When New Zealand rolled out the Clean Car Discount Policy, it was hailed as a game-changer for reducing vehicle emissions. But did it truly deliver on its bold promises? To unpack this, the team at AutoFlip sat down with Phill Haynes, a self-described "fixer & strategist" with decades of experience in automotive retail, policy, and urban mobility. With his knack for turning complex problems into actionable strategies, Phill breaks down what worked, what didn't, and what's next for clean cars in New Zealand.
The Promise of the Clean Car Discount
On paper, the Clean Car Discount had a simple plan. Reward the good (EVs and hybrids), penalise the bad (high-emission gas guzzlers), and let the magic of incentives and penalties reshape the buyer's market.
Rolled out in July 2021, it introduced a highly visible rebate system to make low-emission vehicles more affordable. The initiative would be funded through fees on higher-emission cars. Buyers of new electric vehicles (EVs) could receive up to $8,625, with lower rebates for used EVs and hybrids. On the other hand, vehicles emitting higher levels of CO2 faced penalties, with the intention that the financial nudge would drive demand for greener alternatives if a greener practical alternative was available.
The Clean Car Discount was part 1 of a 2-part Clean Car Policy: A Two-Pronged Approach
The clean car policy relied on a two-pronged approach: the ‘extrovert’ Clean Car Discount and an ‘introverted’ Clean Car Standard.
Introduced after the public Discount, the Clean Car Standard was a behind-the-scenes hidden policy that started in January 2023 to hold vehicle importers accountable for reducing CO2. It forces CO2 emissions annual targets on each light vehicle, passenger cars/SUVs and commercial LCV vans/utes. Importers who bring high-emission vehicles into the fleet are required to pay penalties as $ fee per gramme above target or offset these with credits from low-emission ones. Phill described it as a "balancing act where importers either meet targets through cleaner sourcing or pay up.”
“It created some internal financial benefit for cleaner cars and financial pain for higher-emission ones into the importer’s planning and budgeting."
This dual structure, Phill explained, was inspired by European policies but modified to fit New Zealand’s market. “In theory, it created a balance,” Phill said. “But in practice, applying a model designed for new cars to a market that’s 50% used imports was always going to be tricky, as used auction prices have no set landed price or production schedule like New has, so price-elasticity works differently.”
Despite the complications, the Clean Car Discount had lofty ambitions. It sought to make EVs more accessible and set New Zealand on a path to achieving its climate goals. “The intent was right,” Phill said. “A buyer-user-pays ethos matched with clean-up-incentive should have appealed across the market like ETS is intended to. But it gets political when you’re not starting with a blank canvas, the execution can get messy because it’s chained to decades of behaviours, and in isolation works against other taxation policies, as well as being a new direction.”
Where the Clean Car Policy Succeeded
For all the challenges it faced, the Clean Car Discount had its wins. It delivered some clear victories, particularly in the new vehicle market. “It worked really well for new EVs,” Phill explained. “That $8,625 rebate was a game-changer, especially for families and businesses looking at more affordable options like the MG eZS Electric – at a net discounted $42,000, only $6,000 more than an equivalent Toyota Corolla hybrid or Mazda CX3”. The financial incentive made EVs far more attractive, bridging some of the price gap between traditional internal combustion engine (ICE) vehicles and their electric counterparts. For a brief period of one year, hybrid volume increased too before the emission bands were amended to exclude them; this proved there was a larger market for small and mini car hybrids than traditionally so, for both New and Used cars.
But in 2021-22, that meant more discounts and higher policy costs than the offset penalty fees meant to balance it out; it was ‘too successful, too attractive’, so the Minister changed the emission bands and reduced discounts. As Phill explains, “The Hybrids dropped back to normal volumes, a bummer, while EVs carried on selling – kind of proving the discount didn’t really need to be over $6,000 or so for an EV, and that only $1,500 was needed for the efficient hybrids.”
“I personally would be critical of the 2022 changes to discounts being too severe – the devil is always in the details, and an on-off, yo-yo, panic response was poorly judged – if $5,000 helped sell a New PHEV, with a similar price to a full electric BEV then it showed people will move cleaner for just $5,000, leaving some still available in the balance pot for hybrid choices and downsizing car choices.“
Raising Awareness About Emissions
The policy also succeeded in bringing EVs and hybrids into the mainstream. Phill noticed that the Clean Car Discount turned vehicle emissions into a factor many buyers were considering for the first time. “It pushed emissions and efficiency up the priority list,” he said. “Even people who weren’t ready to buy an EV were at least aware of the options and the cost implications of sticking with high-emission vehicles – it brought forward some EV demand.”
