This is an HTML version of an attachment to the Official Information request 'Procurement advice'.

Purpose of report  
The purpose of this briefing is to respond to a range of issues that you raised about the 
proposed government-industry electric vehicle (EV) package at your meeting with Ministry of 
Transport (Ministry) officials on 2 November 2015. These issues include: 
the scope of a potential information campaign for EVs by the Energy Efficiency and 
Conservation Authority (EECA) 
whether the Electricity Levy can be used to fund the contestable fund or other 
measures proposed in the draft EV package 
the potential role that the New Zealand Transport Agency (NZ Transport Agency) 
could play in establishing EV charging infrastructure – we have divided this into: 
1.3.1.  within existing Government Policy Statement (GPS) settings, and  
1.3.2.  options for funding charging infrastructure from the National Land Transport 
Fund (NLTF) 
information about public investment in charging infrastructure in other countries 
the link between the exemption from road user charges (RUC) for light EVs and the 
proposed targets for EV uptake  
the potential to extend the RUC exemption to heavy EVs 
the scope of the proposed contestable fund, and its link to EV procurement options 
the actual numbers of EVs that business fleets have already purchased, or have 
committed to purchasing. 
We have updated the A3 overview of the government-industry package in accordance with 
your direction. The revised A3 is attached. 
The Sustainable Business Council Advisory Board met on 5 November 2015 to consider the 
proposed package. Feedback from that meeting is in paragraph 84. 
You also raised tax issues related to EVs at your meeting with Ministry officials. On 9 
November 2015, we will provide your office with a briefing on these issues for your meeting 
with the Minister for Revenue, Hon Todd McClay.  
An EECA information campaign would target business fleets and assist with industry 

The information and promotion campaign would have two components: 
a campaign targeted at business fleets (estimated at $400,000 per year) 
industry engagement and coordination (estimated at $450,000 per year). 
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Business fleets campaign 
An EECA information campaign would target businesses because most new cars come into 
New Zealand through fleet purchases, so business fleets are a key market to influence. In 
addition, overseas experience indicates that employees who experience an EV at work are 
more likely to consider an EV for their own private vehicle. 
Barriers to uptake include misconceptions and nervousness about adopting new technology. 
As EECA has already conducted market research into business fleets, it would be possible 
to roll out a targeted information campaign quickly.  
Through the campaign, EECA would aim to persuade business fleet operators to include 
EVs in their fleet purchases by: 
enabling easy cost comparisons via online tools1 
overcoming information barriers through workshops and other events 
providing opportunities to trial EVs first-hand 
showcasing high profile businesses that have already successfully adopted EVs. 
Industry engagement and coordination 
EECA would provide a point of coordination for the range of businesses and industry bodies 
involved in the EV market, to avoid duplication of effort or public confusion. EECA would 
engage with all relevant parties to ensure that projects such as fast-charging networks or EV 
charging brands are coordinated, promoted in a cohesive way, and are accessible to all 
market entrants. 
Identifying and mitigating emerging risks to the EV programme would be part of this 
workstream. For example, EECA has already started a gap analysis to identify information 
and capability needs for EVs (e.g. ensuring that the relevant parties are taking steps to 
develop appropriate capacity for effective emergency response in the event of a crash 
involving an EV). 
Using the Electricity Levy to promote EV uptake and associated infrastructure 
On 2 November 2015, you asked us whether the Electricity Levy could be used to fund 
measures in the proposed EV package. We have discussed this matter with EECA. 
However, we understand that your office has subsequently asked the Ministry of Business, 
Innovation and Employment (MBIE) for similar information by Tuesday 10 November 2015.  
Given that MBIE administers the legislation under which the Electricity Levy is collected, it 
will lead the response to you on this issue. We are happy to provide further advice on your 
1 In October 2015, EECA launched its Total Cost of Ownership tool online. 
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The NZ Transport Agency’s potential role in establishing EV charging infrastructure within 
existing GPS settings 

The NZ Transport Agency advises that it has already begun work to enable the faster uptake 
of EVs in New Zealand. This work includes: 
13.1.  collaborating with the Ministry and local government to understand how it can support 
charging infrastructure 
13.2.  co-leading work on electric vehicles in the Auckland Transport Alignment Project 
13.3.  undertaking environmental scanning with partners to better understand the drivers of 
change in this area. 
