Buy now — or wait? The great electric car conundrum
Rising petrol prices have many wondering if now is the right time to go electric. As it heads past $3 a litre, one expert suggests it might be better to hold off ...
Kia ora and welcome to Stocktake, The Spinoff’s business newsletter, brought to you in partnership with Kiwibank — it’s July 5: Stocks seem to have improved ever so slightly since last week’s newsletter on the declining profits of my Sharesies and KiwiSaver accounts. But the drama’s not over. Writing for The Kākā, Bernard Hickey reports the US might already be entering a recession. NPR says it’s the worst start to a financial year in half a century. The Financial Times believes we’re not done yet. But wait — don’t leave! I felt much better reading the advice of veteran NZH columnist Mary Holm. She’s been doing this so long she’s seen it all play out before. “Don't sell now — or move to a lower-risk KiwiSaver fund,” she recommends. “You risk missing out on the inevitable rally. Once world shares have fallen 20 per cent, they usually don't fall much further, or for much longer.” My fingers are crossed, Mary.
-Chris Schulz, business editor
Are petrol prices depressing enough to make you go electric?
What’s your tipping point? Is it $3.50 a litre? $4? An unthinkable $5? At some point, New Zealand’s record-breaking petrol prices force each of us to face a future that doesn’t involve petrol. Yet, with rising inflation and grocery prices pushing up the cost of living, upgrading a vehicle isn’t a realistic option for many. “I would love an EV, but I can’t afford one and don’t see that happening anytime soon,” says Stewart Sowman-Lund, The Spinoff’s live updates editor and resident petrol price watchdog. “For now, I’m destined to keep throwing hundreds of dollars at my shitbox petrol car until the government steps in and intervenes further to bring petrol prices back down below the $3 mark.”
That doesn’t look like it’s going to happen anytime soon. Petrol is making people angry. Ridiculous things are happening. A weekend convoy formed as angry drivers drove their cars in protest. A pointless petition has been started by one Dannevirke resident. Log jams of drivers at petrol stations are predicted when the $0.25c tax break ends in August, reports Stuff. Then there’s this: over the weekend, my local West Auckland petrol station didn’t even bother posting the price of 91 to customers. Are prices really so bad they can’t tell us what they are?
By now, you know your options. You can walk or cycle, bus or train, more often. You can grin and bear it. (Some appear to be turning to crime.) Or, if you can afford it, you can upgrade your car. Tesla. Mitsubishi. Nissan. Toyota. Lexus. BMW. All of these brands offer vehicles that can get you from A to B and C using far less petrol, or no petrol at all. (We’re talking about electric vehicles, both hybrids (a petrol-powered vehicle with bonus battery power for savings), PHEVs (plug-in EVs that have both petrol and electric options) and full EVs. It’s the future: to cut emissions, the government wants 30% of the country’s light vehicle fleet electrified by 2035. Sooner or later, everyone’s going to have to get one.
Yet, like Stewart says, electric vehicles aren’t cheap. Even with the maximum clean car rebate of $8625, a brand new electric vehicle could set you back $50,000 or more. If you’re looking at second-hand options, electric vehicles hold their value. Another workmate told me she recently purchased a second-hand 2017 Leaf for $17,500 (minus the discount of $3,450). Pro: it gets her around 120km per charge. Con: she’ll never take it out of Auckland because she suffers range anxiety. She’s kept her one-star safety rating petrol car that’s more than a decade old for those trips.
In 2022, the pros and cons list still looks a little light on the pros, and heavy on the cons.
Pros: Big petrol savings, low carbon emissions, cool car, smug factor.
Cons: Expensive initial outlay, range anxiety, import wait times can be ridiculous, increased power bills at home, not enough charging stations.
But there’s another factor at play. Is electric vehicle technology good enough yet to warrant getting one? “I'm keeping my vehicle for three years and then I'm moving to some form of electrical,” says Terry Collins. He’s the principal policy advisor for the AA, and as you’d expect, he’s done his own research. In three years time, he believes EV battery power will be greatly improved, even competing with a full tank of petrol for range. “Price parity is going to hit around the middle of this decade … They'll be a lot better car in three years than what they are today.”
You can see that change happening already in Mitsubishi’s Outlander Phev, a popular family car in Aotearoa that, if you purchased the 2020 or 2021 model, would get you about 50-odd kilometres of electric travel before the engine flipped over to petrol. But those that waited to purchase the 2022 model bought a car with upgraded battery power that gets them 85 odd kilometres before turning to petrol. That’s a vast improvement in just 12 months.
Even if you want one, getting your hands on an EV can be difficult. The clean car rebate means more and more people are committing to them, but wait times of a year or more have been reported by several car brands. “We’re saying to customers, you’re into the first quarter of next year,” says Andrew Davis, Toyota New Zealand’s general manager. He’s got a waitlist of 1000 people wanting a new Lexus, Toyota’s brand of luxury electric vehicle that comes in a range of models — one of which will get you 350 kilometres on a single charge. “We’re having to talk to customers really early. You have to think about your next one now, because we might not be able to supply it for a year.”
So, should you do it? Don Rowe recently toured the country in a BMW EV to file regular reports out on the road. It was a fascinating trip that took in characters from around Aotearoa, so I asked him that question. “I think the technology and charging infrastructure is at a point where EVs are a vastly superior option, but it is far from a panacea for those most vulnerable to high fuel prices,” Don says. “Recommending whānau purchase an EV when they can barely fill their tank is ridiculous. Cheap charging costs are irrelevant if you don't have the capital to upgrade in the first place.”