Driving Market Change
Beyond just awareness, NZ fleet data suggests that the policy had a tangible impact on vehicle registrations. EV and hybrid sales surged after the rebate was introduced, helping shift the market toward cleaner technologies. “The numbers speak for themselves,” Phill noted. “The discount rebate incentivised sales and also manufacturers to launch new models earlier or at more competitive prices, knowing they could appeal to a broader audience.”
Setting the Stage for Long-Term Goals
Perhaps one of the policy’s most understated successes was its role in setting the stage for New Zealand’s long-term climate goals. Increasing the share of EVs on the road and creating a conversation around sustainable transport and renewable electricity laid the groundwork for future shifts in consumer behaviour and policy evolution. It also helped boost recognition for more charging infrastructure installation, with EECA also offering grants for new charger coverage.
Challenges and Shortcomings of the Clean Car Policy
While the Clean Car Discount delivered wins in the new vehicle market, it faced significant hurdles in addressing the unique dynamics of New Zealand’s automotive landscape. Once factoring in Used imports and our Kiwi capability to keep vehicles on roads longer, it becomes a bit more complex. |  |
Limited Impact on the Used Car Market
New Zealand’s reliance on used imports made the Clean Car Discount less effective for many buyers. “The rebates for used EVs were much lower—around $1,000 to $3,500 compared to twice as much for new cars,” Phill explained. “But that wasn’t the only problem.” Global demand for used EVs, particularly ex-Japan, had already driven up auction prices of the limited supply available before the policy’s introduction. When demand at the auctions in Japan increased further due to the rebate because no more supply was available, prices followed demand up, eroding much of the intended affordability at a transactional yard price. As Phill explains, “landed cost went up – the consumer saw prices go up, then had to claim the discount as a rebate after to rebalance the cost back down, a totally unintended consequence the MoT was warned would happen.”
Adding to the complexity was the limited supply of used EVs volume and choice. “Japan just didn’t have enough electric vehicles in the age and price bracket we were importing,” Phill said. “New Zealand was already taking the lion’s share of what was available, mostly small hatchbacks, and there was only one SUV model available, as a PHEV. The Clean Car Discount created demand we couldn’t fully satisfy, which inflated prices even more. The incentive didn’t work to ease availability and access costs for use, either as discounts or as penalties; it just limited demand and sales.”
This really compounds the complexity, as Phill explains, “There were fewer fresh imports, while vehicle ownership remained high, meaning older used vehicles stay on the road longer. The issue with this is that the Clean Car Policies or Government does not measure the fleet emissions profile. Only the average grams per km at the entry to the fleet as imports are measured. This cause and effect ultimately works counter to the objective of the policy as older vehicles have way higher emissions than even a V6 3-litre 7-year-old fresh import!“
Affordability Issues for Lower-income Consumers
While the rebates helped some buyers access cleaner vehicles, though, with little net financial benefit, the penalties on high-emission vehicles disproportionately impacted lower-income consumers. “The penalties pushed up the cost of older or medium-sized ICE vehicles with larger mid-size engines, the ones people on tighter budgets rely on,” Phill noted. This created a scenario where cleaner options weren’t affordable enough, and older, higher-emission cars became even less accessible where there wasn’t an alternative. So, buyers either keep their existing car longer, compromise with a smaller one, or pay a bit more for a cleaner car, like a hybrid, which isn’t any cheaper now than before.
Mismatch Between Policy Design and Market Realities
Phill highlighted a key flaw: the policy’s one-size-fits-all approach didn’t account for the nuances of New Zealand’s vehicle market, and it is only aimed at buyers, not owners. “The Clean Car Discount was trying to do two things—shift the used import market and the new car market through buyers still buying a vehicle —but it didn’t differentiate between used and new,” he explained. The result was a system that excelled at boosting new EV sales but struggled to create meaningful change in the used market, where most Kiwis shop and arguably choices are influenced more by life factors. All this was at a time when vehicle prices and specifications were rising, while emissions of passenger cars were already reducing anyway.
Was the Clean Car Discount Effective?