The NZ Transport Agency could, without changing the current investment settings in the 
GPS, undertake activities as part of the following measures in the government-industry EV 
14.1.  clarify the regulatory framework for charging infrastructure 
14.2.  provide national information, guidance and promotion for public charging 
Specifically, the NZ Transport Agency advises that it could explore a variety of initiatives, 
such as: 
15.1.  continuing to collaborate with local government partners to develop a set of shared 
standards and knowledge base on the best placement of charging infrastructure and 
minimum infrastructure requirements 
15.2.  providing traffic pattern data to aid with the planning of charging infrastructure 
15.3.  developing standards for signage to indicate charging infrastructure or a special 
vehicle designation to ensure on-street charging infrastructure is reserved for electric 
15.4.  supporting a shared procurement process for charging infrastructure to maximise 
economies of scale 
15.5.  investigating the potential to include charging infrastructure at State highway rest 
stops that are managed by the NZ Transport Agency 
15.6.  investigating whether it owns any unused land that could serve as a charging site 
15.7.  funding or co-funding enabling research 
15.8.  aligning the deployment of charging infrastructure installation and scheduled road 
15.9.  streamlining the process to apply for access to the State highway corridor to install 
charging infrastructure 
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15.10.  adding charging infrastructure locations to the journey information it already provides 
to customers. 
Options for funding charging infrastructure from the NLTF 
As set out in our advice of 24 August 2015 (OC033342), we advise against funding public EV 
charging infrastructure from the NLTF in the next 2 years. Nevertheless there are three ways 
the NLTF can be used to fund EV charging infrastructure.  
Option 1: Amend the GPS to include a new activity class to fund EV charging infrastructure 
The GPS would be amended to include a new activity class from which EV charging 
infrastructure can be funded. This option would give greater certainty that charging 
infrastructure would be funded and built than option 2 or the status quo. 
EV charging infrastructure projects would not have to compete with a wide range of other 
land transport projects, however they would compete amongst themselves. For example, an 
EV charging infrastructure project in Auckland would compete for funding against a similar 
project in Christchurch. To meet value for money criteria the funding would be demand 
driven and this may result in some projects not receiving funding. 
While you can amend the GPS, the addition of a small level of funding is contrary to the 
rationalisation of activity classes smaller than $15 million annually, which was undertaken for 
the current GPS. That in itself does not render this option unworkable.  
Option 1 would require at least a 49 percent contribution to the cost from councils’ local 
share. You could issue criteria to the NZ Transport Agency to set an enhanced funding 
assistance rate, which would lower the required contribution from local authorities. 
A new activity class may be subject to increased scrutiny and trigger a requirement to 
engage with key land transport stakeholders on a variation to the GPS. If a new activity class 
is included, the activity class should be enabling to ensure funding is not limited to a specific 
type of project. Economic growth and productivity, road safety and/or value for money, are 
specific result areas in the GPS, so there would need to be a clear line of sight between a 
new activity class and these priorities. 
Option 2: Amend the GPS to provide funding for EV charging infrastructure from an existing activity 

The GPS would be amended to provide funding for EV charging infrastructure from an 
existing activity class, e.g. ‘local road improvements’. 
EV charging infrastructure projects would need to compete for funding with other projects in 
the activity class and be signalled as sufficiently high priority to compete with existing 
priorities. Under this option there is no guarantee that EV infrastructure projects would be 
funded, or that they would meet the value for money assessment by the NZ Transport 
EV charging infrastructure projects would be assessed for both their national priority by the 
NZ Transport Agency and regional priority by Regional Transport Committees against other 
2 A package including the briefings referred to in this paper has been separately provided to your office, so we 
have not attached the documents to this briefing. 
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existing priorities such as congestion relief, efficient freight links and road safety. There is a 
risk that EV charging infrastructure has insufficient relative priority to be funded. 
However, this risk could be addressed by including strong signals and direction within the 
GPS to give EV charging infrastructure priority over the existing GPS results for economic 
growth and productivity and road safety. This would require a specific result area being set 
within an activity class. 
