82% of Canadian dealers don't have ZEV inventory, finds new report

A study on zero-emission vehicle (ZEV) supply, commissioned by Transport Canada, finds that inventory levels have decreased significantly while demand for greener vehicles continues to rise.

“Despite the increase in ZEV registration numbers compared to the previous year – indicating an increase in demand levels – inventory levels in dealerships have gone down across the country and across most manufacturers – indicating a reduction in supply levels,” Dunsky Energy + Climate Advisors concludes in its Zero Emission Vehicle Availability report.

However, the report is far from current. Its most recent data comes from March 2022. Because dealer inventory isn't publicly reported in Canada, Dunsky must reach out to the country's dealers on an individual basis in order to compile the data, so it takes about a year to bring all that work and information together in a single report.

Dunsky says inventory levels in March 2022 were “the lowest since we started tracking this data in December 2018, with a 72-per-cent drop compared to February 2021.”

“In March 2022, we found that 82 per cent of dealerships across Canada did not have any ZEVs in inventory, compared to 54 per cent in February 2021,” the report reads. “Out of the 18 per cent of dealerships with ZEVs, nearly half of them only had one vehicle in inventory.”

'SITUATION IMPROVING'

Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association said supply chain challenges  reduced total vehicle inventory in Canada by 79 per cent during the time of the study.

He said supply issues still exist, especially as it relates to key microchips needed in vehicles.

“But, the inventory situation is improving,” he said in an interview with Automotive News Canada. “We’re seeing that ease over time. And the hope is that by the end of 2023, the global semiconductor market will be as close to balance as possible, and some of these production challenges the industry has faced since the onset of the [COVID-19] pandemic will be behind us.”

The lack of inventory meant longer wait times. 

Dunks found among dealers without any ZEVs available, 38 per cent said the wait time for a new order would be longer than six months, compared to 31 per cent in 2021.

“The lack of availability of ZEVs continues to be a challenge across Canada, and raises questions about whether ZEV sales in Canada would be higher if these vehicles were more readily available,” the report says.

Dunsky called the low inventory levels “concerning” because “demand for ZEVs has been growing relative to other vehicle types.”

The report found inventory levels highest in British Columbia, Quebec and Ontario; the country’s three biggest retail markets. And, B.C. and Quebec offer hefty provincial ZEV rebates that can be coupled with the federal rebate of up to $5,000.

“Inventory continues to be unevenly distributed between provinces and automakers. Vehicle inventory continues to be concentrated in British Columbia, Quebec, and to a lesser extent, Ontario, leaving other provinces with less diversity of consumer choices,” Dunsky says.

Kingston noted policy — both provincial and federal — affects allotment. 

“ZEV mandates are highly distortionary. ZEV demand is directly related to consumers’ ability to purchase these vehicles,” Kingston said. “So. in jurisdictions where you have strong consumer incentives and very, very well distributed charging infrastructure, you see higher rates of demand.”

Lack of choice also is evident among brands.

March 2022 saw 75 per cent of inventory from just three automakers: Chevrolet, Chrysler and Ford. And Chrysler was the only automaker with ZEV inventory in all 10 provinces at the time of data collection. Ford had ZEVs available in just three provinces, down from five at the time of the previous report.

“Stellantis’ Chrysler and Jeep brands now offer among the highest ZEV inventory levels in Canada,” the report found. “Meanwhile, while Hyundai and Toyota had among the highest inventory levels observed in 2021, the current study found almost no ZEV availability at all for these two automakers.”

According to Kingston, there will be 120 electric vehicle models available for purchase in Canada by the end of 2023.

“It’s possible that will be higher, but that’s the track we’re on,” Kingston said.

In 2020 and 2021 there were approximately 40 models.

“Since then, we’ve seen a pretty steady ramp-up in what Canadians can purchase,” Kingston said.

'OVER-BUILD' SITUATION

The report found that when it comes to ZEVs, some automakers actually find themselves in an “over-build” situation.

For example, British Columbia’s province-wide days of supply shows a positive result, meaning they had more vehicles on the lot than were sold. 

“However this is skewed by Chrysler’s over-supply while all other automakers in the province drop to under-supply levels,” Dunsky says.

“It should be noted that the days of supply metric has limited use when assessing emerging EV markets, where apparent ‘over-supply’ can be a result of low historic sales rather than high inventory levels,” Dunsky cautioned.

For the first time since 2018, B.C. led the number of ZEVs available per 100,000 people (10 ZEVs), surpassing Quebec (eight ZEVs), which historically has been the leading province in this metric.

The report also concluded that inventory might not matter as much to ZEV buyers as it does to those considering a vehicle powered by an internal combustion engine.

“New automotive retail models, such as the increasing shift towards online retailing, which is happening in parallel to the transitions to electrification, may be a sign that ZEV shoppers are less interested in the more traditional approach of buying a vehicle directly from a dealership lot,” Dunsky says. “This could suggest that vehicle inventory may not be as important for someone who is willing to order a vehicle to their desired specifications, provided wait times are reasonable.”