Electric vehicle sales are up thanks to the new federal rebate — yet carmakers say government moves put them in a tough spot 

It was a ”good news” press release for a hot summer day.

On August 1, Transport Canada announced that more than 14,000 purchases or leases had been made through its Incentives for Zero Emission Vehicles program since May 1. The release also noted that sales of all ZEVs in Canada for the first six months of 2019 have increased by 30 per cent compared with 2018.

The incentive, said Transport Minister Marc Garneau, helps “make it easier for Canadians to be part of the solution to climate change and to reduce their daily driving costs.”

Reserved enthusiasm

However, when Electric Autonomy Canada reached David Adams, president of Global Automakers of Canada, which represents 15 European and Asian manufacturers, for comment, his enthusiasm was reserved.

“These incentives are helpful in bridging the gap between current market demand and the conversion to electric vehicles,” he says. ”[But] about 75 per cent of the vehicles sold in Canada today are SUVs and pickups. There aren’t many electric vehicles in that wheelhouse.”

”The federal government is trying to force manufacturers to force consumers to buy a certain type of vehicle,” says Adams.

More than two dozen models

At present, more than two dozen models from 15 different manufacturers are eligible for the incentive. Under the program, Canadians who purchase or lease an eligible battery electric, hydrogen fuel cell, or longer-range plug-in hybrid vehicle will receive a $5,000 rebate. Consumers who purchase or lease a shorter-range plug-in hybrid get a rebate of $2,500.

The federal incentive can also be stacked with provincial rebates, which means that Quebec residents can combine the $5,000 federal subsidy with the province’s $8,000 rebate, while B.C. residents can add the federal subsidy to its $5,000 kickback. While there is no incentive program for consumers in Alberta, that province’s Electric Vehicles for Municipalities program offers an $8,000 passenger car rebate to municipalities which can be added to the federal rebate.

Last spring, when it unveiled the incentives, the government also announced its targets for new EV sales: 10 per cent of new light-duty vehicle sales by 2025, 30 per cent by 2030, and 100 per cent by 2040. Currently, ZEVs have a modest 3 per cent market share.

“Crucial“ element

Martin Archambault, a spokesperson for the Quebec Electric Vehicle Association, believes government subsidies are key to increasing the popularity of electric vehicles. As he noted in a recent interview, “Across the globe, it’s a crucial element to foster this transition.” 

Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association, which represents the Big Three (Fiat Chrysler Automobiles, Ford and General Motors), agrees. “Government incentives are necessary until prices come down and there is price parity with internal combustion vehicles, and we don’t expect that to occur until between 2025 and 2028,” says Nantais.

“Without the incentives we would be nowhere. Look at the example of Ontario. The number of sales virtually dropped to zero after the cancellation of its incentives program.” 

In July 2018, the Ontario government cancelled a generous electric and hydrogen vehicle incentive program introduced by its predecessor. That program offered credits ranging from $5,000 to $14,000 for new ZEV purchases from a variety of manufacturers.

Consumers need clarity

“Clarity for consumers on this issue is vital,” says Nantais. “Consumers need to know that the incentives will be in place for a designated length of time.”

On this, he and Adams concur: “The challenge is to get consistency in government action,” says Adams.

To further stimulate the market, the federal strategy also includes plans to invest $130 million in recharging and refuelling stations, in addition to the $180 million it has already committed or invested, for a total of $310 million.

Ottawa is also teaming up with other jurisdictions to help move the market forward.

In June, it signed an agreement with California aimed at setting common clean fuel standards. It also recently joined the International Zero-Emission Vehicle Alliance (ZEV Alliance), a collaboration of national and subnational governments working together to accelerate adoption of ZEVs. The participants set ambitious, achievable targets for ZEV deployment, take actions to achieve those targets and encourage and support other jurisdictions in setting and achieving ambitious ZEV targets.