As with option 1 a local share would be required. 
Option 3: Fund EV charging infrastructure from the NLTF but outside of the GPS 
Section 9 of the Land Transport Management Act (LTMA) 2003 allows the Crown to utilise 
land transport revenue to fund specific activities without the activities needing to participate 
in the contestable funding process run by the NZ Transport Agency. 
Under this option, section 9 would be amended so funding for EV charging infrastructure 
would be from the NLTF but be outside of the GPS. This would effectively reduce funding for 
the NLTF. A small number of activities are funded in this way, such as Search and Rescue. 
The current specified activities have a strong user-pays link to the NLTF. For instance, 
boaties pay fuel excise duty and receive the benefit of search and rescue services.  
EV owners, currently, do not have a strong user-pays link to the NLTF (i.e. light EVs are 
exempt from paying RUC until 2020, and plug-in hybrids use less petrol and therefore pay 
less fuel excise duty than conventional petrol vehicles). Nevertheless, a portion of the 
registration costs for EVs do fall into the NLTF.  
If option 3 is progressed it may create an unhelpful precedent for other activities to be 
treated in a similar manner. 
General risks with funding EV infrastructure through the NLTF 
As value for money is a GPS priority, a cost benefit analysis would need to be completed for 
EV charging infrastructure projects under all of the options. The cost benefit ratio would need 
to be greater than 1 for such infrastructure to be considered for funding. This may be difficult 
to achieve given the current low uptake of EVs in New Zealand, however it may improve in 
the future. 
A broader value for money assessment would also need to be undertaken, including 
assessing the policy alignment with the strategic direction of the GPS.   
Given EV owners currently do not have a strong user-pays link to the NLTF, there may be 
equity concerns between EV owners and other vehicle owners that pay RUC and fuel excise 
Local government have finalised their financial commitments towards the 2015-18 National 
Land Transport Programme (NLTP) and their land transport planning for the Regional Land 
Transport Plans that feed into the NLTP, as required by the LTMA. Any call for a new activity 
and additional local share at this time may not be accommodated without triggering 
individual councils’ significance policies and require re-consultation on a variation to local 
and regional financial and transport plans. 
The NZ Transport Agency implemented fundamental changes to the funding assistance rate 
system for the 2015-18 NLTP. This simplified the funding assistance system with a single 
rate for each council instead of having different rates for different activities. The NZ 
Transport Agency has retained the ability to use targeted enhanced rates but sees this being 
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used only in exceptional circumstances. The setting of funding assistance rates is an 
independent function of the NZ Transport Agency under criteria that the Minister of Transport 
may issue. 
Ownership of EV charging infrastructure 
If the Government decided to fund charging infrastructure ownership issues would need to 
be worked through, as the NZ Transport Agency requires that property and infrastructure for 
which it provides public funding assistance will be in public ownership.  
The NZ Transport Agency would consider funding of infrastructure not in public ownership 
for transport purposes but would do so only on the condition that the use of the facility for 
transport purposes will endure.  
Other considerations for government investment in EV charging infrastructure 
Our advice in March 2015 (OC02885) recommended Government support the private sector 
by potentially funding, or co-funding the installation of charging infrastructure in locations 
where it is not commercially viable for the market to do so. 
Currently, it is difficult to know when Government would intervene, and how it would be 
established that a site was not commercially viable for the market to implement charging 
infrastructure. This makes it difficult to estimate what level of funding would be required from 
The role of Government in owning EV charging infrastructure would need to be clarified. 
There will be a need to set out the business case for this investment to clarify who will be 
maintaining and monitoring sites. This may raise comment regarding whether it is 
Government’s business to invest in infrastructure that is equivalent to a privately owned 
petrol station. 
The Ministry’s preferred option  
The Ministry considers the funding for EV charging infrastructure from the GPS or NLTF 
should be included as part of the GPS 2018 developments. This will provide sufficient time 
for respective policies to be developed and for any identified regulatory barriers to be 
This would also provide opportunity to consider whether other EV activities should be 
included within a broader EV activity or technology class in the NLTF or GPS. 
