Three-Year Federal EV Incentive Burns Through Half Its Budget in Eight Months

It’s only taken the Canadian government eight months to burn through nearly half of its three-year budget for electric and zero-emission vehicle rebates, leaving the funds at risk of running out by year-end and Transport Minister Marc Garneau considering whether to extend the program to meet the demand.

“It’s very encouraging to see how many people are now thinking about and actually going ahead and buying” zero-emission vehicles, Garneau told The Canadian Press.

“Garneau launched the incentive payments last May, offering up to C$5,000 off the price of buying new electric and hybrid passenger vehicles to try and bring their price tags closer to those on similar gas models,” CP reports. The three-year, $300-million program was set up on a first-come, first-served basis.

But as of January 19, “Transport Canada reports that more than $134 million in rebates have already been issued to 33,000 Canadians,” CP says. “At that rate of uptake, the funds will be entirely gone before the end of this year.”

The department said EV sales were up 32% after the program launched, the news agency adds, prompting a briefing book prepared for Garneau late last fall to observe that “the program has induced more new sales than projected”. EVs accounted for 3% of all Canadian auto sales in 2019, up from 2% a year earlier.

That threshold “is still a long way from the goals the federal Liberals set last year to have electric cars make up 10% of all light-duty vehicle sales by 2025, 30% by 2030, and 100% by 2040,” CP notes. And the ZEV initiative “is a significant part of Canada’s efforts to cut greenhouse gas emissions, with light-duty vehicles emitting 12% of all emissions in Canada in 2017.”

Citing a 2017 study that pointed to EV prices as the main deterrent to sales, Plug’n Drive CEO Cara Clairman said incentives make a difference. “There are people buying electric vehicles without them but, definitely, it helps,” she told CP.

Last year, according to Electric Mobility Canada, two provinces accounted for three-quarters of the country’s EV sales, with Quebec nabbing 46% of the total and British Columbia picking up 29%. Sales in Ontario fell 44% in the third quarter of 2019 compared to the same period in 2018, after the Ford government cancelled the province’s EV rebate.