There’s a simple reason the electric vehicle adoption in Canada has become a mess. It’s essentially an example of the government getting involved in the free market by pushing a socialist idea to preserve the environment.
For anybody who wanted to switch from an internal combustion engine (ICE) vehicle to a zero emission vehicle (ZEV) the option was there, along with generous rebates, as much as $14,000 in Ontario at one point. This was purely a choice. Nobody was forcing consumers to buy an EV. But when the federal government started pushing the EV movement and set objectives for a specific number of sales relative to ICE vehicles, it created pressure on manufacturers to meet those limits. The goals were 20% by 2026, 60% by 2030 and 100% by 2035. In Quebec and B.C., manufacturers had to produce a certain number of EVs or face penalties. Talking to some people I know in the industry, sales of new EVs rose about 3% in 2024, but it was only about 15% overall. It is highly unlikely that target will be met, especially after the federal government put a pause on iZEV rebates worth up to $5,000 on January 10. Several manufacturers have decided to keep giving rebates, some at their own expense, through to the end of January. That was when the program was going to be put on pause. When the government pulled the financial plug on EV rebates, it sent the OEMs and dealers into a panic mode.
So it’s the federal government setting unrealistic numbers. Because of COVID and the microchip shortage, there was a problem getting inventory. That’s no longer an issue because dealers are stocked with EV, but it’s the plug-in hybrids that are more in demand. So that tells me consumers still want the option of having a car that is powered by both gas and electricity.
Dealers had to pay for infrastructure with charging stations to accommodate the added EV inventory with which they were being supplied. That inventory is sitting on dealer lots. They own the cars, so they will have to be creative to push inventory. That could work in the consumers favour because they can bargain on price.
The federal and provincial governments had the responsibility of creating charging stations to satisfy this EV adoption. A major headache for consumers, aside from EVs costing as much as $10,000-$15,000 more than a similar ICE vehicle, was concern about range anxiety. Aside from price, the biggest complaint consumers had was running out of electricity when driving a distance without an available charging station. Filling up with gas was far more expensive than recharging an EV battery, but there were no shortage of stations to refuel. If someone driving in an area off the main grid and suddenly has little battery power, they ran the risk of being stuck in no man’s land. Whether or not they should have recharged well before it became an issue is a moot point.
So why did the Canadian government go gung-ho on incentive Zero Emission Vehicle (iZEV) strategy? My thought it was the perfect storm of jumping on the ecology bandwagon, combined with a product that could help reduce carbon emissions. Putting financial incentives in place was a carrot to entice consumers. But mandating targets created chaos, mainly for the Canadian automotive manufacturing industry, which was already dealing with the effects of COVID affecting production and the microchip shortage. There wasn’t enough inventory to stock dealers’ lots. Once the COVID and microchip shortage ended, dealers could have as much inventory as they wanted.
I’ve been told by several dealers there is strong interest in hybrid EVs because consumers like having dual power sources, particularly in parts of the country when the bitterly-cold temperatures are not favourable to strictly electric power. In fact, the dealers have told me they can’t get enough hybrids and are stuck with EVs. Along with paying for charging stations, dealers have been financially burdened because of a government-driven concept.
In 2018, when Conservative Leader Doug Ford was elected Premier of Ontario, he immediately scrapped the rebate program worth up to $14,000 by the previous Liberal government. Immediately EV sales plummeted. When re-elected four years later, Ford decided to court European manufacturers with financial incentives to build battery plants and cars in Ontario. Instead of giving out rebates to consumers, he gave incentives to manufacturers to create jobs. So how will all of this be impacted by the federal government putting an indefinite pause on rebates?
Here’s another thing, there’s going to be a federal election sometime this year. The Liberals will have a new leader in place to replace outgoing Prime Minister Justin Trudeau, who stepped down in January. If, as expected, the voters choose the Conservative Party under Pierre Poilievre and it’s a majority, there is no certainly he will bring back the rebates. He is already campaigning on scrapping the unpopular carbon tax that Trudeau instituted.
And there is also the belief incoming U.S. President Donald Trump will scrap his country’s EV rebates, even with Tesla Motors’ CEO Elon Musk arguably the biggest influencer in his cabinet.
When you put all this together, the EV evolution may turn into a revolution that will create a financial headache. It may become more of an issue than saving the planet from greenhouse gas emissions.
Perry Lefko is the Content Manager of The Car Magazine. He can be reached at [email protected]. Feel free to forward any story suggestions or comments.
