Feature article
What do the NZ Clean Vehicle Standard Cuts Mean for Kiwi?
Learn about the changes to NZ's clean vehicle standard cuts, what they mean for you, and how to navigate the change.
Last updated: 2 December 2025
In a rushed move to combat rising costs, the New Zealand Government has drastically reduced the emissions penalties under its Clean Vehicle Standard (CVS), a scheme similar to Australia's New Vehicle Efficiency Standard (NVES).The changes, which see charges for high-emitting vehicle imports cut by almost 80 per cent, are intended to ease pressure on importers and, crucially, to stop an estimated $264 million in costs from being passed on to consumers.
What does the 80% drop in the clean vehicle standard mean?
Transport Minister Chris Bishop pushed the amendments through Parliament, with the key change being a temporary but significant cut to the penalty rates for exceeding CO₂ targets.
| Vehicle Type | Old Top Penalty Rate (per gram of CO₂) | New Top Penalty Rate (per gram of CO₂) | Reduction | ||||
|---|---|---|---|---|---|---|---|
| New Imports | New Imports | $NZ67.50 | $NZ67.50 | $NZ15.00 | $NZ15.00 | Approx. 78% | Approx. 78% |
| Used Imports | Used Imports | $NZ33.75 | $NZ33.75 | $NZ7.50 | $NZ7.50 | Approx. 78% | Approx. 78% |
These new, lower rates are set to apply for 2026 and 2027, giving the government time to conduct a full review of the CVS before making a long-term decision by June 2026. The legislation comes into effect on 1 January 2026.
The changes to the clean vehicle standard could save kiwi thousands.
The central argument for the swift change is affordability. The Clean Vehicle Standard works by setting annual CO₂ targets for importers. They earn credits for bringing in low-emission vehicles and incur charges for high-emitting ones that are over the target.
- The Problem: The government says the standard has become "misaligned with market reality." Demand for new electric vehicles (EVs) has slowed since the removal of the Clean Car Discount (CCD) in December 2023, and the supply of cleaner used imports is tight. This means a staggering 86 per cent of importers are now facing net charges.
- The Impact: With fewer credits to offset their higher-emitting models (like utes and large SUVs), the penalties were forecast to rise sharply, with those costs almost certainly flowing through to consumers.
- The Relief: The minister noted that under the previous penalty structure, even some popular hybrid vehicles were facing charges, not credits. The revised rates could save buyers of some mainstream vehicles hundreds or even thousands of dollars on the final retail price.
"At a time when Kiwis are still feeling the pinch, the last thing they need is the cost of cars going up by hundreds, or even thousands, of dollars," said Minister Bishop.
For example, a Ford Everest Platinum SUV could have faced a charge of $8,775 under the old rate, but will now only incur $1,950—a potential saving of almost $6,825 for the importer to pass on.
What is a practical example for changes in the clean vehicle scheme?
To understand the real-world effect of this cut, let's look at a hypothetical importer, who specialises in both large petrol utes and popular small SUVs.
In 2026, they plan to import 1,000 units of a high-emitting, top-selling ute model. The ute has CO₂ emissions that are 60 grams/km over the importer’s calculated fleet target for that year.
The Cost Under the Old Scheme (Before the Change)
Under the original penalty rate of $NZ67.50 per gram of CO₂, the cost applied to this single model would have been large:
- Penalty per ute: 60 grams $\times$ $NZ67.50/gram = $NZ4,050
- Total Import Bill for 1,000 Utes: 1,000 units $\times$ $NZ4,050 = $NZ4,050,000 (over $4 million in charges)
This cost would have made the ute unaffordable for many consumers, forcing the importer to limit the number they bring in or stop importing the model altogether.
The Cost Under the New, Reduced Scheme (The Fix)
With the penalty rate slashed to $NZ15.00 per gram of CO₂, the financial pressure on the importer dramatically eases:
- Penalty per ute: 60 grams $\times$ $NZ15.00/gram = $NZ900
- Total Import Bill for 1,000 Utes: 1,000 units $\times$ $NZ900 = $NZ900,000 (less than $1 million in charges)
What this means for the importers strategy
By saving over $3 million on the import charge for this single popular model, they gain several crucial benefits:
- Lower Retail Price: They can now sell the ute at a much more competitive price, ensuring it remains accessible to tradies, farmers, and families who rely on it.
- Maintain Import Mix: They are no longer forced to rely solely on low-emission imports (like EVs) to earn credits to offset the utes high charge. The reduced penalty allows them to continue importing the high-demand vehicles Kiwi actually want right now.
- Breathing Room: The two-year cut to the penalty rate gives the importer (and other importers) vital time to adjust their long-term supply chains and wait for more affordable low-emission options to become available from manufacturers overseas.
In essence, the penalty reduction transforms a massive financial roadblock into a manageable, short-term cost, ensuring the continuous supply of popular vehicles in Aotearoa.
Is the change to the clean vehicle standard a good thing or a bad thing?
While the move has been welcomed by industry groups like the Imported Motor Vehicle Industry Association, who said the previous rules were forcing some businesses to close, it has faced strong opposition from climate and EV advocates.
- The Concern: Groups like Drive Electric called the change "disappointing" and warned that slashing the penalty rate so dramatically could turn Aotearoa into a "dumping ground" for high-polluting cars that other markets are moving away from. They point out that Australia's NVES penalties are far higher.
- The Government's Stance: Minister Bishop dismisses this, saying any climate impact from the temporary change will be "negligible." The priority is to provide breathing room for the industry and protect household budgets from price shocks while a long-term, workable solution is developed.
What Happens Next?
The temporary penalty cuts for 2026 and 2027 are designed to be a pause button. Alongside the reduced charges:
- Credit Protection: Existing emissions credits earned by importers will be protected and won't expire before 31 December 2028.
- Full Review: A full review of the Clean Vehicle Standard is already under way, with recommendations due back to the Cabinet by June 2026.
This signals that while the government wants to reduce consumer costs now, they still intend to find a sustainable path to lower transport emissions that fits Aotearoa's unique market needs.
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