Iran war may have created a longer term EV sales lift

Tuesday, 5 May 2026

The motor vehicle industry is in for a shake-up over the next 20 years as electric vehicles finally take over from fossil fuel guzzling cars. But the shift will have major ramifications for car dealers and the service industry, a new report from the Motor Trade Association says.

The war in Iran caused sales of fully electric vehicles to spike more then 16% in March but, while it appeared the floor had lifted, the trajectory had not fundamentally changed, the association’s head of advocacy, James McDowall, said.

The increase was a clear response to the fuel price crisis but at the same time, just to make things a little bit more complicated, it also coincided with the deadline for the tax depreciation claims.

But the baseline appeared to have shifted up. “So that means perhaps we won't go back to that sort of 5% EV share we saw before the current crisis. It might be higher,” McDowall said.

Provisional fully electric vehicle sales numbers had dipped to about 11%. “It'll be interesting to see what happens in May, if it stays around that 10 or 11% or if it pops back down to 7 or 8% to see what's happening long term, he said.

The report prepared by the New Zealand Institute of Economic Research finds three major trends will shape the industry over that time. They include electrification of the fleet, increased technology in vehicles, and a reduction in vehicle ownership.

The shift will have a profound impact on existing service stations, which will have to adapt to selling electrons rather than petrol and diesel. Almost in tandem, demand for vehicle maintenance will dwindle, mainly because EVs have fewer moving parts that need replacing and safety technology should mean less work for panel beaters.

But when they do need to be repaired, it will be more expensive due to the new technology required to undertake repairs. That will put more pressure on independent mechanics and their ability to stay in business.

“However, the change is relatively gradual over the next decade, before accelerating thereafter,” the report says.

At the end of last year it was estimated that the New Zealand vehicle fleet comprised 4.75 million vehicles, with light passenger vehicles (LPVs) accounting for about 75% of the fleet. The growth rate outstripped population growth, resulting in total vehicles per capita increasing over that time. That is despite a decrease in new vehicle registrations over the last four years.

While the vehicle fleet had grown, the electrification of the fleet had been slow, the report found.

It estimated that only 101,000 vehicles, or 2% of the total fleet, were electric vehicles (EVs), and a further 48,000 vehicles were plugin hybrid vehicles (PHEVs). There were, however, 429,000 petrol hybrids in the fleet, with these vehicles making up a large proportion of the imported used LPVs currently being brought into New Zealand.

The slow rate of electrification of light vehicles has been a result of the higher total cost of ownership, as well as a lack of options, until recently.

The New Zealand vehicle fleet is old and getting older with an average age of 15 years in 2023, up from 14.3 years five years ago. That in turn has limited the rate of new vehicle technology being taken up.

The age is heavily influenced by the high prevalence of imported used light passenger vehicles, which on average enter the fleet aged 9.3 years old and remain on the road for longer. That, in turn, slowed the takeup of new safety technology, and the failure rate of Warrant of Fitness was rising.

The sectors represented by MTA employ more than 65,000 people working in 16,000 businesses producing $6.8 billion of gross domestic product or 1.9% of the economy.

The fleet will electrify at an increasing pace, especially after 2035, but internal combustion engine (ICE) vehicles, at least in part, will still make up just over half of the fleet in 2045, the report said, with 46% being EVs.

The Climate Change Commission previously forecast that the total cost of owning a new EV would fall below that of a petrol or diesel car by the end of last year. It also projected that the price premium between EVs and ICE vehicles could disappear by 2028 under some scenarios, paving the way for a higher share of new EV sales.