Barriers to EV Uptake in NZ
Driving Collaboration and Overcoming the Barriers for EV Adoption
Panel Members: David Vincent, Ken Shirley, Gavin Young, Oz Jabur, Steve West
One of the most relevant topics for the Better NZ Trust’s #LeadingTheCharge campaign at the EV World conference was the Leaders Panel: Driving Collaboration and Overcoming the Barriers for EV Adoption.
Because if there are legitimate, insurmountable obstacles preventing people from purchasing electric vehicles, then the work the Better NZ Trust carries out, would be as frustrating and futile as taking a child window shopping in a candy store.
The first step in overcoming barriers in EV Adoption is to identify them. And the first speaker in this session was David Vincent who has been doing just that in his role on the government initiated EV Leadership Group. The group is an amalgam of government departments and the industry sector. An initial mandate instilled by former Minister of Transport, Simon Bridges, and reinforced by the Associate Minister of Transport, Julie Anne Genter, was ‘to identify the impediments for the uptake of EVs and make recommendations as to how to get over them.’
Read the full transcripts from the panel discussion below.
To summarise, the main barrier to EV Adoption is in the heavy fleet area, with lithium-ion batteries being impractical for high payload vehicles like tractors. Although stop/start vehicles like rubbish trucks and buses or long-haul semi-trucks are slowly and successfully being introduced.
The second major issue is the high initial purchase price. Used imports are driving uptake and stocks are unlikely to dwindle in the near future, but will eventually be joined by ex-fleet vehicles, buoying the second-hand market.
Other issues that are often touted as prime barriers, such as lack of off-street parking or multi-dwelling buildings will not be a problem with technology already available to overcome these issues or tech that will be available by the time mass adoption occurs.
In the past year, customer EV-IQ has increased with intelligent questions being asked and industry representatives report that their own response to these questions has improved with ongoing training. A recent survey of Mercury customers around the country indicates that nearly 50% of people are seriously considering an EV for their next vehicle purchase.
[Transcripts Start Here]
DAVID VINCENT
David is the CEO of the Vehicle Import Association (VIA), who represent the used vehicle industry, ie: export agents, shipping agents, inspection companies, importers, wholesalers, and retailers.
“Some five years ago, some members of the VIA recognised opportunities with EV and started importing them. They were learning as they went along and we started learning to support them,” David said. “Used vehicles are leading the charge for the uptake of EVs in New Zealand. That may have started organically, but is now part of the official strategy. It’s quite deliberate because we know that we’ll get the early penetration. As the corporations and government departments come on board with purchasing new EVs, they will gradually feed through to the used fleet.”
Used Vehicles are leading the charge for the uptake of EVs in New Zealand.
David is also the Chair for ITS NZ (Intelligent Transport Systems). He believes everything is going to be EV. “Electric Vehicles are a subset for intelligent transport and makes it a perfect fit for what we are doing.”
David’s background clearly makes him an ideal candidate for sitting on the EV Leadership Group, where the 10-12 members cover a range of topics from: supply, education, training, pricing, standards, regulations, rules and laws. A variety of government departments, such as IRD, Worksafe, Ministry of Business, etc, report to the group with their current concerns.
“We ask questions and make recommendations, and they just rush off and do stuff,” David says. “It’s a prime example of collaboration. It’s a very good example of government initiative and is well supported by industry and government departments.”
Questions from the Floor
Q: Is there a risk of lack of Used Stock volume, or more specifically, is there a risk of Japan holding onto more of its used EV stock for longer, because they seem to last longer?
“This is something that we monitor all the time because we’re limited to importing vehicles that were manufactured 3, 4, 5 years ago. In particular, the Japanese government, but also the UK, both of which are the source of the majority of our used Stock, have got incentives in place. They’ve got a set cycle in which the vehicles go through in terms of both lease, and depreciation and shaken, which is a strict vehicle inspection programme.
“We draw from the Japanese domestic auto market, and the Japanese government are very keen to encourage the manufacturers to make and sell into that market. They’re very keen to export their used vehicles from the market. Overall, there are about a million vehicles exported annually from the Japanese domestic market, which gives a huge opportunity for Japanese manufacturers to resupply the market. So there’s a continuum there—a refreshment of their own fleet, and we benefit from that. The key point is that whenever any country has subsidies or incentives or accelerated depreciation, we’re able to import those subsidies along with the vehicle. So, although NZ doesn’t have subsidies of its own, we’re getting subsidies certainly from the UK and certainly from Japan.”
