Federal government unveils sales mandate rules to hit 100 per cent new ZEV sales by 2035
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Dec 20, 2023
Mehanaz Yakub

The Electric Vehicle Availability Standard sets out a credit system for automakers to follow in meeting the mandatory 100 per cent zero-emission vehicles sales target by 2035

The federal government has released final regulations for automakers to follow to meet its mandatory target of ensuring that all new light-duty vehicles sold in Canada be zero-emissions by 2035.

The Electric Vehicle Availability Standard sets out a credit system for automakers to follow in meeting the mandatory 100 per cent zero-emission vehicle sales target by 2035

The federal government has released final regulations for automakers to follow to meet its mandatory target of ensuring that all new light-duty vehicles sold in Canada are zero-emissions by 2035.

Minister of Environment and Climate Change Steven Guilbeault unveiled the new Electric Vehicle Availability Standard at a press conference Tuesday at George Brown College in Toronto.

It is a significant moment in the transition to electric vehicles in Canada and the most powerful adoption lever the government has used to date. A sales mandate forces automakers to increase the availability and supply of zero-emission vehicles across the country or face penalties.

“The standard tackles one of the main barriers to people buying EVs: the limited availability and long wait time,” says Guilbeault. “We will do this by ensuring more electric cars come to the Canadian market instead of the U.S. or other markets [and] it ensures Canadians have access to a fair share of the global supply of these vehicles.”

The plan for a zero-emission vehicle sales mandate to meet the 2035 target was first unveiled last December in preliminary draft form. After that, the government opened a year-long consultation period with manufacturers and importers, provinces and territories, national and Indigenous organizations and non-governmental organizations.

The Standard is the result of those consultations.

The Standard requires all new light-duty vehicle sales in Canada to be electric or plug-in hybrid by 2035. There are also interim targets of at least 20 percent of all sales being EVs by 2026 and 60 percent by 2030.

New credit system for EV sales

To compel car manufacturers to achieve ZEV sales targets, the Electric Vehicle Availability Standard employs a new credit system.

In short: manufacturers must sell zero-emission vehicles in order to earn credits. Failure to meet the ZEV targets will result in a credit deficit for companies. Those deficits must be offset within three years or face government fines.

Each type of vehicle earns a different credit amount according to its emission levels.

Automakers surpassing their ZEV targets will amass surplus credits. These can either be banked for up to five years or traded to other companies. However, all credits must be used by 2034, says the government.

Auto manufacturers can also earn early action credits by selling more EVs before 2026. To qualify, a company’s catalogue must have at least eight per cent ZEVs in the 2024 model year and 13 per cent in the 2025 model year.

Also, by installing DC fast-charging infrastructure, carmakers can earn extra credits — one for every $20,000 invested in a new fast-charging infrastructure project.

These projects must meet certain conditions such as:

  • All stations must have a rated power of at least 150 kW;
  • Stations must be operable for at least five years after installation;
  • All stations must be available to any ZEV with a compatible charging port (or compatible adapter); and
  • Stations must open between January 1, 2024, and December 31, 2027.

Industry reaction

Industry response to the government mandate has been mixed ever since the government opened consultations. Automakers, in particular, have been vocal in their opposition to mandating EV sales saying, instead, the government should focus on getting more public chargers in service rather than putting a mandate on the auto industry.

However, other industry organizations responded positively to the government’s new EV Availability Standard.

With the latest figures from Statistic Canada showing a surge in new ZEV registrations to 12.1 percent in the third quarter of this year, Adam Thorn, transportation director at the Pembina Institute, emphasized the standard’s potential to positively impact meeting customer demands, expanding choices, and reducing wait times.

“The regulations mean that manufacturers must gradually increase their sales of EVs to dealers until they hit the 2035 target where all new cars sold are emission-free,” said Thorn. “With more EVs to choose from at the dealership, Canadians will have much greater agency over the kind of vehicle they own. Around the world, we’ve seen exponential growth in EV sales…Demand has been rising here too, causing long wait times, which should now start getting shorter.”

Electric Mobility Canada president and CEO Daniel Breton pointed out the success of existing ZEV sales mandates in Quebec and British Columbia as evidence of their efficacy in increasing ZEV adoption.

“Consumers [in Quebec and B.C.] have more choice in EV supply, makes and models than in any other province. EV sales are highest in those provinces which is no coincidence,” says Breton.

Meanwhile, Joanna Kyriazis of Clean Energy Canada highlighted the financial benefits of going electric, citing potential savings of up to $50,000 over 10 years. She also emphasized how EV availability regulations can reduce EV sticker prices by compelling automakers to prioritize affordable models over luxury ones.

Need for charging infrastructure

From the auto manufacturers’ perspective, Don Romano, president and CEO of Hyundai Auto Canada, praised the standard as a step toward a zero-emission future, but stressed the necessity for expanding charging infrastructure.

“Consumer adoption of EVs cannot solely rely on making these vehicles available to Canadians. To meet the government’s targets, a dedicated investment in charging infrastructure is necessary, especially for Canadians living outside of urban centres,” said Romano in a statement.

The Global Automakers of Canada urged the government to establish a forum involving automakers, the energy sector and consumer groups to address charging infrastructure challenges and promote ZEV adoption.

“The current economic and geopolitical headwinds mean that this transition to zero-emission vehicles will be both challenging and uneven — with automakers ultimately dealing with the consequences of factors outside of their control,” noted David Adams, president and CEO of Global Automakers of Canada.

“This is why we need a dedicated forum for the federal government to come together with key stakeholders to ensure that we are focused on the objective of the greenhouse gas emissions reductions expected with this Electric Vehicle Availability Standard.”

Louis Tremblay, president and CEO of FLO, a Quebec-based charging network provider, said the company “looks forward to working with automakers, utilities, cities and site owners to accelerate the deployment of reliable EV charging infrastructure[…]to support this transition.”

Capping off an EV-focused year

The government’s EV Availability Standard comes at the end of a year when Canada has demonstrated a strong commitment to electric vehicles.

Since 2020, the government says it has secured over $34 billion in investments for the battery and automotive supply chain.

Some notable milestones from this year include: securing an agreement with Northvolt for a $7-billion battery cell factory in Saint-Basile-le-Grand and McMasterville, Que. allocating up to $13 billion for a 90 GWh Volkswagen battery cell factory in St. Thomas, Ont.; finalized the deal with Umicore to construct its $2.1-billion cathode active materials and precursor cathode active material factory in Loyalist, Ont.; investing in a $750-million copper foil factory with Volta Energy, and a $1.2-billion battery cathode factory project with Ford, ECO Procam Canada and SK On Co in Quebec.

The federal government also contributed $44.3 million to Michelin to support the manufacturing of tires used for EVs in Bridgewater, N.S.

“Our government will not apologize for being confident in the role Canada can play in the cleaner economy of the 21st century,” says Guilbeault. “We are determined to leave this world better than we found it.”

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