The Government's scheme for discounts for electric cars comes with a couple of fishhooks: it only applies to newly imported cars, and if the funding runs out the rebates scheme will be paused and cars bought during the pause will not qualify for a rebate.

The scheme is designed so rebates on electric cars are funded from fees paid by people buying petrol cars.

It provides for rebates of $8625 for a new electric car and $3450 for a used imported electric car. There are lower rebates for plug-in hybrids.

The rebates are due to start from July 1 – but Waka Kotahi's website warns that if the funding for the scheme runs dry the rebates will be stopped until the funds are replenished.

"If, due to high demand, rebate funds are exhausted, Waka Kotahi will notify that the rebate window is closed and no discounts (rebates) will be offered during this time. Once we announce the scheme has restarted, only vehicles registered from the restart date will be eligible for rebates."

While there are rebates for both new and used electric cars, they only apply to newly imported cars which are registered after July 1. They do not apply to electric cars which are already registered in New Zealand and being sold on.

The rebates side of the "feebate" scheme starts in July, buyers of new or newly imported used petrol cars will only start facing fees from January next year.

There is another reason to get in quick to get the full rebate under the scheme: for the first six months, a flat rebate will apply, giving the full $8,625 rebate for all new electric cars and $3450 for used. After that, the rebate will depend on emissions.

A spokesman for Transport Minister Michael Wood said a Crown loan would cover the first six months of the scheme and the fees were expected to cover it from then on.

The details of the fees scheme are yet to be finalised, but the Ministry of Transport has estimated those fees will raise $125m and $188m in 2022.

Buyers of new petrol cars would pay a fee of up to $5875 while those buying newly imported used cars face fees of up to $2875.

That fee would be based on emissions – the Ministry has said it would add $2,900 to the cost of a new Toyota Hilux, $1230 to a Kia Sportage, and $830 for a Nissan Navara.

Wood and Climate Change Minister James Shaw set out the scheme on Sunday, saying it was a critical move to try to reduce New Zealand's transport emissions.

It was aimed at lifting the use of electric cars in New Zealand, which Wood said was well behind other countries.

The decision to charge fees for petrol car buyers has been criticised as unfair by Act and National, who say it is a "tax" on tradespeople and farmers who do not have options for electric vehicles.

National's spokesman Michael Woodhouse has said National supports incentives for electric car buyers, but they should be measures such as tax benefits and road user charges exemptions.

"The people who benefit will be higher-income earners who now don't have to pay as much for a Tesla. We don't think it's fair to make tradies pay more for a Hilux so wealthy executives can get a discount on their next electric car."