Canadian Legislative Issues
As NAFA continues to take a part in the Zero-Emission Vehicle (ZEV) taskforce housed under Transport Canada, a new study released in June shows that the current policies employed by the country’s largest provinces, Ontario and Quebec, may not be as effective as once thought.
The study by the Montreal Economic Institute suggests that provincial subsidies to encourage the use of electric vehicles are the most expensive, least effective way to help cut greenhouse gas emissions. The policies currently employed by both provinces could cost them more than $17 billion by 2030, while only cutting emissions by less than for percent a year. Currently, Ontario offers rebates of up to $14,000 and Quebec up to $8,000, on the purchase of electric vehicles.
When compared, the contrast is drastic: The Ontario subsidy is costing as much as $523 a tonne and Quebec’s $288 a tonne, compared with the federal carbon price plan, which will hit $50 a tonne by 2022. At the end of 2016, despite these generous subsidies, there were 29,270 electric vehicles registered in Canada, three-quarters of which are in Quebec and Ontario.
Other recent studies have shown however that the price of batteries is expected to drop dramatically, which would allow the average cost of electric vehicles to decrease. One study even shows that this price equalization could happen as early as 2025 which, when partnered with continued investments by governments in charging stations, could dramatically increase the number of electric vehicles registered in Canada.
As technology advances and governments continuously adapt their policies towards electric vehicles, it will be important for fleet administrators to continue monitoring. It is possible that some day in the near future, there can be an economic argument made to begin converting to ZEVs in order to save on the increasing costs of gas.
In the meantime, however, it continues to be a waiting game. The study concluded that consumer demand, spurred by a carbon tax, is a far more cost-effective way to increase electric vehicle use than a vehicle subsidy.
Consumer demand continues to be the missing element in the uptake of ZEVs. As companies like Tesla move towards creating less expensive options and engineer vehicles to travel longer distances on a full battery, there is a chance that by 2025 and beyond, electric vehicles will no longer be a rare sight.
NAFA Fleet Management Association
http://www.nafa.org/