TORONTO — Canadian auto manufacturers are advocating for the discontinuation of electric vehicle sales targets due to the abrupt halt of federal EV incentives and what they claim is the sluggish expansion of charging infrastructure.
Groups including the Canadian Vehicle Manufacturers’ Association, Global Automakers of Canada, and the Canadian Automobile Dealers Association jointly called for action on Tuesday, after being told the incentive program would be closing ahead of its scheduled end more than two months ahead of schedule.
“Cautiously going forward with a requirement that Canadians buy zero-emission vehicles without giving them the resources to transition to electric vehicles is a uniquely Canadian policy misstep,” said Brian Kingston, head of the CVMA representing Ford, GM and Stellantis.
Canada has ordered that 20 per cent of all new vehicles purchased must be electric by 2026 and completely electric by 2035.
Industry critics aren’t surprised, as automakers have been expressing skepticism since the targets were unveiled back in 2022, insisting that challenges surrounding affordability and infrastructure need to be resolved first.
Transport Canada made the announcement after stating that it’s cancelling an incentive program that gives Canadian citizens rebates of up to $5,000 when buying or leasing electric vehicles because the allocated funding has been exhausted sooner than expected, resulting in the programme’s previously scheduled shutdown on March 31 being brought forward.
The department reported that more than 546,000 vehicles have been sold or leased using the incentive program since its introduction in 2019.
Electric vehicles made up 11.7 per cent of Canada’s market in 2023, up from 3.1 per cent in 2019, while new zero-emission vehicle sales reached a record high of 16.5 per cent of the market in the third quarter of last year, it was said.
Transport Canada has stated that the program stopped accepting new applications on January 12th and that only applications that were pre-approved before the pause will be eligible for the incentive payments.
Federal Transportation Minister Anita Anand said in a statement that she was thrilled with the success of the program.
“We will keep working with the industry, environmental organizations, and provincial and territorial governments to make Canadian transportation cleaner and become a world leader in electric and zero-carbon vehicles,” she said.
The federal government has put a hold on electric vehicle incentives. At the same time, Quebec is also scaling back its own rewards for buying EVs. The province has dropped the incentive amount to $4,000 for each EV this year, down from $7,000 last year. The Quebec program will stop providing incentives altogether from February 1st to March 31st. For the following year, Quebec will offer a $2,000 reward per vehicle, with the incentives scheduled to end by the end of 2026.
Government incentives for electric vehicles aim to give the market for EVs a boost and make it more affordable for early adopters, with the idea that as more people buy EVs, the prices will decrease.
Despite progress so far, there’s been limited adjustment in EV prices. North American automakers have primarily been focusing their production on more expensive, high-profit models in the meantime. Meanwhile, Canada has also implemented a 100 per cent tariff on cheaper EVs from China.
“Until Canadian consumers are paying roughly the same price for a vehicle as buyers elsewhere in North America, incentives are necessary to help deal with the price differential,” stated David Adams, head of Global Automakers of Canada, which represents companies like Toyota, Honda and Volkswagen.
“If the government is going to tell car manufacturers to add more zero-emission vehicles to the market and to punish them severely if they don’t comply, then the government has to make sure it’s also doing its part to make it easier for people to switch to EVs by dealing with the big problems of cost and availability of charging stations,” he said.
A report released yesterday by RBC stated that a slowing-down economy and inflation influenced only 28% of Canadians considering purchasing an electric vehicle (EV) in 2024, down from 47% in 2022. It predicted that delayed automotive company EV plans are likely to further delay the point at which prices of EVs are equal to those of gas-powered vehicles.
A report released last year, commissioned by Natural Resources Canada, estimated that the country will require around 679,000 public charging stations by 2040, a significant increase from the approximately 32,000 currently available.
This article taken from The Canadian Press was first published January 14, 2025.
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