Dubitsky: ‘Smoke and Mirrors’ Budget Incentives Leave Canada Behind in EV Deployment
The electric vehicle incentives in Finance Minister Bill Morneau’s 2019 budget are a “smoke and mirrors disappointment” that help demonstrate why North America is falling behind China and the European Union in the race to bring EVs to market, retired public servant Will Dubitsky argues in an analysis for National Observer.
“Unlike China and the European Union with legislated/mandatory targets and penalties for non-compliance, Canada’s Budget 2019 provides C$5 million over five years for Transport Canada to work with the automakers to establish voluntary sales targets on the availability of zero-emission vehicles (ZEVs),” Dubitsky writes. “By contrast, China’s sales/credits legislation goes further on ZEVs than the EU mandatory requirements by allocating extra credits for greater autonomy. Penalties can include the banning of models in the event an automaker is way off the targets.”
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He adds that “Catherine McKenna, Canada’s environment minister, spoke of the ‘possibility’ of a target of 100% electric vehicles by 2040. But this isn’t much of a target, because EVs will reach purchase price parity between 2020 and 2025, and after that will be more attractive than gasoline-powered vehicles due to lower energy and maintenance costs. By 2040, Canada will be well on its way to seeing EVs dominate the market,” with or without government mandates.
The other major policy tool available to Canada, the Corporate Average Fuel Economy (CAFE) standard, is under attack, with Donald Trump pushing hard to freeze fuel efficiency from 2020 on. “It would be nice if Canada, as a minimum, could align itself with California and 13 other states which are fighting the Trump administration’s decision to cancel the ability of these states to impose stricter fuel efficiency standards,” he writes. “However, not even the closure of General Motors’ Oshawa plant, which will throw nearly 3,000 people out of work, can shake the federal government from its slumber.”
Dubitsky calls the EV purchase incentives in Budget 2019 “a halfway measure offering less than the consumer rebate programs elsewhere,” taking Ottawa to task for limiting the subsidy to models selling for $45,000 or less. He brands the $130 million over five years allocated for ZEV charging and refuelling stations “mediocre” compared to equivalent commitments in California and the EU.
China, by contrast, has introduced a “complex system of credits and quotas” aimed at boosting EV sales from 10% this year to 12% in 2020 and 20% in 2025. Some cities are also restricting new registrations for internal combustion vehicles.
“Incredibly, global and Chinese automakers are able to comply,” he writes. “There are over 400 electric vehicle technology manufacturers in the country, already offering broad selections of electric models. Even so, demand still outstrips supply.”
The result: the number of EVs on China’s roads more than doubled from 2017 to 2018, and is expected to double again this year. “China is also meeting demand for charging stations, often a major impediment to EV sales,” he adds. “Already, 75% of the world’s installed charging stations are in China, with as many as 4.8 million more expected by 2020 and a goal of one station for every EV on the road. More than 5,900 new stations went online in September 2018 alone.”
Dubitsky closes by laying out “three contrasting storylines on electric vehicles: EV sales in North America are expected to climb modestly from 405,000 in 2018 to 425,000 in 2019. Meanwhile, China is undergoing the most significant vehicle revolution since the advent of the Model T Ford. In Europe, the trend lies somewhere in between.” He opines that “the governments of Canada and the United States have let the flailing Detroit automakers drag their countries to the bottom of the clean technology pack in the developed world. Without bold incentives and strict standards, North America’s auto industry will end up broken down by the side of the road, watching Chinese taillights disappear.”