Introduction of a so-called "feebate" scheme to encourage the purchase of low-emissions and electric vehicles, would dramatically alter the prices of both new and used import vehicles , says the head of New Zealand's largest car company.

Larger vehicles would go up in price by thousands of dollars, while the prices for smaller and more fuel efficient vehicles would fall by thousands, says Toyota New Zealand managing director Alistair Davis.

And that would strongly influence future decisions on what vehicles to buy, he adds.

SUPPLIED Kiwis still very much into bigger cars, says Toyota NZ CEO Alistair Davis: "it's not good".

In the case of Toyota product, he is calculating the price of a Hilux ute would rise by $5000, while prices to fall would include $3100 for a Corolla, $7300 for a Prius hybrid, and $14,800 for a Prius Prime plug-in hybrid.

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Davis was responding to this month's release of document vital to NZ facing up to the threat of climate change - the final report on the Productivity Commission's inquiry into transitioning to a low-emissions economy by 2050.

SUPPLIED Dramatic action might be needed to encourage Kiwis to buy cleaner vehicles.

A key recommendation in this landmark report is that NZ should follow the lead of the likes of France, Sweden and Singapore and introduce a price feebate – a combination of fees and rebates - as a way of encouraging consumers to purchase vehicles that pour out fewer emissions, particularly EVs.

Under such a scheme all vehicles, both new and used imports, would be assessed for their greenhouse gas exhaust emissions, and those with higher emissions would incur a Government fee, while those with low emissions would earn a rebate.

Such a feebate could be a one-off transaction at the point of import, a yearly transaction, or a combination of the two. It would only apply to vehicles at their time of first registration in NZ, not to vehicles already on the roads.

SUPPLIED An EV like Prius Prime could be $14k cheaper under a feebate scheme. But a Hilux might go up by $5000.

A feebate scheme could be designed to be revenue-neutral for the Government, so that total revenue from fees would offset the cost of providing rebates.

The report says a clear majority of individuals and organisations that made submissions during the inquiry, expressed support for a feebate scheme.

It adds: "A big advantage of such a scheme is that it would encourage the purchase of more fuel efficient fossil-fuel vehicles until such a point EVs become more cost competitive.

SUPPLIED Feebate would be fantastic for the likes of the Nissan Leaf and other EVs - but also fair for petrol vehicles.

"In the case that early uptake of EVs is slow, improving the efficiency of fossil-fuel vehicles would become especially important."

One company to support the scheme is Toyota NZ. Alistair Davis says this this might seem unusual given that at this stage it doesn't offer any fully electric vehicles .

"But the issue of transport emissions is becoming increasingly pressing, and feebates would be the most equitable and transparent means of bringing the emissions down.

"Feebates would be fantastic for EVs such as the Nissan Leaf – and we think such a scheme would also be the best and simplest system for other vehicles, particularly those with lower emissions such as our hybrids."

While the productivity Commission report doesn't specify any mechanics for the feebate system, for the sake of his calculations Alistair Davis has assumed it would involve a fee or rebate of $100 per gram of CO2 per kilometre above or below an agreed level of average exhaust emissions.

New Zealand's vehicle emissions record isn't good, he says. Transport is the second-largest source of the country's greenhouse gas emissions, and thanks to big growth in the number of vehicles on our roads the emissions have grown 70 per cent since 1990.

There are now more than four million vehicles registered in New Zealand, which is 50 per cent more than in 2000, and the national fleet is old and getting older, going from 11.8 years old in 2000 to 14.2 years last year. Average fuel economy is also poor, a key reason being because of the thousands of used vehicles being imported each month.

"As a result our transport emissions per person are the fourth worst in the world," says Davis.

"And we're into bigger cars. We tend to buy big cars, SUVs and utes, and for this reason our average vehicle CO2 emissions are 181 grams per kilometre. Compare that to Europe where the average for cars and SUVs is 119g/km. It's not good."