rather sanguine about the matter.

However, owners of plug-in hybrid vehicles (PHEVs) seem a little less impressed with the changes.

PHEV users have voiced their concerns that the new RUC regime has the potential to double-tax them and effectively impose a financial penalty for their efforts to reduce greenhouse gas emissions.

Whilst the proposal to impose a partial per-Km charge on top of the RUC built into petrol prices for PHEVs may sound fair at first glance, there are a few holes which might justify the concerns and complaints being expressed by their owners.

Firstly, the battery-only range of some of these vehicles is pretty limited and, based on anecdotal evidence, seems to decline more rapidly than that of a pure EV. This means that well before the limit of their useful lifetime is reached, many of these vehicles will effectively become more reliant on petrol and less on being charged from a wall-socket.

As this transition to almost pure ICE takes place, the owners of these vehicles will be paying a higher rate of tax than either a pure ICE or pure EV user for their use of the roads.

Putting my devil's advocate hat on, there is perhaps some sense to the government's dual-tax strategy in this case. An old PHEV with near-useless battery may well be less fuel-efficient than a pure ICE vehicle, by virtue of the fact that it's having to haul around the dead weight of that battery and the generator/motor unit not found in the ICE.

With battery replacement costs for PHEVs being pretty high, it's unlikely that owners will stump up the pile of coin required to keep their vehicle operating at optimum efficiency which means they'll likely be scrapped or just driven solely on fossil fuel after a decade or so. Neither of these options is particularly good for the environment, is it?

To be honest, although PHEVs might appear to be "the best of both worlds" I think that's only true for a limited time. Buying a second hand PHEV might not be the smartest move on the planet if your goal is to safeguard the environment and keep your costs low.

So what do you do, if your existing ICE vehicle is getting a bit long in the tooth and due for replacement?

Do you go EV, PHEV or buy another ICE car?

Well EVs seem to be getting cheaper and better by the day so there's a lot to be said for not buying yet. If you wait another year or two you'll likely get a much better vehicle for the same price or similar levels of performance for much less cash.

PHEVs are, I believe, simply an interrim solution with a very limited lifetime (from an efficiency perspective). Like EVs they also have significant rates of depreciation and now, given the RUC situation, may be even less desirable.

If you buy a new ICE vehicle then you run the risk that, as EVs improve, the resale value of that car may fall precipitously. Then there's the very real potential for fuel prices to spike due to some kind of international crisis or simply because oil companies are forced to hike prices on falling demand.

Maybe the best solution would be to just wait. Keep maintaining your existing vehicle and review the situation in a year or two's time.

Personally, I drive my vehicles until they reach the point where it would cost more to repair them than to replace them. My old 1994 Toyota ute is still going strong, requiring nothing more than the occasional set of new tyres, an oil change and some windscreen-wiper blades.

It's not flash, it's not fast and it's probably far less comfortable than most people would feel desirable but my goodness, it's cost-effective; especially when I've not had to fill the tank sunce late October or early November because I walk everywhere in summer.

Another option, more popular in large overseas urban centres than here in New Zealand, is to consider not having a car at all and instead use public transport supplemented with the occasional rental when absolutely necessary.

Perhaps the real question should be: does everyone actually need their own cars and can we afford the energy cost of creating/operating so many vehicles?

Carpe Diem folks!

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