Q: We seem to have plateaued at about 500 registrations a month, apart from a bit of a dip with a speed wobble earlier in the year. What do we need to do in NZ to push through that glass ceiling?
“That’s a valid point. The 30 kWh LEAF had a problem with the battery and it really slowed sales down quite considerably. The problem was identified by Flip The Fleet—a group of citizen scientists in NZ who collect data from a whole host of EV Owners on a regular basis. On analysis of this data, they identified a trend of accelerated degradation of that particular battery model. That information was fed up to Japan fairly quickly. We didn’t get any response from them at all. They just took the information. But then within two and a half months, Nissan had identified the problem. It was a software problem on the recording of the state of health of the battery, rather than the actual battery itself. So they developed software patches and rolled them out to each of their different model markets. When Japan received theirs, we were able to get it here.
“That happened within 2½ months and that’s pretty quick for identifying a problem, dealing with it and releasing the fix. That was released last week and that should pick up sales again.
“The speed wobble was the Stink Bug problem earlier this year. We lost all imports for seven weeks, a huge drama that meant close to 50,000 vehicles that didn’t come in during that time. Just yesterday, the Ministry of Primary Industries released a new Import Health Standard which controls the way new and used vehicles are inspected when they come into the country to ensure our bio-security. And we’re very pleased with that. Our members have spent literally a million dollars to install a heat treatment plan in Japan in anticipation of this health standard to ensure we don’t have that problem again.
“So those were blips. We’re now back on the trajectory for EV uptake.”
KEN SHIRLEY
The symposium took a change of direction when we heard from the next panel member, Ken Shirley, CEO of the Road Transport Forum, which is essentially the trucking industry. Ken also sits on the EECA panel for Contestable Funding.
He began by commenting that the industry recognises the global de-emissionisation of removing diesel from the vehicle fleet. “Our industry will be dragged kicking and screaming into the rest of the century, because it is a global phenomenon,” he said.
“All the big manufacturer brands are moving fast in developing electric trucks of various forms.” Ken used the example of a Fortune 500 corp, Cummins Inc. "Their heavy diesel motors are used by many truck brands. Cummins have committed to develop electric motors for heavy vehicles."
“Diesel engines are good with heavy payloads, but are notoriously inefficient at low torque,” Ken said. “By comparison, Electric motors have a lot of inherent advantages which we must recognise. Envirowaste and Ecowaste electric rubbish trucks are already on the road and on display outside because their stop/start functions at low speeds are ideally suited to electric motors. Buses are the same.
“Our industry will be dragged kicking and screaming into the rest of the century, because it is a global phenomenon,”
"As well as the global determination to take emission out of transport for eco reasons, there are also health issues with diesel. Over the last 20 years there has been a massive 95% reduction VOCs and particulate matter but the health departments are still saying, ‘not enough.' Diesel bans in European areas, means it's the end of the road for diesel in many respects.
“Urban Form issues include a desire to have more deliveries of freight in the evenings to avoid congestion. Electric trucks have less noise in dense urban environments for night time deliveries.
“But the main challenge with heavy fleet uptake of EV seems to be the lithium-ion battery. It is limited in payload. With freight, payload is everything. Roughly all the goods one buys, has a built-in road transport cost of approx. 12% retail price. So there is a lot of pressure to drive freight rates down at every opportunity.
“There are some long-haul trucks globally. In the US, the interstate distribution network for the massive brewery Anaheuser-Busch utilises 40-odd Tesla semi-trucks. They are also working with Nikola’s electric semi which uses a hydrogen fuel cell to overcome the payload issue. Toyota and other brands are putting a lot of effort into developing hydrogen fuel cells.
“We’re at an exciting stage. There won’t be a single solution. There will be a lot of parallel solutions.”
Questions from the Floor:
Q: In terms of the balance of the shift to EV phenomena in NZ at the moment, is there enough going on for the heavy fleet from your members’ point of view?
