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February 06, 2023 08:13 AM

The road to ZEVs is paved with good intentions

Without the supply side on its feet, automakers have little chance of meeting the new federal ZEV sales mandate

New Jeff Melnychuk
Jeff Melnychuk
Editor-in-Chief of Automotive News Canada
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    Yes, I substituted “ZEVS” for “hell” in this popular expression I ultimately chose for the headline of this particular column.

    The federal government’s quest to rid dealership showrooms of internal-combustion vehicles by using a zero-emissions sales mandate could be all about good intentions. Significantly less fossil fuel being burned over time is a good thing for the air and the planet in general.

    The world is shifting and nearly every automaker is investing huge sums in electrification plans for the vehicles they sell, so they obviously agree.

    Then why is the industry in an uproar about the new federal ZEV sales mandate?

    If I may borrow a quote from Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, “Ideology over ideas, government intervention without taking a view on the supply side, is brainless.”

    I like this quote because Volpe doesn’t represent any one automaker. And I like it because he’s smart and knows how to get the impossible done: a concept car called Project Arrow that was built during three years of the COVID-19 pandemic. He knows the challenges facing Canada’s suppliers and has a good grasp of what’s possible and what isn’t.

    So when he joins the chorus and calls the federal plan brainless, it’s wise to take note.

    But you might be wondering, if British Columbia and Quebec can have ZEV sales mandates — B.C. appears to be at or near 20 per cent ZEVs sales, according to S&P Global’s third-quarter update — then why not the rest of the country? Fair question.

    Well, the two provinces have had a huge head start and have significant consumer rebates in play. Ontario, in particular, does not. B.C. and Quebec are mostly responsible for third-quarter ZEV registrations of about 9.5 per cent, nationally.

    That gives the rest of the country about two-and-half years to pick up the slack: The federal mandate of 20 per cent nationally applies to all 2025 model-year vehicles.

    Volpe’s comment about being “brainless” comes in handy right about here. Presuming there were enough affordable ZEVs on the market, which there aren’t, and presuming there was enough variety in ZEV types, which there isn’t, and presuming that Canadians even want them, which many don’t, there is also likely no way they could be built to meet the deadline.

    Take lithium. The only large-scale mine in North America is in Quebec, and it’s not online yet. The rest of the supply chain isn’t on its feet, either: The new NextStar Energy battery plant in Windsor, Ont., isn’t expected to be up and running until 2025.

    Honda, for one, doesn’t even make an EV. The first will be the 2024 Prologue. And current wait time to get an EV can be a year or more. What about the lack of charging infrastructure for apartments and condos? Surely there’s street charging? Also no. The Toronto Parking Authority EV charging project is barely out of the test phase.

    Maybe brainless doesn’t go far enough to describe the mandate. Maybe the right word is insanity.

    Assuming 1.5 million annual sales in Canada (2022), 300,000 2025-model-year vehicles would have to be ZEVs. It’s about half that now. On a good pre-pandemic year of two million sales, 20 per cent is 400,000 ZEVs.

    The penalty to automakers for noncompliance is up to $20,000 per vehicle. As Volpe said, they might as well start handing out the fines now because, “Nobody is going to make it.”

    Is there any wonder why the industry is showing zero love for the feds’ ZEV sales mandate? Assuming it’s passed into law, the road to ZEVs/hell might indeed be paved with good intentions, but it’s a path that has put the cart before the horse.

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