The Clean Car Discount achieved mixed results. It successfully boosted EV adoption in the new vehicle market and raised awareness about emissions, marking a crucial step forward for New Zealand’s climate goals. However, its impact on the used market—the backbone of the country’s car sales—was limited. As Phill said, “The policy raised demand but couldn’t address supply issues or price inflation on used EVs.” While it encouraged change, the policy’s one-size-fits-all approach struggled to balance the needs of different market segments, leaving room for improvement in future iterations.
In 2024, though, the new government revoked the discount part of the policy, which also timed badly with a stalled NZ economy and road user charges being reinstated to EVs. According to Phill, “Without the Discount on EVs and hybrids, CO2 emissions of imports have jumped back up, and we will now fail both of 2024’s Clean Car Standard targets for Passengers and Commercials by over 10%. This is because, in truth, for anyone other than Toyota NZ, achieving the Standard’s target relied mainly on boosting EV sales, not on reducing emissions of ICE or non-EV imports, several of which don’t yet have a viable or affordable alternative.”
“So now we have gone back to the pre-2021 slow, steady increase in electrification. The hybrid is now king as it was before, but now between $2,000 and $5,000 higher price than they were in 2021! Subtlety would have been a better policy than a layered-up stick and carrot.”
Lessons for Future Policies
For all the highs and lows of the clean car discount policy, one thing is clear: it offered valuable lessons for future policy design. As Phill puts it, “It’s like it needed to happen, to go wrong to enable the next stage, but it was never going to survive election cycles because it was divisive. You can’t use a one-size-fits-all approach here; it’s too polarising to last in an MMP environment, let alone its commerce.” |  |
Phill noted. “The used market is fundamentally different—there’s no fixed price or unlimited supply, and global dynamics heavily influence it. That needs a completely different strategy, one aimed at ownerships, not just purchases.”
Phill emphasised the importance of balancing environmental goals with affordability, especially for lower-income buyers. “If the penalties on high-emission cars push prices too high, it’s the people with the least options who get hit the hardest. If they have a choice, the next cheapest choice goes top of the list, at the compromise of something elsewhere in their lives, something the average CO2 grammes/km probably hides or doesn’t measure,” he explained.
Another suggestion was that future policies should create incentives to support all market segments, buyer types, and vehicle types. Phill believes “new incentives should particularly target businesses, complemented by taxation changes. Disincentives could be aimed more subtly at total ownership costs, such as fuel prices where the ETS is supposed to have an impact but currently falls short. These changes should avoid exacerbating financial pressure on those already struggling.”
New Zealand could also benefit from learning from global successes. Phill pointed to Norway’s tax exemptions as a practical model; it’s simple and clear, noting that “it’s expensive to do, and who pays, but we should be honest and clear about if we can or can’t afford the right tools and if EV is the chosen answer or not. Tax incentives and reform work, and they don’t just work for EV buyers—they shift the whole market by making cleaner choices the easier, more affordable option throughout the vehicle’s life. Through businesses, through rentals, through leasing, as well as private buyers.”
Lastly, simplicity is key. “Complex policies lose people, especially layering them at the same time, not allowing one to become effective before starting the next one”, Phill explained. “If it’s too hard to navigate, it creates resistance instead of adoption and becomes opaque, hard to use or hard to challenge. A clear, consistent system that’s transparent to consumers and importers and aligns new and used markets would go a long way.” By addressing these lessons, future policies could build on the Clean Car Discount’s foundation to create more equitable and impactful solutions.
“At the end of the day, it will have a cost if it’s worth doing, and it’s too idealistic to just tell the user to fund it because choosing comes before using, so incentive always comes before disincentive – it’s hard to time the two elements together to cost neutral all in the same year.”
A Good Start to Reducing Emissions, but Room for Improvement
The Clean Car Discount was a bold step toward reducing New Zealand’s vehicle emissions. It successfully increased EV adoption and raised awareness about cleaner transport options, but its uneven impact, particularly in the used market, revealed significant gaps and flaws. Phill said, “It was a good first step, but it didn’t solve everything, so the adjustment was necessary, but cutting it short just blew the benefits and continued the tax relief of an ineffective ETS scheme that isn’t reducing fossil fuel consumption at the pump.”
Future policies must address affordability, tailor solutions for different markets, and learn from global successes to create a more equitable transition. The journey toward a greener automotive landscape is far from over, but the lessons learned can pave the way for smarter, more impactful solutions.
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