Investing in an Electrified Canadian Future
The age of the internal combustion engine is coming to an end. Those were the words of Håkan Samuelsson, Volvo’s President and Chief Executive. Volvo announced that as of 2019 all of its vehicles would be fully electric or hybrid. Volvo is not alone; other brands like General Motors, BMW, and Volkswagen have all announced similar plans. The question is, does Canada have what it takes to adapt to the electric vehicle revolution?
The short answer is no. Currently, the Canadian market lacks the support it needs to comfortably transition to this change. We see that reflected in the fact that only 0.6% of new car sales in Canada are represented by electric vehicles; compare that to 29% in Norway. So, why the lack of consumer enthusiasm? What can Canada do to encourage its population to make the shift?
The lack of confidence in electric vehicle technology can really be boiled down to higher initial costs and poor supply of support infrastructure. Often times electric cars cost substantially more upfront, though in the long run they can be more cost effective. If Governments are serious about incentivizing Canadians to purchase an electric vehicle the next time they are in the market for a new vehicle , they need to provide financial incentives, such as rebates, for consumers to do so. Only Quebec and British Columbia offer rebates to consumers on electric vehicle purchases with no current Federal rebate to supplement. Ontario scrapped their rebate, which was the most generous at $14,000, this past week.
Norway heavily subsidies the cost of electric vehicles. Consumers don’t pay any taxes on the vehicle, which can cost 25%. For company cars, taxes are reduced by 50% in order to incentivize companies to buy electric vehicles.There are also reductions on insurance and registration costs. In addition to rebates, in California, the Government has implemented supply side regulations forcing car manufacturers to have a certain percentage of their produced vehicles be electric.
These measures don’t have to be permanent too; with rising competition among manufacturers, and the cost of batteries decreasing, we will see the ticket price for these vehicles steadily decrease. The Government tries to regulate consumer behaviour through taxes. Rather than taxing traditional combustion engine vehicles, which would be decidedly harmful for certain parts of the country, government should rather incentivize the production and consumption of electric cars through reduced taxes and rebates. Electric vehicles are here to take over and if Canada is serious about transitioning, governments in Canada need to learn from Norway, California, and other electric vehicle leaders by providing financial incentives for consumers