Canadians are facing a cost of living crisis due to soaring prices for everything from transportation and housing to clothing and food. Nearly three out of four Canadians say rising prices are affecting their ability to meet day-to-day expenses.
Now, life is about to get even more expensive for Canadians with the federal government’s plan to regulate vehicle sales.
Sales regulations restrict the gas-powered vehicles available to Canadians, regardless of their fuel efficiency or the reason they are needed. Given the price differential between gas-powered vehicles and zero-emission vehicles (ZEVs), this means low- and middle-income, rural, remote and northern Canadians will bear the brunt of this misguided policy.
Canada’s 2030 Emissions Reduction Plan included a commitment to establish a ZEV sales mandate for light passenger vehicles. Despite clear evidence that vehicle sales regulations are not driving ZEV adoption, the federal government continues to advance this outdated and redundant policy.
Automakers are making unprecedented investments in electrification, with more than $515 billion (US) committed through 2030 to ramp up production and bring new models in every vehicle segment to consumers. What the groups advocating for sales regulation don’t want you to know is that accelerating and building a battery supply chain, developing new mineral mining and processing capabilities reviews and the retooling of auto plants to deliver ZEVs only for Canada will make this more costly for Canadians. to get the vehicles they need.
According to recent data from JD Power, the transaction price of a compact SUV (the most popular vehicle segment in Canada) averages just over $40,000 (CND). Compare that to $60,000 for an electric equivalent. A similar price gap exists between electric and gas-powered compact cars, a critical segment for Canadians with limited car budgets.
Even with the inclusion of Canada’s modest consumer buying incentives, the price difference is almost $15,000 for a buyer in Canada’s most populous province, where there are no provincial incentives.
Equally concerning is the impact on remote, rural and northern Canadians who depend on SUVs and pickup trucks capable of living, working and playing, in harsher climates with longer driving distances. Automakers are bringing electrified SUVs and pickup trucks to market at a record pace, but higher-performance vehicles require bigger batteries. This means higher price differentials for these vehicles until materials and battery technology reach price parity with gasoline vehicles. With an acute lithium supply deficit projected until 2035, price parity could still be a long way off.
Add to that the cost of installing home charging, which can run into the thousands depending on the electrical work required, and it’s clear that regulating ZEV sales without providing Canadians with sufficient support will only exacerbate the affordability crisis.
The question for policy makers then is: how do we close the price gap and make ZEVs more affordable and attractive to millions of Canadians?
According to the EV Readiness Index, an annual analysis conducted by Ernst & Young Global that assesses markets based on supply, demand and regulatory factors, Canada ranks second to last among the 14 countries in the study. . A major contributor to Canada’s poor performance is lack of demand due to high cost and concerns over charging infrastructure.
Fortunately, there is a solution. Rather than regulating Canadians to buy vehicles they cannot afford or charge, the federal government should develop a comprehensive plan of consumer incentives and charging infrastructure to help all Canadians go electric.
The government’s own survey concluded that the biggest barrier to ZEV adoption is the higher cost of vehicles. The federal government’s $5,000 purchase incentive for consumers is nowhere near enough to help Canadians go electric. At a minimum, we should keep pace with the strong consumer incentives in the new Cut Inflation Act recently signed by US President Joe Biden that gives Americans up to $10,000 (US$7,500) when they switch to electricity.
For Canadians living in multi-unit residential buildings (MURBs) or homes without access to charging, a comprehensive and accessible public charging network will be needed. To support an all-electric vehicle fleet, Canada will need nearly four million public charging stations by 2050 powered by clean, affordable and reliable electricity generation and grid infrastructure. With only 16,400 public charging stations available today, Canada is not on track to have the charging infrastructure needed to drive ZEV sales.
And for those lucky enough to have access to parking at home, consumer assistance in the form of grants or tax credits for Canadians who install a charging station at home will go a long way. For example, the UK’s ChargePoint EV grant for people living in MURBs provides up to 75% of the cost of buying and installing a charger connection.
The transformation towards electrification is well underway in the automotive industry. Strong incentives and widely available charging infrastructure will make switching affordable for everyone.
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