Government Cuts Clean Vehicle Charges to Prevent Price Hikes for Kiwis

Transport Minister Chris Bishop says the temporary measures ensure New Zealanders aren’t unfairly burdened as the Government works to fix a system that is currently “not working as intended”.

The Government has moved swiftly to pass legislation that dramatically reduces the penalties applied under the Clean Vehicle Standard (CVS), preventing an estimated $264 million in additional costs from flowing through to households and businesses. Transport Minister Chris Bishop says the temporary measures ensure New Zealanders aren’t unfairly burdened as the Government works to fix a system that is currently “not working as intended”.

Clean Vehicle Standard Under Pressure as Importers Struggle

The Clean Vehicle Standard, introduced to steadily lower the CO₂ emissions of imported vehicles, requires importers to meet annual fleet emissions targets. Under the current settings:

• Importers earn credits for low-emission vehicles

• They incur charges for higher-emission vehicle imports

• Emissions targets tighten each year, reflecting a long-term move toward cleaner vehicles

But Bishop says that 86 percent of importers are now unable to meet the tightening targets without incurring significant charges. If left unchanged, these costs would likely be added to the price of new and used vehicles—raising transport costs for families, tradespeople, farmers and small businesses.

“We’ve acted quickly to avoid these charges from falling on New Zealand households and businesses,” Bishop said.

New Changes: Major Reductions to Charges and Greater Flexibility

The legislation, which takes effect on 1 January 2026, introduces three key changes designed to stabilise the system while giving the Government time to reassess long-term settings.

1. Charges Slashed by Nearly 80 Percent (2026–2027)

The maximum per-gram charges are being significantly reduced:

• New vehicles: From $67.50 → $15 per gram of CO₂

• Used vehicles: From $33.75 → $7.50 per gram of CO₂

This temporary relief applies for the 2026 and 2027 compliance years.

These cuts mean popular family vehicles, utes, SUVs, and vans—currently attracting substantial penalties—will face much lower charges at the border. Depending on how importers adjust pricing, buyers could avoid paying thousands of dollars extra per vehicle.

2. Protection for Existing Credits

To ensure importers aren’t penalised for past compliance achievements, all credits will be protected from expiry until 31 December 2028. This stabilises the system and gives the sector breathing room to plan without fear of losing previous gains.

3. Full Review of the Standard

The Government will undertake a comprehensive review of the Clean Vehicle Standard, with recommendations due to Cabinet by June 2026.

The review will examine:

• Whether the Standard’s targets are realistic

• How it can better reflect New Zealand’s vehicle needs

• Ways to support emissions reduction without punishing consumers

• Options to strengthen long-term sustainability

Balancing Affordability and Emissions Goals

Minister Bishop emphasised that the Government remains committed to cleaner transport, but believes the system must be fair, workable and economically sound.

“These changes mean Kiwis can still upgrade to cleaner, more fuel-efficient vehicles,” Bishop said. “But we are giving ourselves the space to make sure the Standard is workable and delivers a long-term path to lower emissions that fits New Zealand’s needs.”

He noted that the previous settings did not properly account for:

• New Zealand’s heavy reliance on imported vehicles

• Limited availability of low-emission utes, vans, and off-road vehicles

• The risk of passing large costs onto consumers already under financial pressure

The temporary cuts are intended to stabilise the market while the review develops a more balanced system.

Protecting Consumers and Stabilising the Vehicle Market

By preventing hundreds of millions of dollars in charges from being pushed onto consumers, the Government aims to:

• Keep vehicle prices affordable for families

• Provide certainty for importers

• Maintain supply of popular vehicle types

• Support continued uptake of cleaner vehicle technologies

• Avoid disruption in the used-vehicle market

The changes give the sector time to adjust and allow the Government to design a more durable long-term approach.

Looking Ahead

The Clean Vehicle Standard will continue to operate, but under more sustainable and realistic penalty settings until at least 2027. The review will determine future policy, including whether targets remain achievable and how best to encourage lower emissions without distorting market access or affordability.

For now, the Government says the priority is ensuring fairness while still supporting the transition to a cleaner vehicle fleet.