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Here are the headlines you need to know …
Christie Smythe left her husband for Martin Shkreli, the “Pharma Bro” who ramped up the cost of crucial Aids medication, used that money to buy a one-off Wu-Tang Clan album, and was jailed. Shkreli dumped Smythe while behind bars, and that story, covered here in this paywalled story by The Times, is a fascinating look at a relationship with “the most hated man in America”.
Country Calendar is TVNZ’s little tractor that could, a familiar farming fave now into its 56th year. Last week, the show went rogue, sparking 1500 complaints with some saying they’d never watch it again. “I got two minutes and 12 seconds into this episode and quit,” said one. Why? Tara Ward explains.
Can’t find a decent frozen chicken nugget at the supermarket? Same. My kids are rioting. I tried to find out why, and it turns out that yes, Covid, supply chain issues and staffing shortages are all playing their part. But there’s another, stranger, reason they’re out of stock at the moment. Read about it here.
I really enjoyed this New York Times story about Montys, a Los Angeles burger chain that uses celebs, Instagram, connections to the Coachella music festival and an entirely plant-based menu to create a massive cult following. I know it sounds gimmicky, but I’d love to hear from anyone who’s tried this crazy fried not-chicken burger.
Fashion labels around the world continue to get away with greenwashing, often using industry standards as ‘smokescreens’. So why does Kowtow, a Wellington-based fashion label that makes luxurious basics using organic materials, still care about certifications? Reweti Kohere finds out.
The story we’ve been diving into: Medicinal marijuana
I thought it was a joke. When I received a call from someone telling me you could get weed — actual cannabis flower, not the drops and oils that have been available for a while now — I didn’t believe it was real. So I persuaded my editor to let me go find out. It’s true: if you’re suffering from pain, anxiety or sleep disorders, you truly are able to get 10 grams of Australian-grown cannabis on prescription to take home. It’s a recent change in Aotearoa’s attitude towards cannabis, so I went on a bit of a journey to find out how it happened.
When the Facts Change is back for season two!
Season two of The Spinoff's economics and business podcast, When the Facts Change, is here, starting with a confronting look at inflation, labour shortages and the rising cost of living. Here’s an excerpt from Bernard Hickey's chat with Kiwibank economist Mary Jo Vergara discussing the labour shortage and how that can impact inflation that I thought was particularly compelling.
Bernard Hickey: Where is the wage inflation coming from? It doesn't feel like in the 1970s, when we had double digit wage increases, big union deals that would fund seven or 8% pay increases? How does it express itself in New Zealand?
Mary-Jo Vergara: The rise in wage growth is really being underpinned by how incredibly tight our labour market is. The demand for labour remains robust, but the supply is obviously fading given that we're limited to just homegrown talent. And now with the borders opening up, that's reducing the supply even more. So this imbalance is what's supporting higher wage growth. But when you're comparing 3% [wage growth] to 6.9% [inflation], it's obviously not matching the rising living costs.
One of the worries that people have is that we're going to hit back to a stagflationary era, a lot like in the 1970s when we had high inflation, but also relatively high unemployment. You see the sorts of big deals going through with wages going up fast and then decision makers on prices going 'right with my wages going I had to put my prices up' and then it becomes a bit of a self-fulfilling prophecy.
One of the really surprising big components in the 6.9% inflation we saw in the March quarter from a year ago, that 32 year high, was what they call “housing and household services”, which don't appear to be linked at all to food, or to energy costs, and maybe not even wages. So where is that increased housing costs coming from in New Zealand?
The main driver to that rising housing costs is construction costs. What's driving construction costs higher is the labour and material shortages that the construction sector is facing, probably the most severe of all industries. When you couple supply shortages with such strong demand for housing, that's a potent cocktail for rising prices for housing.
There was plenty of demand last year, and in 2020, for new houses, with plenty of lending going on, and people looking to buy a new home, maybe they haven't spent a lot on going overseas, they've got a bit more money for a deposit, but I wonder, with this big jump in prices of a lot of things, how are consumers responding?
Inflation is really stretching household budgets quite thin. It's getting more and more expensive not only to buy your discretionary spending items, like a new e-bike or a new car, but also just your necessities like food and fuel. There'll be some pullback in demand, given how expensive prices have become, but also with the Reserve Bank, intervening here to try and stop inflation they're having to lift interest rates. And that's in order to moderate demand, so that's another factor weighing on demand. So the idea is to quell demand with higher interest rates.
Listen to the full episode of When the Facts Change here.
Finally, here’s something we’ve been toying with…
Spatial audio. You may have heard about it. Kiwi DJ Zane Lowe calls it “the future of music”. But what is it? It’s hard to describe. To listen properly, you’ll need a decent set of headphones (your AirPods will do the trick) and a subscription to a streaming service that uses the format, like Apple Music, Netflix or Apple TV+. Once you’re set up, you’ll discover spacey surround sound that feels like it’s beaming in from another dimension. I’m struggling to explain it, so I asked Chicago DJ legend Jeff Mills, aka The Wizard, to do it. He suggests going to a busy urban area full of noise. “Simply close your eyes and let your other senses take over. That’s the immersive experience this audio program replicates,” he says. “Most of us will never know what it’s like to be in the middle of a jungle, listening to animals all around us, but spatial audio makes this happen.” He’s made a trippy DJ mix designed to showcase spatial audio to its full effect, which you can listen to here.
