It’s a busy time in Canada, as it should be. In fact, we need to do more and do it faster, but let me focus a little bit.
Recently, Mark Carney’s Liberal government announced a pause on the federal zero-emission vehicles (ZEV) mandate that would have required 20 per cent of new light-duty vehicle sales to be ZEVs by 2026, 60 per cent by 2030 and 100 per cent by 2035. They’ve also announced the first five “nation-building” projects that will be fast-tracked through Canada’s very new Major Projects Office.
In my opinion both of these developments are very positive. But they are only a start and there is much, much more to do.
Let’s look at the ZEV mandate pause. Prime Minister Mark Carney announced that the 2026 requirement (20 per cent ZEV sales) would be waived, giving automakers immediate relief from having to meet this target for 2026 model year vehicles. The government is conducting a 60-day review to “ensure the EVAS framework continues to reflect market realities, remains effective for Canadians, and does not place undue burden on automakers. The review will consider potential amendments to the annual sales targets, including the 2035 goal, and will explore possible additional flexibilities.”
“The review will consider potential amendments to the annual sales targets, including the 2035 goal, and will explore possible additional flexibilities.”
In other words, the 2035 line in the sand is being reviewed but it is not gone. As one would expect this review is generating a lot of debate pushing for and against the mandate. I find much of that debate falls short of being as informed as it should be. Let me give you an example.
Consider this, drawn from a recent CBC article: “Sales mandates like this are more effective at cutting emissions and cost effective than rebates, according to research by Jonn Axsen, a professor who studies sustainable transportation at Simon Fraser University, including policies to encourage the transition to EVs. Mandates send a ‘stronger long-term signal to automakers that this is where Canada is going,’ he said.”
Maybe. I doubt it. Aggressively mandating the sale of EVs without putting in place the other support consumers need to make EVs a reasonable choice makes no sense to me. At this stage making EVs a reasonable choice for consumers is a three-legged stool.
One leg is product availability across market segments. This is the leg the mandates have been aimed at. Fair enough. At the same time the timelines need to be reasonable and in clear recognition of how small the Canadian market is in the global context. The government’s review of the ZEV mandates is a clear acknowledgement that the current lines in the sand are not. Well done.
A second leg of the stool is consumer purchase mandates. As long as there is a significant price gap between ZEVs and comparable ICE vehicles, most consumers will make the reasonable choice (and often the economically necessary choice) and purchase an ICE vehicle. The data clearly shows that when that affordability gap is closed many consumers will purchase EVs. Ontario is the perfect test tube. When Ontario eliminated the EV rebate years ago, sales plummeted. I was one of the last to buy a vehicle under that rebate program and, without it, I would not have made the purchase I did.
The affordability gap will go away. In fact, it will reverse. But that takes time and volume.
Consider what is going on with renewable energy. Despite the Trump administration’s efforts to push away from renewables and back to fossil fuels, the markets are moving ahead with rapid adoption of renewable energy. One of the jurisdictions leading the way in the U.S. is Texas. But they are not alone. Both inside the U.S. and beyond, the move towards renewable energy is clear.
Why? In no small part because it is the right financial choice. A recent video by Ian Bremmer, head of the Eurasia Group and my favourite fix for my geopolitics addiction, quotes that the cost of solar and wind has dropped 99 per cent since the 1970s.
As EVs scale we will reach a point where buying an ICE vehicle simply won’t make financial sense. Consumer rebates make that happen sooner.
The third leg of our stool, and one that continues to get far less attention than it should, is charging infrastructure. Prime Minister Carney, please add this to your list of nation building projects. We know the future is electric. We want to get there. We need charging infrastructure to make it happen.
So as we go through this ZEV mandate review let’s focus on “and”, not “or”. If we make sure our stool has three strong legs we’ll reach an electrified future much more quickly.