The biggest risk will be whether EV charging infrastructure can meet the threshold for a cost 
benefit analysis or the value for money assessment against other GPS priorities that would 
result in funding.  
The local authorities we have engaged with on the EV package do not see a need for 
government to invest directly in public EV charging infrastructure. Local authorities are 
already being approached by private businesses seeking consents and support to establish 
charging infrastructure. At least one of the main cities is looking to encourage businesses to, 
as far as possible, establish charging infrastructure off-street (i.e. shopping car parks, 
parking buildings).  
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Investment in infrastructure: international approaches 
The Japanese Government has made available up to US$500 million dollars over 2 years to 
support the installation of public EV charging infrastructure (both 200 volt AC chargers and 
SC fast chargers). Over 10,000 chargers are already in place.  
Development of public EV charging infrastructure is based on ‘Deployment Plans’ set by 
local authorities. The Government subsidises two-thirds of the purchase cost and a fixed 
amount of the installation cost.  
For multi-unit dwellings (e.g. apartment blocks) the Government subsidises half the purchase 
cost and a fixed amount of the installation cost. 
Japan operates on a 110 volt power supply3 and a high proportion of its urban populations 
live in multi-unit dwellings. This increases the need for public investment in charging 
For households in Norway, the Government offers a sales tax exemption for EVs chargers if 
purchased with the vehicle itself. 
There are national and regional subsidies for fast chargers. These fund a percentage of the 
purchase cost. The market (applicant) decides where to install the charger, and to be eligible 
for the subsidy the operator must charge a fee for use. 
There are national, regional and local subsidies for normal EV charging infrastructure. Up to 
the full cost is subsidised (around €1,250 or about NZD$2050). 
United Kingdom (UK) 
The 2009 Plugged-in Places programme offered matched funding to a consortia of 
businesses and public sector partners to support installation of EV charging infrastructure in 
six local areas. The programme has since been expanded to eight new areas. 
Government grants are available to home owners, local authorities, and train operating 
companies to install EV charging points.  
In 2011 the Government also published a nationwide recharging infrastructure strategy. 
The California Energy Commission provides funding for EV charging points. The Electric 
Vehicle Charging Station Financing Program provides loans for the design, development, 
purchase, and installation of EV charging stations at small business locations. 
To support home charging, new building regulations have been amended to make homes 
‘EV-ready’, i.e. to encourage new homes to include charging points. This is important 
because, like Japan, the US domestic power supply is low (120 volts). 
3 In New Zealand domestic power supply is 230 volts. 
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The link between the RUC exemption for light EVs and the targets in the proposed EV 

The RUC exemption for light EVs applies until 30 June 2020. When the Government agreed 
to the exemption, it was intended that the exemption would apply until 1 percent of the light 
vehicle fleet was electric (approximately 30,000 vehicles). At this 1 percent threshold, the 
foregone revenue from the RUC exemption would be $20 million per year. 
On 12 October 2015, targets for EV uptake were developed at a government-industry 
workshop on the EV package. It is intended that these would be ‘NZ Inc’ targets, with central 
government, local government and business sharing responsibility for achieving them. 
The table below sets out the targets developed with stakeholders, and estimates how much 
RUC revenue is foregone due to the exemption for light EVs. 
Table 1: Annual RUC revenue foregone if EV uptake targets are met (targets set at 12 October 
2015 government-industry workshop) 

Target – annual 
registrations of EVs 
Projected cumulative 
total EVs (if targets 
EVs as a % of the 
vehicle fleet 
Foregone RUC 
revenue (in million $) 
Under these targets, EVs make up about 1 percent of the vehicle fleet by 2019, and almost 2 
percent in 2020. This would mean a higher level of foregone revenue than was envisaged by 
the Government when it agreed to the RUC exemption. The practical impact is that: 
61.1.  other road users would face greater increases to fuel excise duty and RUC over this 
period to offset the foregone revenue, and/or  
61.2.  desirable transport investment may need to be reduced or delayed. 
On 2 November 2015, we discussed the achievability of the targets with key stakeholders. 