“The uptake is occurring at about the rate that you’d expect. The life of a prime mover or heavy tractor unit is only five years, fifteen for a heavy trailer. So, with a five year life cycle in its first use, and as an industry as a whole, the uptake could be quite rapid. We are technology takers and all of the truck manufacturers are international. It’s a global phenomenon and we’ll be moving in sync with those measures.”
Q: But in your mind do fuel cells have to come sooner rather than later? Will we need a hydrogen refuelling network?
“There’s a lot of work going into that tech too. It’s quite exciting and there may also be other options, but the problem with lithium-ion for 40 – 50 tonnes is that you’d need a third trailer full of batteries. Payload is everything and that is the limiting factor in terms of lithium-ion.”
GAVIN YOUNG
The next panel speaker was Gavin Young, service manager of Hyundai NZ. Gavin has been with Hyundai NZ for nearly ten years, but has been associated with the Hyundai product for about 17 years.
“I can honestly tell you that the space in which the technology around the electric side of things, particularly with Hyundai Motor Group, has accelerated far beyond my expectations," Gavin says.
“Because Hyundai NZ is an independently owned and operated distributor globally, we have a greater flexibility in introducing these alternative powertrains and electric vehicles into our market. Hyundai has been quite progressive in the eco-space. Yesterday we launched the Kona, which was well received by the journos. Hyundai is preparing to introduce 18 electric vehicles by 2025. A lot of those will find their ways to NZ.
"Billions and billions of dollars by Hyundai Motor Group are going into R&D. We are looking at a number of opportunities to bring new technology to NZ including alternative fuel and powertrains like fuel cell technology, battery manufacturing, weight and vehicle processing. Manufacturing is getting better and improving. In fuel cell space, just this week, the Commonwealth Research Institute in Australia announced it is finding alternative ways of storing hydrogen in other forms to improve transportation. So, these technologies will trickle through to NZ, potentially addressing all these concerns and barriers in the coming years. The bigger thing for us is looking ahead.
“We're doing a lot of collaboration with a lot of people and companies in the industry, such as fleets, lease companies, corporates, and our dealer network. We are having that discussion with customers. Customers are coming in asking questions about EV and there is a lot of information to digest. Education for customers, asking the right questions to get the right product (PHEV, EV, trad.) Is the Ioniq or the Kona the vehicle for you? Or will you be suited to a PHEV so you can have that range ability? Once we start drilling into the nuts and bolts of that conversation, they may realise that while 200+ km range for city driving seemed a little short, in reality, they are only doing 30-40 km per day. Put into that context, then yes that car will be perfect with them. We are not just a pure distribution business. We’re having conversations around charging infrastructure. When we launched the Ioniq in Feb last year, we essentially had just six months to get our head around a whole lot of things in the EV space. Particularly myself. I’ve faced those challenges head-on and did a lot of research and read up on stuff in my own time. And obviously, training is part of that. Getting that information out to our dealer networks so that they can talk to customers with the confidence of the product.
“The other key thing, and one of our fundamental brand values, is sustainability. Although we’ve got a 10-year unlimited warranty on the lithium-ion battery packs, we’ve got to start thinking of what we’re going to do with these things when they reach End Of Life. We are already now starting to think about who we can collaborate with, in the future for second-life of batteries. Hyundai Motor Group, as a whole, has partnered up with a Finnish company called Wärtsilä which has 70 distributors around the world. There is an opportunity that we can actually repurpose these lithium-ion batteries for either UPS functions or domestic purposes as well.
"Hyundai Motor Group has partnered up with a Finnish company called Wärtsilä."
“So we’re continuing to forge ahead in the EV space. Getting as much new tech into the NZ market is a good thing for everyone and they’re really fun to drive.”
Questions from the Floor:
Q: Over the last year, are you noticing a lot more knowledgeable questions and insights coming from consumers on BEVs and plug-in hybrids?
“Yes, most definitely. Particularly at Fielddays recently where we had a couple of electric vehicles on display, we received a lot of inquiries for information. In most cases, people ask common questions on range and charging times, etc. But there’s always the oddball question that you didn’t expect to get. With our petrol and diesel customers, we weren’t really having discussions around fuel economy and where the nearest servo is to fill up. Now we’re having to talk to partners, such as energy companies so we can let our customers know that hey you can get cheaper rates and you can do this and that. It seems most people are really investing a lot of time on their own and understanding the EV space as a whole. So, for us, getting that information to pass on is most beneficial.”
