Electrifying the problem

With the price of fuel out the gate, is it the electric vehicle’s time in the sun? We take a look under the hood.‍

Insights with Infinance by Brian Coogan

The first thing to consider is, is this a temporary increase or a reset? It’s anyone’s game until something gives and right now it’s too early to determine the outcome.

If it’s temporary and we believe it will be, then fuel prices are likely to ease again, but it could take a while.

‍The other thing is, come 2027 the NZ Government proposes road user charges RUC on all vehicles in lieu of fuel excise with an e-road type system being rolled out which will change the pricing model again.

Let’s compare fuels per 100km given they’ve increased again on last week.

Electric vehicle charging off peak translates to around $3.00 / 100 km plus RUC @ $7.60 so total $10.60 / 100 km. An internal combustion engine vehicle on 91 using 10l / 100 kms is $34 / 100 km. Hybrid vehicles at say 6.5l / 100 kms on 91 is $22 / 100 km. Diesels usually come in around 9 litres / 100 km so $31 / 100 km plus RUC taking it to $38.60 / 100 km.

So you can see electric is way cheaper to run also with lower servicing costs. Given the private light vehicle sector average travel is around 15,000 kms pa or 1,250 km / month, with an electric vehicle coming in at $132 month and a petrol vehicle $425 month, there’s a $292 month difference right now. Hybrid on 91 at $275 month is $142 month difference on the average km, but what if 91 goes back to $2.49 litre, then the difference is $166 month for ICE and just $62 month for hybrid.

In conclusion, you’d buy electric because you’re ready to change anyway but the cost to change can be way greater than the difference in running costs when you break it down. Electric, as it improves, will have an increasing presence in the NZ fleet.

For the full article on the above with some head-to-head examples, go to www.infinance.co.nz/insights.  Next week talks about clean energy loans.

Written by Brian Coogan, Licensed Financial Adviser and Director at Infinance – Taupo.