Introducing rebates for electric cars is a smart, transitional policy that will help accelerate Canada’s transition to clean energy.
Last month, Ottawa officially kicked off work on a national strategy for zero-emission cars. And this week, a thoughtful report from Canada’s Ecofiscal Commission said that offering incentives to Canadians who buy those cars doesn’t make much sense.
Our take? A national game plan to get more electric vehicles (EVs) on Canada’s roads is essential, and rebates for consumers should absolutely be part of it.
But first, some background on why transportation that doesn’t run on gasoline matters so much.
I’m old enough to remember the first time I went on the Internet. (It was in my high school library, and we looked up the Backstreet Boys.) This morning, I watched my two-year-old find the Netflix icon and hit “play” on some Paw Patrol. By the time he’s my age, my little guy is going to look back at gas-powered cars the way I do at dial-up internet.
If that sounds surprising, consider these trends.
- The price of electric car batteries dropped by 73 percent between 2008 and 2015 — and car makers are pushing to do even better. As a result, some experts project that electric cars will cost the same as gas-powered ones by 2022. (Once you buy an electric car, they’re far cheaper to operate than vehicles with internal combustion engines.)
- Battery density is improving, meaning that electric cars can drive much further before needing to recharge. Both Tesla’s Model 3 and Chevy’s Bolt offer more than 300 kilometers of range — significantly more than the average Canadian drives in one day.
- There are now more than 2 million electric cars on the road globally. China is fast emerging as the world’s EV powerhouse, accounting for nearly half of global sales in 2016, with plans for many, many more.
- There are more than 20 electric car models available in Canada today — the list now includes North America’s first electric minivan, the Chrysler Pacifica Hybrid, built in Windsor, Ontario.
More electric cars can cut pollution
We’re still a very long way from where we need to be: transportation accounts for nearly a quarter of Canada’s carbon pollution today, and we need to cut that total, quickly.
Electric cars can make a big dent in that pollution, especially when they’re charged from clean power — and Canadians are fortunate enough to have an electricity supply that’s already two-thirds renewable.
That makes electric vehicles a key ingredient in a successful clean energy transition in Canada: by 2050, one independent analysis concluded, nearly all passenger cars on the road will be electric.
However, today, they account for far less than 1 percent. And while Canadians bought nearly 11,000 electric cars in 2016, that’s still just 0.6 percent of all new vehicles sold in Canada.
Zero-emission vehicles are still a relatively new technology, and like other new technologies, they face barriers.
Many Canadians are intrigued by them, but they are still wary. They worry about running out of power on the side of the highway, and about whether they can afford a cleaner car. And when potential buyers seek out electric vehicles, dealerships often have very little electric inventory available, making it tough to take one out for a test drive.
None of those barriers is impossible to overcome. In fact, we’re seeing steps in the right direction already.
Quebec is the first Canadian jurisdiction to require that an increasing percentage of vehicle sales must be zero-emission—an approach already in place in California and several northeastern US states. While it may sound impossible to dictate which cars people will buy, the requirement is flexible, allowing car makers to trade credits for clean car sales among themselves — so a company with a top-selling electric model will have credits to sell to less successful competitors.
These standards help support a culture change within car companies, making it more worthwhile to get EVs on the lot and into their advertising plans, as well as to train salespeople and technicians to service them.
It’s a smart and cost-effective way to make sure Canadians who want to buy a clean car can find one, and we’d love to see Quebec’s approach go national.
Federal officials are working hard to craft a national zero-emission vehicle strategy that can take effect next year, and a Canada-wide sales requirement would be an ideal centrepiece for it.
Until a sales requirement is up and running, there’s still plenty of room for a tried-and-true approach to get more electric cars on the road: rebates for people who buy them.
These incentives, which in Canada range from about $5,000 to over $14,000, have received some bad press lately. The Ecofiscal report argues they’re an expensive way to cut pollution, adding little to what a carbon price already contributes.
No question, there are cheaper ways to reduce carbon pollution in Canada, and we should be taking full advantage of those across the economy. But we also need to accelerate our transition to cleaner cars — in the long-term, to increase our success in cutting emissions, and also to take full advantage of our country’s strength in auto innovation and technology, as demand for these vehicles grows around the world.
So if we want to get from near 0 to 60 faster than our competitors, we’ll need rebates. That’s because they work.
Last year, fully 95 percent of the electric cars sales in Canada happened in the three provinces that offer them: British Columbia, Ontario, and Quebec.
Buying a car is a big financial commitment for most of us, so knowing a cheque is coming soon helps drivers make the leap to a cleaner vehicle. And that success has a knock-on effect: seeing an electric car in your neighbour’s driveway helps motivate and reassure the next potential buyer.
Rebates should be a transitional policy, not a permanent one: they help fill a gap while zero-emission cars cost more than their competitors, so they should be designed to phase out over time, or once a certain number of vehicles have been sold. (And before anyone objects that we shouldn’t subsidize luxury car buyers, there’s a simple solution: offer rebates only on vehicles below a certain price point, as BC does.)
But as this country moves from dial-up speed to insane mode on zero-emission cars, rebates will still have a valuable contribution to make.
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