The federal government wants to overhaul the electric vehicle rebate program to more closely match the types of cars Canadians want to buy, Transportation Minister Omar Alghabra said.
The Liberals pledged in their campaign platform to spend an additional $ 1.5 billion over the next four years on the Zero Emission Vehicle Incentives (iZEV) program, which is part of a big push to get more electric vehicles on the road as Canada strives to achieve net zero by 2050.
The current program has been extremely popular, but Alghabra is considering improvements.
Currently, the program limits rebates to new vehicles with a maximum base price of $ 45,000 and a maximum price for models with enhanced features of $ 55,000.
That will leave out many of the new SUVs and pickups that start flooding the market next year, including the F-150 Lightning electric pickup that Ford says will start around $ 58,000.
“The vast majority of vehicles purchased today are SUVs and pickup trucks, and although options (zero emission vehicle) become available for these segments, many of them will be billed outside of the current iZEV program,” Alghabra said. in a written statement. issued by his office.
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It also omits used vehicles, for which there is an emerging market.
“This is why our government is examining how the program can be revised to better align with current consumer preferences,” said Alghabra.
In 2020, more than three in four new vehicles registered in Canada were pickup trucks and SUVs, while passenger cars accounted for only one in five vehicles.
But due to the models available, over 60% of new zero-emission vehicles registered in 2020 were passenger cars, and 35% were SUVs and crossovers.
According to Plug’n Drive, an Ontario-based non-profit that promotes the use of electric vehicles, only four zero-emission SUV models are currently available in Canada. None of them are priced low enough to qualify for the discount. There was no van among them.
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There are, however, over 40 new electric vehicle models expected over the next two to three years and most of them are pickup trucks and SUVs.
Cara Clairman, president of Plug’n Drive, said the lack of real SUVs and vans “is a real challenge.”
“It’s been a big deal so far, because let’s face it, the first EVs were all pretty small so it was a tough sell for Canadians,” Clairman said.
The first budget of $ 300 million for the iZEV program was supposed to last three years, but was snapped up in less than 20 months. Another $ 287 million was added a year ago, and only $ 48 million remains.
Over 121,000 vehicles were purchased with the rebates, which range from $ 2,500 for plug-in hybrids to $ 5,000 for the battery only. Leased vehicles may see smaller discounts, depending on the length of the lease.
The $ 1.5 billion promised in the election must last until 2025.
Clairman is among several electric vehicle experts who say rebates to bring the cost of electric cars up to their gasoline equivalents are a vital part of the puzzle.
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The year after Premier Doug Ford canceled Ontario’s rebate program in 2018, new electric vehicle registrations fell 41%. Ontarians registered 38% of all new electric vehicles in 2018. In 2019, it was 17%.
Quebec and British Columbia have both benefited from discounts for several years and together represent three out of four electric vehicles sold in Canada. They are also the only two provinces with sales mandates that penalize automakers whose sales do not include a minimum proportion of EVs.
In the past year, Newfoundland and Labrador, Nova Scotia, Prince Edward Island and New Brunswick have all introduced discounts on electric vehicles. The Yukon and Northwest Territories added discounts in 2020.
Most of these programs also include help installing electric vehicle chargers in the home.
Rebates don’t come cheap, and some economists argue they’re one of the most expensive ways to cut greenhouse gas emissions. A September 2020 article edited by Christopher Ragan, director of the Max Bell School of Public Policy at McGill University, concluded that there are better and cheaper ways to encourage people to use electric vehicles.
Alghabra said the first 100,000 cars handed over under the iZEV program reduced Canada’s greenhouse gas emissions by about 352,000 tonnes per year, or roughly what 78,000 gasoline cars produce on average in 12 month. Electric vehicles still produce emissions, including when plug-in hybrids use their gas engines and if the electricity used to charge comes from fossil fuels like coal or natural gas.
In his article, Ragan said that even in Quebec, where almost all electricity comes from hydroelectricity or zero-emission wind power, the goal of having a million electric vehicles on the roads here. 2030 would only reduce emissions by 3.6%.
This is a fraction of the goal of reducing total emissions by 37.5%.
“In other words, electric vehicles should not be considered the main or even an important means for Quebec to reduce its carbon footprint,” said Ragan.
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Wilf Steimle, president of the Electric Vehicle Society, said the rebates are a short-term expense to overcome the sticker shock for some drivers until prices become comparable to gasoline.
“It is important to note not to lose sight of the fact that it is in the short term, that the price disparity is being resolved,” he said.
The price difference may vary. Hyundai Canada lists the base price of a gasoline Kona at $ 21,999 and the electric model at $ 43,699. Ford Canada is launching a gasoline Escape at $ 27,149 and the base plug-in hybrid model at $ 35,649.
Analysts at BloombergNEF, which studies the energy transition, said in May that they expected new electric vehicles to be on average cheaper than their gasoline-powered counterparts within five years.
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