Canada's ZEV sales mandate bad policy say dealers, automakers

A new federal government plan to impose a sales mandate for zero-emission vehicles as early as 2026, has set Ottawa on a collision course with Canadian dealer and automaker groups that are championing a different path to a fully electric fleet.

Steven Guilbeault, minister of environment and climate change, introduced Ottawa’s 2030 Emissions Reduction Plan in Vancouver March 29, while the government’s 2022 budget, tabled April 7, backed up the policies with fresh funding. The plan includes a mandate that 100 per cent of new light-duty vehicle sales be ZEV by 2035. It also lays out accelerated intermediary ZEV requirements of 20 and 60 per cent of new light-duty sales for 2026 and 2030, respectively.

The planned ZEV mandates, which Ottawa intends to write draft legislation for as early as this year, are one part of the government’s wider plan to cut greenhouse gas emissions 40 to 45 per cent below 2005 levels by 2030.

“Canadians just need to grab the reins, have the guts and the brains and the foresight to drive investment that supports emissions reduction, create economic opportunities and support workers.” Guilbeault said at a Vancouver press conference March 29.   

Canadian dealers and automakers say they fully back the transition to ZEVs, but organizations representing both groups warned mandates miss the mark.

“We believe there’s a better approach, and it starts with putting the consumer first, by not mandating what they have to buy, but by incentivizing them to choose ZEVs,” said Tim Reuss, CEO of the Canadian Automobile Dealers Association (CADA).

Reuss was joined at a virtual press conference April 1 by Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association (CVMA), which represents the Detroit Three automakers in Canada, and David Adams, who represents overseas automakers as head of the Global Automakers of Canada (GAC).

TRIPLE INCENTIVES?

As opposed to mandates, the three groups said the government should focus on amping up its incentives for ZEV buyers to foster adoption. This includes a tripling of the current $5,000 federal purchase incentive to $15,000.

“That is yes, a lot of money. It won’t be required forever, but it will be required to kick-start this process across Canada in all provinces,” Reuss said.

CADA, CVMA and GAC are also advocating for an increase to the maximum eligibility threshold for the Incentives for Zero-Emission Vehicles (iZEV) program. Currently, smaller ZEVs selling for more than $55,000 and larger ZEVs costing more than $60,000 are not eligible for federal incentives.

To capture more of the new ZEVs coming to market, such as electric pickups and SUVs, Ottawa needs to bump up its threshold, Adams said, otherwise it will be attempting to force buyers into less popular, smaller vehicles.

“It’s almost like we’re trying to put square pegs into round holes in terms of moving consumers into electric vehicles,” he added, noting about 80 per cent of Canadian buyers today opt for pickups or SUVs.

The 2022 federal budget showed little movement from Ottawa on any of these auto sector priorities.

It committed $1.7 billion to extend the iZEV program through 2025 but did not increase the per-vehicle purchase incentive. While Ottawa pledged to broaden the program to a wider range of trucks and SUVs, no further details on models or the possibility of higher vehicle price thresholds were included.

Expanding charging infrastructure is another imperative for ZEV adoption, Kingston said.

Ottawa has pledged to build 50,000 charging stations to support the transition to ZEVs but Kingston said this target falls well short of what’s needed. He estimates a ratio of one charger to every 10 EVs will be required, translating into several million chargers over the next few decades.

'WE NEED TO OVERBUILD'

“We’re not suggesting that the government build that whole network, of course there will be a private sector goal here, but in these early years where we’re trying to get adoption levels up, we need to overbuild.”

The federal government did put new money into charging infrastructure, adding $400 million over five years to the Zero-Emission Vehicle Infrastructure Program. A further $500 million from existing Canada Infrastructure Bank funds will be deployed to build out large-scale charging sites.

Not all with a stake in automotive see Ottawa’s planned mandates an overstep.

Daniel Breton, CEO of Electric Mobility Canada, which advocates for ZEV adoption, said the mandates are not only welcome, but necessary to getting Canadians into ZEVs.

“Considering the fact that more and more jurisdictions are getting more and more stringent, if we don’t end up having stringent regulations, we’ll get the crumbs — we’ll get the leftovers of electric cars that are not sold anywhere else,” he told Automotive News Canada.

Breton said higher incentives and expanded charging infrastructure should be pursed in tandem, but that without a legislated target, the auto industry will not step up quickly enough.

“For me, to say that the carrot alone works — it never did, it never will. You need both carrots and sticks,” he said, adding that a ZEV mandate puts the “burden” on manufacturers as opposed to consumers.

Breton, who has been involved in consultations for the new climate plan, said he was also encouraged by Ottawa’s willingness to break from the United States on ZEV policy. U.S. President Joe Biden announced a voluntary 50 per cent ZEV target for 2030 last summer — well short of Canada’s plan to legislate a 60-per-cent 2030 mandate.

Kingston, meantime, said the break from Washington threatens Canada’s entire auto sector.

“If we decouple from the integrated North American market with a redundant and unnecessary ZEV sales mandate, it will threaten automotive investment jobs and Canada’s place in this emerging supply chain.”