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Gilmour Automotive owner Alistair Gilmour said over the past six weeks he had already seen a 10% increase "across the board" for late-model used cars from Japan, popular with Dunedin buyers.
The intentions of the rebate scheme were honorable, but savings would be "swallowed" by rising prices due to further demand, he said.
"For some reason people think there’s a hopper full of them over there and all we have to do is open the tap a bit more and we’ll get enough for our market," he said.
"It’s frustrating because it’s admirable, I can see what they’re trying to do."
The Government announced people who buy new cars from July 1 will be able to get rebates of nearly $8700 for a new electric or plug-in hybrid car, or about $3500 for unregistered used cars. Those who buy new petrol cars would pay a fee of up to $5875, while those buying newly imported used cars face fees of up to $2875 from January next year.
The scheme is designed to drive up low-emission vehicle uptake.
The Climate Change Commission’s advice to Government said New Zealand was heavily dependent on private vehicles.
Although 84% of New Zealanders lived in urban areas, there were limited connections between towns and cities.
And there were limited transport options for people living outside urban centres, it said. Further, New Zealanders showed strong preferences for utes and SUVs, which made up eight of the top 10 selling vehicles in the country last year, it said.
Dunedin EV Group spokeswoman Pam McKinlay said the Government rebate scheme was a good first step, but driving down emissions from petrol vehicles would require both "the carrot and the stick".
Dunedin was New Zealand’s leading city for electric vehicle ownership per capita.
But more needed to be done to disincentivise the "huge numbers of unnecessary 4WDs" in city streets.
"Not everybody needs a truck at the supermarket," she said.
"Most of those trucks drive less than 10km a day.
"You need to pay if you’re going to burn."
Federated Farmers national president Andrew Hoggard said there were no electric vehicle alternatives available for the heavier types of vehicles farmers and tradespeople used, and there were unlikely to be any for at least four years.
Invercargill MP Penny Simmonds said her phone had been running hot as farmers, builders, contractors, and those on low incomes all expressed shock and anger at the move.
University of Otago senior lecturer John Williams said while the vast majority of vehicle trips were short, long trips could be a dealbreaker for some prospective buyers even as more charging stations became available.
For the rebate scheme to work, and for the desired change in the fleet to happen, it would have to work at the low to mid end of the market, Dr Williams said.
The vast majority of that part of the market owned a vehicle worth less than $10,000 and up to 20 years old.
"People who are at the low end of the food chain socio-economically, they’re often the most ecologically minded.
"And they would probably switch to an EV if all the factors were right."