There was general agreement that the targets developed at the 12 October workshop were 
too much of a stretch to be credible beyond 2016, so two alternative sets of targets have 
been proposed. These targets and their associated impact on foregone RUC revenue are set 
out in Tables 2 and 3. 
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Table 2: Annual RUC revenue foregone if EV uptake targets are met (doubling the number of EV 
registrations each year) 

Target – annual 
registrations of EVs 
Projected cumulative 
total EVs (if targets 
EVs as a % of the 
vehicle fleet 
Foregone RUC 
revenue (in million $) 
Under the targets set out in Table 2, EVs make up about 1 percent of the vehicle fleet by 
2020 and foregone RUC revenue is within the tolerance intended by the Government when it 
originally agreed to the RUC exemption.  
Table 3: Annual RUC revenue foregone if EV uptake targets are met (option 3: targets as a 
percentage of annual vehicle registrations) 

5% of 
10-15% of 
Target – annual 

registrations of EVs 
(about 12,000 
(about 24,000 – 
36,000 vehicles) 
Projected cumulative 
total EVs (if targets 
53,863 – 65,863
EVs as a percentage of 
1.80 – 2.20
the vehicle fleet (%) 
Foregone RUC 
32.32 – 39.52
revenue (in million $) 
The targets in Table 3 would result in a higher level of foregone revenue than was envisaged 
by the Government when it agreed to the RUC exemption. 
Under all the proposed targets, EVs make up 1 percent of the light vehicle fleet or more by 
2020. Presently, business is most comfortable with the targets in Table 2 which, if achieved, 
would keep foregone RUC revenue within expectations.  
If Government and industry achieved the targets in Table 1 or 3, EVs numbers would exceed 
the threshold set by Government for the RUC exemption. The Government would have to 
consider its options for managing the higher than anticipated revenue losses that would 
The Ministry’s preferred option 
We favour the targets set out in Table 2 as they send a signal that Government is supportive 
of a visible increase in the number of EVs in the fleet, are achievable within current 
projections and have support from stakeholders.  
There are benefits of the percentage approach taken in Table 3, in that a target range allows 
for fluctuations in the annual number of EVs available on the market. However, the exact 
percentage values were not agreed by all stakeholders and would require further discussion.  
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Extending the RUC exemption to heavy EVs 
In March 2015, we provided you with advice on extending the RUC exemption to include 
heavy EVs (OC02885 refers). We advised against extending the RUC exemption to heavy 
EVs because: 
69.1.  it would further compromise the user-pays basis of the transport system and mean 
that the cost burden of building and maintaining the road networks would fall on a 
smaller proportion of road users. This would raise equity issues, particularly among 
low-income road users who are less able to afford newer, more fuel-efficient vehicle 
69.2.  it would exacerbate revenue pressures and consequently limit or delay desirable 
transport investment because heavy vehicles do significantly more damage to the 
roads, and therefore have a greater impact on road maintenance costs 
69.3.  the benefits of this option would be limited to operators who can reasonably adopt EV 
technology, thus raising further equity concerns. With the present state of EV 
technology, this is only an option for a small proportion of operators, such as urban 
buses, waste collection vehicles, and some construction vehicles. 
Any extension of the RUC exemption to heavy EVs would require a change to the Road User 
Charges Act 2012, because the power to exempt electric vehicles from paying RUC is 
specifically limited to light EVs. 
If the RUC exemption were extended to heavy EVs, the 80 trolley buses used in Wellington 
would no longer pay RUC. This is a issue given that the Greater Wellington Regional Council 
has already decided to phase these buses out based on existing policy settings.  
If pursued further, we would need to consult with councils and industry to consider their 
views on the matter, and get a better indication of likely rates of uptake. This would inform 
the projected costs of the exemption. We would also suggest limiting the scope of the 
changes to reduce the risk of higher-than-expected revenue losses (for example, limiting 
introducing a RUC discount for heavy passenger EVs).  This would help mitigate the risks 
noted above. 
The proposed contestable fund and its link to EV procurement options  
Stakeholders agree that the price differential between EVs and equivalent conventional 
vehicles is a key barrier to the uptake of EVs. From a business perspective, even when 
considered on a total cost of ownership basis the lower running costs of EVs do not offset 
the higher purchase price. 
