2022 federal budget delivers money for EVs, minerals and supply chain fix

Canadian Finance Minister Chrystia Freeland on Thursday tabled the 2022 federal budget, which included spending designed to accelerate the adoption of zero-emission vehicles (ZEVs).

The federal government pledged $1.7 billion over five years starting in 2022-23 to help make zero-emission vehicles more affordable for consumers. The Canadian Infrastructure Bank will spend $500 million over five years to build infrastructure to support the 1,500 charging stations that the government has promised to build throughout Canada.

"Eligibility under the program will also be broadened to support the purchase of more vehicle models, including more vans, trucks, and SUVs, which will help make ZEVs more affordable," the budget reads, in part. "Further details will be announced by Transport Canada in the coming weeks."

It also promised $547 million over four years starting in 2022-23 to help businesses upgrade their fleets to zero-emission vehicles.

"Overall, the ZEV measures in Budget 2022 are a good start but without significant investment and action this Liberal/NDP plan will fail, Huw Williams, head of public affairs of the Canadian Automobile Dealers Association (CADA), said in a statement.

“CADA has mapped out a full plan for government action on the website Roadto2035.ca and will shortly be publishing a report card on how this budget stacks up against the proposals made by the entire industry," 

The association represents more than 3,000 new-vehicle dealers across Canada.

LUXURY TAX

On the retail front, the budget reiterated the luxury tax on new vehicles priced above $100,000 will come into effect on September 1, 2022.

"The Canadian Automobile Dealers Association continues to strongly oppose the luxury tax as an unfair arbitrary tax that will cost more to collect than it will bring into government," Williams said. "This tax is a job killer and completely out-of-step with the well-designed HST that already collects more tax for government as consumer purchases increase in value.  

"CADA predicts this tax will cause trade problems for Canada and will actually reduce federal tax revenues on vehicles over $100,000. 

"Finally, it just plain wrong that there is no solution to the double luxury tax on vehicles that now exist in province such as B.C. and Quebec."

Brian Kingston, head of the Canadian Vehicle Manufacturers' Association (CVMA), which represents the interests of the Detroit Three in Canada, says the budget doesn't offer enough detail about how the government will implement its measures to encourage ZEV uptake.

In pre-budget advice, the CVMA called on the federal government to “outline a credible plan to achieve ambitious zero-emission vehicle sales targets” that included tripling consumer purchase incentives, committing to building a comprehensive national charging network and launching a national consumer awareness program.

"Supports for consumers and charging infrastructure are not keeping pace with the government’s own timetable for change," the CVMA said in a statement.

“Automakers are investing billions of dollars in Canada to assemble electric vehicles, build a battery supply chain and create good jobs,” Kingston said. “We had hoped this budget would start to connect the dots between Canada’s ambitious electric vehicle adoption targets and the government supports required to help Canadians make the switch to electric.

“The government needs to keep pace with the automotive industry in the transition to electrification. The budget is a start but a serious, integrated, long-term plan is required now to boost consumer incentives and build charging infrastructure.”

MINERAL, LABOUR PLAN

The budget proposes to provide $400 million over five years, starting in 2022-23, to Natural Resources Canada to fund ZEV charging infrastructure in suburban and remote communities through the Zero-Emission Vehicle Infrastructure Program (ZEVIP).

The government says it will spend $3.8 billion over eight years for a critical minerals strategy, and $450 million over five years to unclog supply chains. As part of the strategy, the federal government also announced a new 30-per-cent tax credit for exploration projects related to critical minerals such as lithium and cobalt, which are used in the production of electric vehicles and batteries.

Flavio Volpe, head of the Canadian Automotive Parts Manufacturers' Association, praised the budget.

"The investments directly in critical minerals supply and strategy, investments in the exploration of semiconductor production viability and the unique approach to financing the mobility of skilled labour speak directly to three competitive challenges facing the industry in Canada today and I am glad to see them materially addressed in the document," he said in a statement to Automotive News Canada.

Volpe was referring to the government’s plan to introduce a Labour Mobility Deduction, which would provide tax recognition on up to $4,000 per year in eligible travel and temporary relocation expenses to eligible tradespersons and apprentices. The measure would apply to the 2022 and subsequent taxation years.

In a tweet, Volpe also explained how an increase in defence spending could benefit the auto industry:

The Canadian Press contributed to this report.