New Zealand’s Electric Vehicle (EV) debate has drifted into the wrong frame. We talk about uptake rates, incentives, and whether people are “ready”, when the numbers tell a much simpler story: the transition is already economically inevitable, and slowing it is quietly costing the country billions.
Using conservative assumptions — a light-vehicle fleet of around 3.5 million vehicles, each travelling about 14,000 km per year — the shift away from internal combustion is not driven by ideology or subsidies. It’s driven by supply constraints on Internal Combustion Engine (ICE) vehicles and a clear total-cost crossover that favours electric vehicles, especially once used imports are included.
World’s Manufacturers will dictate Availability
OEMs will withdraw ICE vehicles and ultimately stop supplying markets like New Zealand because the global EV transition has passed the classic S-curve tipping point—EVs are reaching price parity, ICE demand peaked years ago, and by the mid-2030s EV sales will dominate—making continued ICE manufacturing as uneconomic and strategically obsolete as horse-drawn buggies were once mass production of the Ford Model T took hold.
This shift means many legacy automakers are having to adapt their production strategies or risk being left with stranded assets in the ICE space. As the market share for new ICE cars shrinks, their cost may rise due to decreased demand for parts and servicing infrastructure.
The Cost of Importing Fuel
By 2025, New Zealand’s light-vehicle fleet is consuming roughly 3.5 billion litres of petrol and diesel each year. At a blended price of about $2.80 per litre, that’s close to $9.7 billion annually, most of it leaving the country as fuel imports. Under a realistic trajectory where ICE vehicle availability continues to decline and EVs replace vehicles as they are retired, that fuel demand falls to around 1.3 billion litres by 2040. ICE fuel spend drops to about $3.7 billion a year.
By 2040, New Zealand has avoided sending roughly $36 billion overseas for imported vehicle fuel, by 2050 cumulative avoided ICE fuel imports has reached ≈ $116 billion (2025–2050, nominal).
Cheap Renewable Energy
What replaces it is electricity, but far less of it than many assume. EVs travel 4x further than an ICE vehicle on the same amount of energy, they are more efficient. Even with close to 1.8 million battery electric vehicles on the road by 2040, total charging demand is around 4.5 terawatt-hours per year. That’s only about ten percent of today’s electricity generation. At 16 cents per kilowatt-hour — a price that can plausibly be held flat with managed charging, flexibility, and vehicle-to-grid — the annual electricity cost is under $750 million. Unlike fuel, that money stays in New Zealand.
With V2G participation, just 0.9 million EVs exporting 7 kW each—using only around 20 kWh per vehicle—could deliver approximately 6.3 GW for three hours, covering most of New Zealand’s current winter peak demand and exerting strong downward pressure on peak electricity prices.
Seen this way, the transition isn’t an added cost to the economy; it’s a structural reallocation. Roughly $6 billion a year moves from imported fossil fuels into locally generated renewable electricity. Even if you take a strict accounting view and subtract electricity spending from fuel savings, the country is still ahead by more than $5.3 billion per year by 2040. From a macroeconomic perspective, the gain is even larger because electricity spending circulates domestically rather than draining overseas.
This is why recent policy signals are so frustrating. By removing the feebate, reinstating RUCs early, and maintaining fossil-fuel subsidies, the Government is framing EVs as a fiscal burden rather than as distributed infrastructure that households pay for themselves. The numbers suggest the opposite. Delaying EV uptake doesn’t save money; it delays a recurring, compounding economic benefit.
EVs become a significant component of the Electricity System
There is also a deeper missed opportunity. By 2040, those expected 1.8 million EVs are each 50 kWh batteries on wheels. They represent 4,500 GWh of flexible demand and 90 GWh of distributed storage sitting in driveways and garages. If enabled through pricing and standards, that flexibility can absorb surplus renewables, shave peaks, and defer network upgrades. It is grid support funded by vehicle owners, not taxpayers. Yet New Zealand policy barely acknowledges vehicle-to-grid (V2G) at all, even as manufacturers like BYD already ship V2G-capable vehicles and companies such as Sigenergy are scaling bi-directional chargers globally.
This is where the hesitation from Nicola Willis and Simon Watts matters. Slowing EV uptake may look neutral in the short term, but it forgoes a chance to improve energy security, reduce import exposure, and let consumers themselves fund flexibility in the electricity system. The risk is not that EVs arrive too quickly, it’s that they will arrive regardless of incentives, but without the pricing signals, standards, and V2G pathways needed to capture their full value.
If there is one lesson from the numbers, it’s this: EVs are no longer primarily a transport policy issue. They are an energy and economic strategy – national infrastructure. The longer New Zealand treats them as a problem to be managed rather than an asset to be enabled, the more value it leaves on the table — billions of dollars a year, every year.
References
Increase in BEV sales https://www.idtechex.com/en/research-report/electric-vehicles-land-sea-and-air-2025-2045/1060