2.3 Making electric vehicles more affordable
One of the biggest barriers to EV adoption in Canada is their relatively high purchase price relative to gas-powered cars.32 In 2021, the average transaction price for a new EV was more than 20 per cent higher than the average car or truck sold in the United States.33 The high cost and still limited supply of advanced batteries and other component parts can partly explain this price gap. Industry watchers agree that until automakers can build and profit on EVs at a level that is comparable to conventional vehicles, consumer prices will remain above average.34
Governments eager to ratchet down greenhouse gas (GHG) emissions are seeking ways to encourage faster uptake of EVs. For instance, Canada has set its sights on implementing a national sales mandate requiring ZEVs to account for 20 per cent of all new light duty vehicle sales by 2026, 60 per cent of sales by 2030, reaching 100 per cent by 2035.35 Other jurisdictions have taken similar measures, such as the United Kingdom, California and China.
Canada’s Electric Vehicle Sales Goals
However, mandates alone will not encourage EV uptake. In a submission to federal consultation on ZEV mandates, Unifor argued for a “holistic” policy approach to spur EV adoption by marrying government sales mandates with major infrastructure upgrades and industrial development efforts.36 In fact, of all new light-duty vehicle registrations in Canada, less than 4 per cent are EVs. Virtually all are registered in either B.C. or Quebec owing to both provinces’ aggressive consumer purchase incentives.37
Making this shift to electrification means addressing the affordability gap, acknowledging the price barriers and introducing meaningful supports to overcome it.
32 According to a November, 2020 PCO poll, 43% of respondents said they believed EVs were too expensive: https://globalnews.ca/news/7632277/internal-government-poll-support-electric-vehicle-subsidy/
33 See November 2021 Kelley Blue Book: https://www.prnewswire.com/news-releases/eight-straight-new-vehicle-prices-mark-another-record-high-in-november-2021-according-to-kelley-blue-book-301442015.html
34 Bloomberg Hyperdrive Daily benchmarks price parity once the cost of battery packs crosses the $80/kwh threshold. Preliminary estimates suggest that to happen in 2026: https://www.bloomberg.com/news/newsletters/2021-05-25/hyperdrive-daily-the-ev-price-gap-narrows
35 See Transport Canada: https://tc.canada.ca/en/road-transportation/innovative-technologies/zero-emission-vehicles/canada-s-zero-emission-vehicle-zev-sales-targets
36 Unifor submission to ECCC Consult on Possible Additional Measures Needed to Achieve a Mandatory ZEV Sales Target of 100% by 2035, available at: https://www.unifor.org/resources/our-resources/eccc-consult-possible-additional-measures-needed-achieve-mandatory-zev
37 Statistics Canada – Automotive Statistics: https://www.statcan.gc.ca/en/topics-start/automotive (accessed February 1, 2022).
#15. Increase vehicle purchase incentives
Doubling the iZEV rebate program to $10,000 is an immediate step the federal government can take. Provincial governments must also introduce similar and complementary consumer rebates where they are not currently in place. To ensure fair distribution of public funds, governments must also consider setting in place a dynamic income-tested rebate once market penetration for new light duty ZEV purchases crosses the 50 per cent threshold (i.e. eliminating subsidies to individuals with incomes above $200,000 and establishing a sliding scale subsidy for those below that amount).
#16. Introduce a temporary vehicle trade-in rebate program
Heavily affected by production downtime and supply-chain disruptions, annual Canadian and U.S. auto industry sales continue to lag pre-pandemic levels by 15 per cent38 and 12 per cent39 respectively. Developing vehicle trade-in or “scrappage” programs can simultaneously boost demand for newer, more fuel-efficient vehicles, such as EVs, and reduce overall carbon emissions by pulling higher-polluting older vehicles off the road. Such a program can apply to vehicles aged 12 years or older, the average lifespan of a vehicle, and work in conjunction with dollar-for-dollar matching incentives provided by automakers.
38 See Automotive News Canada (January 5, 2022): https://canada.autonews.com/retail/2021-sales-nearly-7-remain-far-below-194m-sold-2019
39 See Automotive News (January 8, 2022): https://www.autonews.com/sales/2021-us-auto-sales-most-unusual-year