With three-quarters of its funding spent, is Canada’s EV purchase rebate program set for an expansion?
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Aug 27, 2020
Luke Sarabia

Over $225 million of the program’s three-year $300-million allocation to aid Canadians in buying electric vehicles has been used. Is there more to come?

Over $225 million of the program’s three-year $300-million allocation to aid Canadians in buying electric vehicles has been used. Is there more to come?   

Since May 2019, the federal government has offered Canadians up to $5,000 towards the purchase of battery electric and long-range plug-in hybrid vehicles. Electric Autonomy reported in January that $134 million of the $300 million allocated by the government to fund three years of the program had been spent in its first eight months.

According to new figures from Transport Canada, that number has now topped $225 million, which represents 75 per cent of the program’s allotted funding. A total of 53,510 Canadians and Canadian businesses have benefitted from the purchase incentive since its inception, as of July 31, 2020.

The EV purchase rebate was developed to assist the federal government’s commitment that zero-emission vehicles (ZEVs) account for 10 per cent of light duty vehicles sales by 2025, 30 per cent by 2030 and 100 per cent by 2040. Those targets were announced early in 2019, and reiterated in Prime Minister Trudeau’s mandate letter to Minister of Transport Marc Garneau at the end of last year.

As the upfront costs of EVs are still typically higher than most vehicles, experts say incentive programs will play a crucial part in increasing adoption until EVs reach price parity with gas cars, which some have forecasted will occur as soon as 2022. Following this, adoption will likely continue to increase without government support.

Sales high, but regional discrepancies remain

Since the introduction of the purchase rebate, electric vehicle sales have climbed steadily across the country, with the exception of a COVID-related dip in recent months.

According to Transport Canada, ZEVs made up 3 per cent of light vehicle sales in 2019, up from 2 per cent in 2018. That number rose to 3.8 per cent in the first quarter of 2020, but dropped to 2.9 per cent between April and June. The number of ZEVs purchased in the second quarter of this year also dropped by half from the same period in 2019, following a widespread trend downward in vehicle sales this spring.

British Columbia and Quebec are currently the only Canadian provinces that offer provincial rebates on electric vehicle purchases; they also have the first and second highest (respectively) EV ownership rates. Ontario, which no longer offers an EV purchase incentive, ranks third.

“Restart … needs to be green”

In January, following the news that nearly half of the allocated $300 million had been spent, Minister Garneau commented that, “It’s very encouraging to see how many people are now thinking about and actually going ahead and buying [zero-emission vehicles],” and that he was “certainly working very hard” to expand the rebate program.

Expectations that the program might see renewed funding in the 2020 federal budget were foiled by the unprecedented economic disruption posed by the arrival of COVID-19.

When we asked about the possibility of a top-up this week, a Transport Canada spokesperson was noncommittal, stating: “Any changes in funding for the program would be reviewed at the appropriate time and as needed.”

However, an imminent reinvestment in EV purchase incentives would be consistent with newly appointed Minister of Finance Chrystia Freeland’s comments last week that investment in decarbonization “has to be part of” Canada’s post-COVID economic recovery plan.

“I think all Canadians understand that the restart of our economy needs to be green…. And we need to focus very much on jobs and growth,” said Freeland.

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