Want Canadians to buy electric cars? Cash rebates may help, say officials

Cash rebates and tax incentives are the best way to convince Canadians to buy electric cars as part of an overall government strategy to cut greenhouse gas emissions, federal officials conclude in a report to Transport Minister Marc Garneau.

However, those same officials have told Garneau that money set aside in this year’s budget to encourage people to take the electric vehicles for a spin may be going to waste.

The comments from the department’s policy group are in response to a report by Electric Mobility Canada, which made a number of recommendations in March to accelerate the deployment of electric vehicles (EVs) across the country.

The not−for−profit group’s report called for purchase rebates of up to $3,000 per vehicle sold, on top of provincial rebates amounting to a minimum of $3,000.

"EV purchase incentives likely hold the greatest potential to increase EV sales, as they address arguably the most important barrier to uptake — high cost premiums for EVs compared to conventional vehicles," Transport Canada’s policy group said in internal comments on the report’s recommendations.

"Evidence suggests incentives are the primary reason for existing sales of EVs."

In documents obtained by The Canadian Press under the Access to Information Act, officials noted that nearly all sales of electric vehicles in Canada — 95 per cent — were completed in provinces that offered EV purchase rebates.

Applying a federal cash incentive in provinces where rebates already exist would not only spur new sales, but would also encourage other jurisdictions to introduce their own incentive programs, they concluded.

British Columbia, Ontario and Quebec currently offer incentives to buyers of so−called zero−emission vehicles.

The Liberal government hasn’t said whether it’s considering offering cash incentives to buyers of more environmentally friendly cars, but it has been hearing from proponents of the idea.

"The government of Canada has launched broad consultations of addressing climate change and electric vehicles could significantly reduce greenhouse gas emissions for the transportation sector," Garneau’s communications adviser Melany Gauvin said in an email.

"Minister Garneau recently held a roundtable on green transportation in the margins of the Electric Vehicle Symposium and Exhibition in Montreal, where he met with industry key stakeholders, academia and big thinkers."

The Electric Mobility Canada report also recommended the federal government fund the installation of fast−charging stations as part of a national electric−vehicle highway.

Transport Canada policy advisers concluded it’s doubtful car makers will pay for the stations because they aren’t yet profitable, given how few electric vehicles have been sold in Canada.

"Industry is unlikely to make this investment, as the business case is still weak for the amount of capital required ... to attract a limited number of customers," they said.

The federal government set aside $62.5 million in the 2016−17 budget so Natural Resources Canada could help businesses install workplace fuelling stations for electric cars as well as natural gas and hydrogen−powered vehicles.

Last month the Ontario government said it would partner with private−sector companies such as Ikea and Tim Hortons to build a new network of almost 500 charging stations for electric cars at restaurants, stores and Pearson International Airport, among other locations.

But earlier this year it also capped its EV rebate program at $3,000 for cars priced between $75,000 and $150,000, sparking criticisms from wealthy Tesla owners, while expanding rebates for lower−priced vehicles, up to as much as $10,000.

There were just over 20,000 plug−in electric cars on the country’s roadways as of May this year, representing fewer than one−third of one per cent of all vehicles sold in Canada, according to online magazine Green Car Reports.

Industry observers estimate that number could grow by another 10,000 vehicles by mid−2017.

EV sales in Canada

Here are some key facts on electric vehicle sales in Canada:

• In May 2016, the number of plug-in electric vehicles sold in Canada surpassed the 20,000 mark, according to the online magazine Green Car Reports.
• Plug-in electric vehicle sales in Canada account for less than 0.30 per cent of all cars and trucks sold.
• The Chevrolet Volt, made by General Motors, commands the Canadian EV market with roughly 30 per cent market share, followed by the Nissan Leaf and the Tesla S, which has seen the fastest sales growth numbers so far in 2016.
• If current sales trends continue, there could be 30,000 EVs on the country's roads by Canada's 150th birthday next July.
• By comparison, the United States had the largest fleet of light-duty plug-in electric vehicles in the world by June of this year, with roughly 474,000 highway-capable EVs sold since the Tesla Roadster went on the market in 2008.
• The federal budget introduced in March included $62.5 million over two years to help build the infrastructure needed to support alternative fuel vehicles, including charging stations for electric cars and refuelling stations for vehicles that run on natural gas and hydrogen.