CALGARY — Canadian automakers say the dollar value of an existing federal incentive for consumers who purchase electric vehicles will need to triple in order for the Liberal government to be successful with its ambitious new EV sales mandates.
In its sweeping new emissions reduction plan tabled this week in the House of Commons, the government said it will require 20 per cent of all new light vehicles sold in Canada to be zero-emission by 2026, and 60 per cent by 2030.
The government wants 100 per cent of new vehicles sold to be electric by 2036.
But Canadian automakers say it’s not yet clear if consumers are ready to make the switch at that sort of pace. In 2021, only 5.6 per cent of new vehicles sold in Canada were electric, according to the industry.
“The reality is there’s one simple driver of EV sales — and this isn’t just a Canadian story, it’s the same anywhere you look in the world,” said Brian Kingston, president and chief executive of the Canadian Vehicle Manufacturers’ Association. “It’s directly related to purchase incentives.”
While EV drivers can save money in the long-term due to lower costs of ownership, the upfront cost of an electric vehicle typically comes with at least a $10,000 premium over a gasoline-powered one.
Kingston said B.C. and Quebec, the two jurisdictions that offer a provincial purchase incentive on top of an existing federal incentive for EV buyers, currently lead the country in electric vehicle sales. He added demand for EVs in Ontario fell significantly after Premier Doug Ford scrapped a provincial rebate program in 2018.
Currently, the federal government offers an incentive of up to $5,000 for the purchase of a new electric vehicle in Canada. While the emissions reduction plan released Tuesday said the government has plans to provide $1.7 billion to extend the incentives program, no further details were made available.
Kingston said his industry believes the amount of the federal incentive needs to increase to $15,000 to convince Canadians to make the switch to EVs.
“If they don’t roll something out like that, you’re going to have a hard time,” Kingston said. “Because we’re in an inflationary environment right now … and the federal government is essentially going to regulate you to buy a more expensive vehicle. That’s not good policy.”
He added he doesn’t believe government rebates need to be permanent. As EV technology improves and the price of batteries comes down, Kingston said consumers will no longer need a financial incentive to buy them.
Kingston added the federal government will also need to improve charging infrastructure and educate consumers about electric vehicles in order to meet its targets.
“We sell the vehicles and build the vehicles. We know what it’s going to take. It’s going to take charging infrastructure and consumer incentives. And on both fronts, the government is surprisingly unambitious,” he said.
The emissions reduction plan released Tuesday said that the government plans to provide additional funding of $400 million for zero-emission vehicle charging stations, with the aim of adding 50,000 EV chargers to Canada’s network. Kingston said he doesn’t believe that will be anywhere close to sufficient, and said he would like to see a serious analysis done of Canada’s expected charging station needs for the years to come.
The Canada Infrastructure Bank will also invest $500 million in electric vehicle charging and refuelling infrastructure.
Tim Burrows, an Ontario-based member of Canada’s Electric Vehicle Society — an organization of EV owners and advocates — said increasing purchase incentives would certainly have an affect on electric vehicle adoption in this country, but he added he’s not sure it’s entirely necessary.
“I think the change is happening anyway, and can’t be stopped,” he said. “It’s just a question of how quickly we want this to happen.”
In many parts of the country, EV demand is already outstripping supply, Burrows said. He added there are people who have expressed interest in purchasing one but can’t find one, either because the auto dealers close to them aren’t equipped to sell them or because of supplier shortages.
“The frustration people are experiencing with finding available inventory is proof that it’s accelerating,” he said. “And the more people you see out on the road driving electric, the more you think ‘this a real thing and maybe I should think about it too.’ “
This report by The Canadian Press was first published March 31, 2022.
Amanda Stephenson, The Canadian Press