Q: Does Hyundai have any ambition to beat Toyota in the market by bringing in the first hybrid or EV ute?
“We always get asked this question. For starters, we’ve first got to get a ute. At this stage we’re potentially looking at 2021 or 2022 for our first ute in diesel form. We’re looking at 18 electric vehicles by 2025 and we’re hopeful that we’re going to have a plug-in SUV in the near future. So, who’s to say we won’t have some form of eco-friendly ute on that list as well.”
OZ JABUR
Oz Jabur is Head of Product and Innovation at Mercury NZ Ltd.
“Our mission is energy freedom—removing ourselves from the need of fossil fuels. It is a very exciting time for us as we are at the door of the tipping point for mass adoption. We are at the beginning of the S-curve, the adoption curve and there is a lot of initiative and things we can do to help customers into these vehicles.
“It’s an exciting time across the whole value chain from customers where we sit through to technology, infrastructure, regulation from the government, as well as OEM. There’s a whole bunch of opportunities throughout that space for us to collaborate and do things together.
“We understand that there are barriers: range anxiety, choice and variety, the total cost of ownership—the cars just cost too much. We know that where we’ve sold EV to customers they love them. They understand the sustainability factor. They understand the eco and cleanness of these things. And I think hopefully in the future when the cost of batteries comes down, these things can become more affordable.
“Our mission is energy freedom—removing ourselves from the need of fossil fuels."
“In terms of Mercury and initiatives we’re doing in this space, there’s a whole variety of things such as upgrading our fleet, introducing new pricing tariffs to make it a whole lot more affordable to charge at home, raising awareness around charging infrastructure where Steve and the Government and the NZTA are doing a great job in that already. Also innovating and collaborating with smaller players like Cityhop and car sharing.”
Questions from the Floor:
Q: From an electrical retailer's POV over the last year, how are your consumers tracking in terms of the level of customer inquiry and level of knowledge around these decisions?
“A couple of days ago, we published some results from a survey of customers across the country. 84% of customers said that EVs are the way of the future and 46%, so nearly half, said that they were considering purchasing an EV over the next couple of years.
“In terms of fleet upgrades that are happening across the large corporates, we understand that NZ is a second-hand market. You can get a pretty good car for $3,000 - $4,000 and drive around for 10 years, so cost is a big issue. For us corporates, there is a big responsibility to inject the second-hand market with our own fleet cars once they cycle off, so there is a huge initiative for us to update our fleet. Currently, Mercury has 70% of plugins and BEV in our fleet.
“Other things we often talk with our customers about is motives for purchasing an electric vehicle. So again they understand the rational aspect of it. They’re saying, ‘30c/litre to fuel,’ ‘less moving parts,’ ‘cheaper to maintain,’ ‘cheaper to operate.’ In a way, the breakeven point is not on parity with the ICE vehicle currently because the capital cost to buy one is quite high, but as battery prices come down hopefully we’ll see those financials work out better for customers.
“For us in the retail space, there is a huge responsibility towards education and awareness. I don’t know if you’ve seen our EVIE car downstairs. It’s a 1957 Ford Fairlane which we’ve converted to an electric vehicle. And again, it’s another story that we can tell our customers. It’s not a box and a piece of tin. It’s actually it’s something that you can live with and enjoy and take with your family to the bach.”
Q: How many free public stations do Mercury have and are you planning more?
“Mercury does not currently have a strategy for rolling out infrastructure as such. That’s more Steve’s job. We have put in a lot of AC destination chargers for Akl Transport, Council and also recently the Accor Hotel Chain.”
STEVE WEST
That leads conveniently on to the final panel member, Steve West. Steve is CEO of ChargeNet NZ Ltd. He is also on the EV Programme Leadership Group, the board of Drive Electric, and the board of Better NZ Trust, which runs the #LeadingTheCharge Road Trip every year, not to mention hundreds of Ride and Drive events every year with the great support of EECA.
