New Zealand’s vehicle fleet continues to grow and age, while electrification remains slow, creating challenges for emissions reduction and technology uptake, a new report shows.
Commissioned by the Motor Trade Association (MTA) and prepared by the New Zealand Institute of Economic Research (NZIER), the report examines the current and future state of the fleet and wider automotive industry.
MTA head of communications Simon Bradwell says the research provides a comprehensive view of the sector.
“We really wanted to create a resource that all industry could benefit from,” Bradwell says.
“NZIER has provided a detailed, informative and thought-provoking analysis with implications not only for industry but Government and communities.”
The report shows the national fleet had reached about 4.75 million vehicles as at 2025, having grown at an annual rate of 2.3% since 2015 — outpacing population growth and increasing vehicles per capita.
Growth has been led by light commercial vehicles — including utes and vans — which expanded at an annual rate of 4.7% between 2015 and 2025, compared with 1.8% for passenger vehicles. The segment accounted for about 17% of the fleet as at 2025, reflecting strong demand from trades and small business users.
Electrification remains limited, with electric vehicles accounting for about 2% of the fleet as at 2025, alongside a further 1% plug-in hybrids. Petrol hybrids have grown more strongly, making up about 10% of the light vehicle fleet.
For the freight sector, the report highlights a structural challenge for decarbonisation. Trucks account for about 4% of the fleet but an estimated 29% of total transport emissions as at 2025, with improvements in emissions performance lagging behind light vehicles.
Cost remains a key barrier to change. The report says the total cost of ownership for electric heavy vehicles remains higher than diesel equivalents, with cost parity not expected until around 2045 on average. However, earlier uptake is likely in specific use cases such as urban delivery fleets and vehicles operating on predictable routes with overnight charging.
The ageing fleet is also slowing progress. The average vehicle age was about 15 years as at 2024, while trucks averaged around 17.8 years, limiting the speed at which newer safety and emissions technologies enter the fleet.
Looking ahead, electrification is expected to accelerate, particularly after 2035, but internal combustion engine vehicles will remain a significant part of the fleet for decades.
The report forecasts only about 13% of the fleet will be fully electric by 2035, rising to 46% by 2045 — meaning more than half of vehicles will still rely on liquid fuels, including hybrids and plug-in hybrids.
Falling battery costs and economies of scale, particularly from China — which accounts for around 70% of global EV manufacturing and nearly half of New Zealand’s EV imports — are expected to drive increased uptake, with EV total cost of ownership for light vehicles projected to undercut petrol vehicles.
However, the transition is expected to be much slower for heavy vehicles, where higher upfront costs and operational demands remain barriers. The report notes some earlier adoption is likely in specific applications such as stop-start urban freight and fixed-route operations, while bus fleets — particularly in metropolitan areas — are already electrifying at a faster pace.
The report also points to growing complexity in vehicle technology, with advanced driver assistance systems and proprietary software increasing repair costs and creating challenges for independent workshops.
Bradwell says some of the findings challenge conventional assumptions about the pace of change in the sector.
“The report offers a roadmap for the industry into the future.”
*Click here to read the full report.
