Yahoo Finance 'Very heavy' EV purchase perks needed for at least 5 years, say experts
Canadians will need at least five years of “very heavy” financial incentives from Ottawa and the provinces in order to keep electric vehicles (EVs) sales growing at today’s pace, say consultants at global accounting firm Ernst & Young (EY).
From new mandates for 100 per cent zero-emission vehicle sales by 2035, to eyeing a meaningful role for Canada in the global battery supply chain, Prime Minister Justin Trudeau’s government has made the transition from fossil fuels to electrified transportation a showcase economic issue.
“Oil has served us very well as an economy, but the technology with EVs is just so much better,” Jason Clifton, a Calgary-based partner for EY told Yahoo Finance Canada.
He says the Electric Vehicle Availability Standard unveiled by the government last week shows lawmakers are thinking about how consumers can drive that shift.
How long will the government support EV sales?
EVs are selling in record numbers. According to Statistics Canada, ZEVs accounted for 12.1 per cent of new vehicle registrations in the third quarter of 2023, an all-time high for the category.
Clifton and EY Canada director of energy transition Dan Guatto say more education is needed to combat negative perceptions on range, cost of ownership, and government incentives.
A recent Abacus Data survey of 1,500 Canadians conducted by industry group Electric Mobility Canada found the majority gave wrong answers about costs versus gas and diesel cars, range, risk of fire, and a host of other issues.
When it came to the federal government’s rebate of up to $5,000 for purchasing a new EV, only 45 per cent knew it existed.
In Nova Scotia, where the province offers an up to $3,000 rebate, only 21 per cent of survey respondents say they were aware of this discount.
Clifton says ensuring those incentives are present and "probably increasing" will be an important driver of EV sales for "at least the next five years."
“We’ve got to make sure we’re very heavy in terms of that. Will it be at the outer range of 10 [years]? I’m not sure that will be required. It will be at least five, and less than 10,” he said.
“The cost of these vehicles is still not where it needs to be at the end of the day,” Clifton added. A recent government report says Ottawa is looking at expanding incentives to used zero-emission vehicles.
Provinces with EV purchase incentives in place include British Columbia, New Brunswick, Nova Scotia, Newfoundland and Labrador, Quebec, and Prince Edward Island. Guatto says the Ontario government’s removal of a rebate in 2018 caused an “immediate sales hit.”
In May, General Motors’ (GM) head of electric vehicle adoption called Canada’s most populous province a “laggard” behind other parts of the country, in an interview with Yahoo Finance Canada.
“The incentives matter, particularly early on,” Guatto said. “But I think we’re approaching the point where they’re not really going to matter as much as the cost of owning and operating an EV as people learn that, and the way they fit into our lives.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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