“I founded ChargeNet right back at the beginning of 2015. At the time, there were literally 500 EVs on the road. So, it seemed audacious to commit to install 100 stations all around New Zealand and enable long-distance travel.
“We have now powered up our 100th site. We are on the coal face of all the current issues, we want to talk about today, such as government regulation and working with local and central governments. The kind of collaboration that is necessary to get anything like this achieved involves absolutely working with the EDs—electricity distributors, retailers, and owners and drivers.
“Dealing with cutting-edge equipment feels like we are beta testers for the equipment. It turns up and we plug it in and nothing ever works as easy as we hoped.
"It turns up and we plug it in and nothing ever works as easy as we hoped."
“Our network we’ve built to date are 50 kW chargers, which are absolutely essential for the current generation of vehicles to drive long distance. But the next generation of vehicles is on the cusp of arriving. We’ve got the Audi e-tron quattro, Jaguar I-Pace, Porsche Mission E or Taycan as it’s now known. These vehicles are charging at rates of 150 kW+ up to 300 kW in Porsche’s case. What that means is that Porsche, with its 500 km range, can add 400 km in 15 minutes. That’s a game changer in terms of people not needing off-street parking. They don’t have to have a garage and charge their vehicle every night. It means they can drive for a week and then stop for 15 minutes to gain another 400 km of driving.
“Not having off-street parking is a crucial barrier. A lot of people are used to driving a petrol car where they can pull up to a petrol station and fill up in 5 minutes or so. We are nearly there from a technology level. We are getting really close. That is absolutely essential. It gets me very excited. And I can't wait until we install our first 350kW charger. And then the other 120 stations as times goes on.”
Questions from the Floor:
Q: How is the business model looking, particularly in the face of free charging stations?
“Our business is naturally primarily outside of Auckland for that very reason. It's very difficult to compete with free. Free rapid chargers in Auckland have led to all the sort of problems that you’d expect and could have predicted: mass congestion, distorted behaviour from people using public chargers unnecessarily. Rather than charging at home, just to save $2 – $3, they’ll go to a rapid charger and sit and read a book. A lot of those problems go away if you adopt a more sustainable model of billing for that service.
“In terms of our business, in the last couple of years, we’ve tripled per annum our business with most metrics: the number of customers, the amount they spend, and the amount they charge. It’s a pretty sweet trajectory to be on. When we founded the company there were 500 EVs on the road and now we’re knocking on the door of 10,000 so that growth is phenomenal. The company was founded on faith that that would happen and we’ve been proven to be correct. In the same sense, we're bursting at the seams at head office. We’re about to triple our office size, so the only way is up.
"We’ve tripled per annum our business ... it’s a pretty sweet trajectory to be on."
“We’ve had to solve a lot of problems. The charging stations you buy don't bill out of the box. So, we had to create that. All of those backend support systems that we’ve built to run our network, now enable us to support other people’s chargers. We already have about 20 chargers on our network that belong to other organisations, and that’s a service we now offer. So, if people want to put a charger in, whether it’s a multi-tenant dwelling or a business that wants to stick one on the outside of their building and can’t really justify giving away free power, then we can now offer a cost recovery service. That service is helping us grow our business.”
Q: Are you still wrestling with the government over standards and regulatory issues about the actual configuration of the things, as you were this time last year?
“New Zealand is a tiny fraction of the world. We can't afford as a country to have unique requirements. Manufacturers of charging equipment are not going to customise their gear for 0.1% of the market. There has been a disturbing trend that the government wants to go down a route of requirements that are not aligned with international standards. To adopt the international standard but then to go beyond that. That’s been making the job much more difficult here than it needs to be. It’s still an ongoing issue.”
Q: What proportion of your customers only use your stations when they are away from home versus those who are steady regular users? Or are you happy to have any kind of customer? Have you analysed them that way?
“It depends to a large extent on where in New Zealand the station is. It ties back to that issue of off-street parking. There are parts of the country where off-street parking is difficult or rare, like Wellington. We have a lot of heavy users in Wellington, that includes, not just private drivers, but also taxis and couriers are high use repeat customers. Most people it’s just occasional use. They only need it when they’re on a road trip.”
End
[Rachelle Tilsley - Better NZ Trust - 13 Aug 2018]