Canadian Legislative Issues

The province of Ontario is expanding its electric vehicle (EV) rebate program, aimed at incentivizing buyers of EVs with cash subsidies for low and zero-emission vehicles. Until now, the program was capped for relatively pricey vehicles, with the maximum benefit set at $3,000 for vehicles with an MSRP above $75,000.

With recent changes, EVs priced between $75,000 and $150,000 will qualify for the full rebate, which once again raises the specter of (presumably) wealthy consumers cashing in with large taxpayer subsidies for vehicles that cost well into the six digits.

The Ontario government is obviously willing to take this political risk and continues to stake a large amount of its political capital on its aggressive climate change action plan, of which the EV subsidy is a part. The province continues to invest heavily in charging infrastructure as well, with the goal of achieving five percent of new car sales by 2020 in the electric or hydrogen-powered segment. In addition to infrastructure already installed, the province is aiming to build another 500 charging stations across the province by the end of April.

The degree to which the market will react to Ontario’s policy moves remains to be seen, but the overwhelming majority of vehicle sales in the province – and nationwide – continue to be traditional internal combustion engine (ICE) vehicles. Significant efficiency and fuel economy gains made in the last decade by automotive manufacturers – resulting from government regulation and consumer demand for a cleaner product – means that the calculus facing EV and other non-traditional vehicles remains challenging.

However, with battery technology improving all the time, and with aggressive subsidies and infrastructure investments in place at provincial and federal levels, the battle in the marketplace between EVs and the ICE vehicles we have known for a century is only beginning.