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OTTAWA — The federal government’s decision to pause a key initiative meant to boost electric vehicles sales won’t prevent Canada from meeting its targets for getting more EVs on the road, some proponents say.
On Monday, the federal government said the funding had run out for its rebates – which cut up to $5,000 off the purchase price of battery-powered vehicles – and the program is not being extended at this time. The program was meant to encourage uptake of EVs in Canada.
The federal government has mandated that battery-operated passenger cars must make up 20 per cent of all new vehicle sales in Canada by 2026, and an increasing share every year after that. EVs must account for 60 per cent of new vehicle sales by 2030 and 100 per cent by 2035.
Cara Clairman, the founder and CEO of Plug’n Drive, a not-for-profit organization promoting the use of EVs, said she doesn’t think losing the rebates will keep Canada from hitting its targets.
“It’s ambitious, but I don’t think this changes anything in terms of the general direction that we need to go,” she said.
Canada’s automakers have never supported the sales mandate and repeated their call for it to be dropped after the rebate program was paused. They say Canada has been slow to build out its charging infrastructure, which discourages many people from choosing an EV. That, coupled with the current high cost of EVs, makes Canada’s targets unrealistic, the automakers argue.
The federal rebate has become more popular since it was introduced in 2019, as both consumer interest in EVs and the number of models available have increased. It started by paying out $140 million to support the purchase of 33,911 vehicles in 2019.
In the first 11 months of 2024, the program paid out $927 million for more than 191,000 new EVs, according to Transport Canada’s program database. Program statistics for December have not yet been published.
Statistics Canada data shows 13.5 per cent of new motor vehicle registrations in Canada last year were for fully electric or plug-in hybrids – up from about 10.6 per cent for the same period in 2023 and 7.7 per cent in 2022.
Clairman said the loss of the rebate may hurt a little at first but it won’t slow down sales for long.
“The stats show you that actually it’s on the up and up, and we’ll see a blip because of this for sure, but it’ll still be a general trend up,” Clairman said.
“Yes, it probably will slow down adoption for a period, but I believe it will still go forward as sort of more or less as expected.”
The federal government has spent almost $3 billion on the EV rebate program since its inception, topping up the program a handful of times as it ran out of money. That included a top-up of $607 million in the 2024 budget after the program paid out nearly $700 million in rebates in 2023.
“I think (the federal government) has left the door open to recapitalize the program, or shift money from another program,” said Joanna Kyriazis, the public affairs director for the think-tank Clean Energy Canada.
“While the EV transition is happening with or without rebates, incentives do certainly help and they make it easier on Canadians during a period in which we are all financially stretched.”
More than 111,000 rebates issued through November of last year went to people from Quebec, according to Transport Canada’s data.
The province reduced its incentive per EV to $4,000 this year from $7,000 last year and says its incentive program will be paused between Feb. 1 and March 31.
The Quebec program will offer $2,000 per vehicle next year. The program is scheduled to terminate at the end of 2026.
While EV sales lagged in Ontario after the provincial government scrapped its rebate program in 2018, Ontario saw the second highest number of federal rebates among the provinces in 2023 and through 2024 — indicating sales have picked up in recent years. Ontario lagged behind British Columbia in total federal rebates in the years before that.
Tesla continued to be most popular model of electric vehicle in Canada last year, with its Model Y accounting for 13 per cent of all vehicles that received the rebate through November of 2024. Tesla’s Model 3 accounted for more than six per cent.
This report by The Canadian Press was first published Jan. 16, 2025.
Nick Murray, The Canadian Press