Clean Energy Canada | Canada’s approach to EV tariffs undermines affordability and our climate
August 26, 2024

OTTAWA — Joanna Kyriazis, director of public affairs at Clean Energy Canada, made the following statement in response to the federal government’s announcement of a 100% tariff on Chinese-made electric vehicles.

“The federal government had an opportunity to take a balanced approach to a complicated issue: one that considered not only the priorities of traditional automakers and Canada’s local industry but also the needs of affordability-constrained Canadian consumers and our climate.

“Unfortunately, Canada made a decision today that will result in fewer affordable electric vehicles for Canadians, less competition, and more climate pollution. To be clear: Canada could have applied a reasonable tariff that considered multiple interests. Europe, for example, is applying tariffs that range from 36% on cars from SAIC Motor, to 17% on BYDs, to 9% on Chinese-made Teslas.

“Instead, Canada is applying a 100% tariff on Chinese-made EVs, in line with the U.S., while potentially layering on additional punitive measures, such as another consultation concerning batteries and battery parts, semiconductors, solar products, and critical minerals. Currently, Chinese brands make up 50% of EV sales globally, but perhaps more critically to our own supply chains, 80% of battery cells are produced in China. Many North American automakers still rely on Chinese-made components, including batteries, in their supply chains. Slapping tariffs on these could have further cost implications for Canadian consumers—not just on EVs but other electronics as well.

“Organizations like Clean Energy Canada had also asked for a 90-day grace period on any tariff to help companies like Tesla and Volvo shift their production plans and potentially supply the Canadian market with EVs produced elsewhere, but it appears that won’t happen. Not only could today’s announcement have a chilling effect on future EV sales, it could drive up EV prices and slow adoption in the near-term as well.

“EVs represented 24% of all vehicle sales in Europe in 2023 and this spring hit 44% in China, compared to just 12% in Canada. Europeans can choose from no less than 11 different electric options with a purchase price of less than C$45,000, compared to just two in Canada—one of which has been discontinued for at least a year. This vehicle, the Chevy Bolt, is by far the cheapest EV available in Canada and has sold better than any EV in the country not made by Tesla. Canadians no longer have any options at that same price point. Meanwhile, American automakers like Ford and GM have delayed or cancelled a number of planned EV models in recent months.

“Protecting Canadian jobs and workers is clearly an important priority, but securing investments and ensuring Canada’s EV workers have good jobs far into the future also depends on strong and growing EV demand. And strong EV demand depends on building and offering EVs that Canadians want—and can afford. If Canadian EV sales drop as a result of the new measures, this might be used as a justification for cancelling, delaying, or downgrading EV ambitions and, ironically, further delaying the domestic production they’re meant to protect.

“So, what now?

“To offset cost impacts to consumers and ensure EV uptake continues going strong, the federal government should complement its trade response with an EV affordability package that extends the iZEV program until 2028 when more mainstream Canadian-made EVs come to market, lower the price cap on rebates to $50,000 as B.C. has done (which has caused at least some automakers to drop their prices below the cap), and introduce rebates for used EVs. The federal government should also seek a commitment from Ontario to introduce consumer EV rebates in exchange for these tariffs, which aim to benefit plants and workers almost exclusively in Ontario at the risk of exposing other sectors in other provinces to Chinese retaliation.

“Crafting a policy package that supports Canadian industries but also considers consumer affordability will, in the long run, be to our collective advantage. The federal government should be ensuring that, in attempting to protect autoworkers and our EV investments, we do not inadvertently undermine the market they’re meant to serve.”

KEY FACTS

• The EU has taken a more measured approach to Chinese EVs, recently lowering tariffs to 9% for Tesla, 17% for BYD, 19.3% for Geely, and 36.3% for SAIC. Other companies cooperating with the EU’s investigation in Chinese EV subsidization will face tariffs of 21.3%, while companies not cooperating will face tariffs of 36.3%.
• ​​Today’s EV drivers pay the equivalent of $ per litre gas to charge their cars—less than what drivers paid for gas during the gas wars of the ’90s.
• When considering the full cost of ownership over the course of a decade, from a car’s purchase price to fuel and maintenance, a typical EV saves drivers roughly $30,000 or about $3,000 a year.
• A recent poll from Edmunds found that, among intended EV buyers, 47% say they are seeking an EV with a purchase price below US$40,000 (C$54,000), and 22% are interested in EVs priced below US$30,000 (C$40,000).
• At present, Europeans can choose from 11 fully electric options with a purchase price of less than C$45,000, compared to just two in Canada (one of which is soon to be discontinued for at least a year).
• The only passenger EV currently made in Canada is the Chrysler Pacifica plug-in hybrid minivan.
• Most Canadian-made EVs and batteries are not expected to come to market until 2027 or 2028, and many have already been delayed or cancelled. The EVs slated to be produced here in Canada are:

  • A plug-in hybrid minivan (Chrysler Pacifica)
  • An electric delivery van (Brightdrop EV600)
  • A battery electric muscle car (Dodge Charger)
  • A potential electric pickup truck (Ford Super Duty)

• Honda is the only manufacturer with plans to make mass-market EVs, with two new electric crossover models to be made in Ontario by early 2028.

RESOURCES

Report | The Scenic Route

Report | A Clean Bill