Auto execs want more subsidies from Canadian taxpayers to meet federal targets

Alex Dhaliwal
  |   June 28, 2024   |   Be the first to comment

Auto executives want taxpayers to fork out billions more in subsidies to satisfy the Trudeau Liberals' electric vehicle mandate, despite existing subsidies totalling more than $150 billion to date. 

Cabinet has yet to account for the costs of this mandate. 

The Department of Environment and Parliamentary Budget Office put current subsidies at $151.5 billion. They include $24.5 billion to build charging stations and $52.5 billion for auto and battery manufacturers E-One Moli, Ford, Honda Motor Co., Northvolt, Stellantis and Volkswagen.

Environment and Climate Change Canada in a 2023 Regulatory Impact Analysis Statement said unaccounted expenses included the “cost of retraining mechanics,” lost revenue for “gas stations with attached convenience stores” and higher insurance premiums for select EVs. 

David Adams, CEO of Global Automakers of Canada, said regardless of costs, the country cannot reverse course on the mandate. “Much is riding on this transition,” Adams told reporters. 

“Global automakers have invested $1.3 trillion in the transition to electrified vehicles,” he said. “The die is cast and we need to figure out how we are going to make that transition... [it] will not be smooth by any means. It is going to be bumpy.”

Notably, dealers want more rebates in addition to a current $5,000 federal grant to electric car buyers, reported Blacklock’s Reporter. The government says its incentive program has helped make EVs more affordable and increase sales. 

Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association, said Canada is far from meeting their mandate. 

“In the first quarter of 2024 electric vehicle sales were responsible for 11.3% of total vehicle sales in Canada,” he said. The mandate requires 100% of sales be electric by 2035. 

“The government can only do so much to entice consumers to purchase vehicles that they would like to see implemented,” Frank Voss, president of Toyota Motor Manufacturing Canada, told Bloomberg. “Consumers will choose what they need.”

“We need to make sure that we’re revisiting targets to align targets with reality,” Voss said.

Meanwhile, automakers agree it is ‘doubtful’ that Canada will phase out new gas vehicles by 2035.

First announced in December 2022, Minister Steven Guilbeault pledged that zero-emission vehicles would make up 20% of all new car sales in 2026, followed by another interim target of 60% in 2030. 

The Trudeau government previously ignored calls to adopt U.S. targets of more than 50% of new vehicle sales being battery-electric by 2032.

BloombergNEF estimates EV sales in Canada will be approximately 70% of new passenger vehicle sales by 2035.

Automakers are also requesting more handouts to build charging stations nationwide. Canada was “woefully short,” said Tim Reuss, CEO of the Canadian Automobile Dealers Association.

Natural Resources Canada estimates the nation will need around 200,000 public chargers by 2035, which it hopes private sector funding will cover. 

The Trudeau government aims to have 84,500 electric chargers by 2029, partially funded through the government’s Zero Emission Vehicle Infrastructure Program.

Potential EV buyers also expressed hesitation as lithium-ion batteries lose upwards of 20% of their range in below freezing temperatures, according to Recurrent, a Seattle-based startup that assesses EV batteries. 

Consumer demand for EVs will rise when they are more affordable, Voss said. The average price of a new vehicle in Canada is $66,000 — cheaper than the typical electric vehicle ($73,000). 

Conservative Leader Pierre Poilievre in a December 19 interview with 640 Toronto’s “On Point With Alex Pierson” said “working class people” cannot currently afford EVs. 

“The working-class guy who needs a pick-up truck,” he said, “is going to be forced to pay $20,000 or $30,000 more for an electric version that may or may not work in cold weather and driving long distances.”

“If these cars were affordable, you wouldn’t need a mandate,” Poilievre said. He intends to repeal the mandate if elected prime minister.

Alex Dhaliwal

Journalist and Writer

Alex Dhaliwal is a Political Science graduate from the University of Calgary. He has actively written on relevant Canadian issues with several prominent interviews under his belt.

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