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VBB? We need CEV!

Regular readers of this blog will know that we think that BEVs are too expensive. Local automotive business heads seem to want to specify New Zealand bound vehicles with VBB (very big batteries) and a lot of (unnecessary?) tech in new cars. All of this means we get cars with great range, which are too expensive.

The challenge for New Zealand is that without more affordable cars, we won't electrify our vehicle park quickly enough. Trickle-down theory only works if the trickle is affordable; a three-year-old car that was $80K when new, is still an expensive used car.

Gogoro Battery Swap Station

Affordability can be affected at a local level by the importers. At the time of writing VW NZ have just announced their iD4 and iD5 line-up. Only one vehicle is under the $80,000 cap, meaning three vehicles are above the cap (and essentially that means that the three vehicles above the cap have a relatively high premium placed on them, because they miss out on the $8,625 subsidy). Yet iD4 in New Zealand will come with a 77kWh battery. That is a VBB. In other markets you can get iD4 with just 52kWh. Which got me thinking. What would the 52kWh have cost if it had been brought to these shores?

It would be naive or misleading to not mention the current and continued supply chain woes. Volkswagen Group (VWG) have it worse than most. In addition to continued semi-conductor supply restrictions, most of their wiring looms for their European production are made in the Ukraine. This means that their production capacity is limited.

If your business had a factory that couldn't meet demand, I am sure you would also focus on more expensive and higher margin products. However, to do so is short-sighted, because the European brands are under increasing and very real threat from brands based in China. China also has supply chain woes, but the brands are also much more focussed on growth. A board-room decision in Wolfsburg or Grey Lynn to chase margin not volume only opens the door wider for new entrants.

Battery Cost 10 kWh

The reality is how we think we use cars and how we really use them is starkly different. 68% of journeys are sole occupancy, (that figures moves to 90% when looking at commuting) and 65% are less than 10kms, according to NZTA data.

Back to iD4. In the UK the difference in price between 52 kWh and 77 kWh is 4,330 GBP (about $9,000 NZD). But that's for the lower output model (148ps) not the 204 ps that we take here. Interestingly both are based on the Life Edition (spec is not 100% the same, but pretty close) and the walk between the UK priced Life Ed 52 kWh / 148 ps model to the NZ equivalent 77 kWh / 204 ps model is 7190 GBP - around $14K NZD.

So by offering a smaller battery on the Pro models or lower output VW could have had at least two models below the cap, and in fact instead of the iD4 Pro retailing for $79,990 driveway it could have been potentially $69,990 driveway. In doing so they would have increased volume.

By equipping cars with smaller batteries, we would help consumers now and the trickle-down consumers of tomorrow.

Which got us thinking. What if we examined all the mainstream models available in New Zealand and looked at how brands price battery capacity. To be a valid piece of work, we would have to look for same spec examples and differing battery sizes. Telsa makes it hard to do this because extra battery power in a Model 3 comes with a second motor too. Sometimes we would need to check overseas models, but at least we can get a decent sample and see if there is a common theme. Spoiler alert there is.

Apply this to less premium products and the power of less becomes more apparent. BYD has launched Atto 3, and it has received attention for being well priced and well specified for the local market. EV Direct, Australia's original BYD distributor, touted the model below Atto 3, the EA1 (locally to be called Dolphin or maybe Atto 1) as being "sub $35,000" Australian (this was prior to it joining forces with Eager's Automotive to create BYD Australia). This is likely in doubt. However, if we apply BYD's own pricing model we can see where EA1 might be priced. EA1 will come with either a 31kWh or a 45kWh battery. BYD charges just $5,000 for 10kWh in New Zealand. This is a mid-pack premium (see table) and is broadly consistent with other brands. Therefore Atto 3 with a 31kw/h battery, if such a thing existed, would be just, $43,000. Now put a smaller body around it and high $30K is plausible. There's no doubt in my mind that this would make it New Zealand's best-selling electric car. EA1 is bigger than it looks in the pictures too. We were lucky to sit in one recently, and it had us looking for wheelbase stats; its the same wheelbase as a Corolla hatch, but with shorter overhangs.

The reality is how we think we use cars and how we really use them is starkly different. 68% of journeys are sole occupancy, (that figures moves to 90% when looking at commuting) and 65% of trip legs are less than 10kms, according to NZTA data.

Ora Funky Cat (we predicted that this and EA1 would be New Zealand's best-selling EVs this year when they were on schedule and early product rumours surfaced) is available with three batteries. 49kWh, 58kWh and 63kWh overseas. It appears to be moving from low spec stylish volume car, to VBB and high spec, and it is possible that 63kWh might be the only NZ version, and now only as a high spec connected car. See what's happening here? This would be a huge mistake.

In the UK, Funky Cat is £31,995 ($62,000) for the First Edition (before the UK's £1,500 government plug-in car grant has been taken into consideration). This is with the 63kWh battery. Applying Ora's overseas pricing steps for same spec models, this car would be $5000 cheaper if it had 11kwh less, $6000 cheaper is it had been the 49 kWh version and cheaper again if it weren't so highly specified. This car has the potential to be sub $50,000 in New Zealand with careful planning.

But taking a closer look at how we really use cars, reveals, surprise, we really don't need 77kwh batteries.

Citroen Ami - Europe's lowest cost EV

Take a polar opposite for example, the Citroen Ami. The Ami is not quite a car and it comes with not quite a car pricing. It's around $16,000 NZD and has a 5.5 kWh battery. China's best-selling 'car' is the Wuling Hong Guang MINI EV. It has 19kW power and a 9.3kWh battery (there's a 24 kWh long range version too). This starts around $10,000 NZD. Imagine if we legislated for quadricycles, and other loosely aligned global classes. Affordable city cars would be within reach of many more families.

But if we really want low-cost electric cars, we should sell them without the battery. That would probably reduce the vehicle price by $20,000. NIO, a brand who is a global leader in battery swaps have now undertaken 10 million battery swaps. Selling a vehicle without a battery would dramatically lower the cost; then the user would subscribe to a battery swap service, which would be more in line with a very cheap petrol bill. Battery Electric vehicle sales take off when price parity is achieved, and this has been demonstrated in Norway quite clearly.

For smaller vehicles, imagine how well a small format interchangeable battery would work. One that could be swapped by the user easily. These are already at work in scooters and motorcycles which are powered by Gogoro's battery swap system - each vending machine is about the size of a coke dispenser.

If we are to speed up adoption of EVs and assist the trickle down, we could start with thinking differently. Switching a luxury ICE car to a luxury BEV is not the solution for decarbonisation. We need to move from VBB to smaller cheaper EVs (CEV).

Please note, since writing this article and publishing it, BYD increased its retail prices, however the cost per kWh is largely unchanged.

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