At the 12 October 2015 government-industry workshop, the joint procurement and 
contestable fund were proposed by business representatives as interrelated initiatives to 
bridge the price differential. 
Through the joint procurement initiative, aggregated volume of demand would be leveraged 
to achieve lower prices. The remaining price differential would then be ‘shared’ on a like-for-
like basis between the purchaser (industry or local/central government) and government via 
a fund established for this purpose. The expectation was that these options would work 
together to assist industry and government to make a better business case, based on total 
cost of ownership, for the purchase or lease of EVs. Further discussion of the proposed fund 
broadened it to a contestable fund, which could be accessed to fund other innovative 
projects involving EVs. 
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Under the scenario proposed by business, the fund would act in part as a subsidy (albeit on 
a cost sharing basis) for the purchase of EVs. We expect it would be likely to be 
oversubscribed. Given your earlier direction on the issue of subsidies we would need to 
discuss the operation of a contestable fund with you further, should you choose to progress 
this option. 
The Government already provides a financial incentive or ‘tax break’ for EVs through the 
existing RUC exemption, which is worth around $600 per vehicle per annum until 2020. It 
appears the RUC exemption, which is factored into the total cost of ownership analysis, is 
not sufficient on its own to bridge the price differential.  
The risk under this approach is that it could be difficult to justify an additional financial 
incentive purely to fund the purchase or lease of a private asset, particularly if that incentive 
was not available to the public at large. Another option, which could address the price 
differential, is a government guarantee of residual value, which would require further analysis 
if it was to be progressed further. 
Numbers of EVs that fleets have already purchased, or have committed to purchasing  
The Sustainable Business Council has provided the information in Table 4 about uptake of 
EVs by its members: 
Table 4: EV uptake by some Sustainable Business Council members 
Number of EVs 
Air NZ  
Subject to Request for Proposal (80 vehicles – to be 
Auckland Airport 
1 EV 
2 EVs; 1 EV on order and a business case is being 
Auckland Council 
developed that could see up to 45 purchased 
18 EV 
5 EVs  
Kapiti Coast District Council 
1 electric rubbish truck 
15 EVs (plan to transition 70 percent of its fleet to 
Mighty River Power 
EVs by 2018. Its fleet size is about 100 vehicles) 
NZ Post 
14 fully electric specialist vehicles (postal delivery) 
3 EVs 
60 EVs 
In addition, Wellington Electricity Lines has five EVs, Nelson-Marlborough District Health 
Board has one, Northpower has six, and Christchurch City Council has three (a total of 15 
between them). There may be other fleets with EVs, but we are not aware of any that have a 
significant number (e.g. more than five). 
Christchurch City Council is currently working with four public sector organisations to scope 
a shared fleet project which could potentially be a public car share scheme. Based on work 
to date, Christchurch City Council estimates that it would need 100 EVs if the scheme went 
[Commercial in-confidence] Auckland Transport is currently working to finalise the details for 
a car share scheme using electric vehicles. The following update on progress with the 
scheme has been provided by AT on a highly confidential basis: 
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82.1.  A provider has been selected and is planning to launch the scheme in May or June 
2016, with 100 EVs. This is seen as a starting point, and if it goes well further EVs will 
be added to the scheme. The cars will be able to be used by Auckland Transport and 
Auckland Council staff for business and private use, as well as by members of the car 
share scheme. Auckland Transport is able to source the vehicles it requires but has 
not yet settled on a manufacturer. 
Feedback from the Sustainable Business Council Advisory Board Meeting 
At its 5 November 2015 meeting, the Sustainable Business Council Advisory Board 
considered the attached A3 and the targets set out in Tables 1-3 above. It: 
83.1.  endorsed the targets that saw annual registrations of EVs double each year to 2020 
(see Table 2 above) 
83.2.  encouraged Government to be bold in its approach 
83.3.  encouraged innovative thinking on funding models, and would like to see a 
comprehensive contestable fund that complemented joint procurement, and assisted 
in bridging the cost gap between EVs and internal combustion equivalents 
83.4.  endorsed the collaborative approach between officials and business and are 
supportive of continuing this. 
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