TORONTO — Clean Energy Canada executive director Rachel Doran and director of public affairs Joanna Kyriazis drafted the following response to reports that the federal government is considering updating its Electric Vehicle Availability Standard.
Globally, the shift to electric vehicles continues to move rapidly, not driven solely by policy or climate concerns but as a technological revolution toward a better, more efficient product that can save consumers significant amounts of money over time. Despite geopolitical uncertainties, electric cars are on track to make up more than one in four vehicles sold worldwide by the end of this year, up from one in five in 2024 as they become more affordable in more markets—from the EU and China to emerging markets such as Thailand and Brazil.
But government policy has played a key role in moving EV adoption into the mainstream in mature markets like Norway, the EU and China and has become even more critical as recent U.S. policy changes have created risk and uncertainty in the global investment climate.
Canada is facing pressure to repeal its Electric Vehicle Availability Standard (also known as a “ZEV mandate”) from a traditional auto sector that is headquartered in and highly integrated with the United States. This pressure comes at a moment when American EV and clean energy policy is moving starkly away from the direction the rest of the world is headed. Other countries and jurisdictions, including the U.K., are meeting global trade headwinds not with a backslide on policy but by recalibrating to meet the moment. In contrast, the U.S. just passed a bill projected to cause wholesale electric power prices to increase roughly 50% by 2035 and cumulative annual consumer energy costs to increase more than $16 billion by 2030 (the majority of which relates to vehicle fuel). It’s estimated some 830,000 renewable energy jobs (many of these EV- and battery-related) will be lost or not created by 2030 as developers cancel a significant number of the announced clean energy manufacturing facilities, and between 2025 and 2034, cumulative U.S. GDP could decrease by more than $1 trillion.
Ultimately, the EV Availability Standard is a policy for consumers, not the auto sector. The Canadian auto sector has benefited from exclusionary tariffs; nearly $3 billion and $1.2 billion in federal government spending on consumer incentives and charging infrastructure, respectively, to secure demand for EVs; and government investments of over $50 billion to secure manufacturing facilities, in addition to pre-existing support to help shore up an industry that was in decline prior to the EV shift. But the EV Availability Standard is only one tool in what should be considered a broader policy package intended to increase choice for consumers that want to purchase an EV and to drive down prices over time. Any adjustments to the EV Availability Standard must be considered in the context of this broader support package and how it should be geared toward helping Canadian consumers and households in addition to industry.
Clean Energy Canada’s recommendations
Canada needs an EV package that aims to deliver a selection of affordable EVs under the price point of $40,000 to Canadians by 2030. Multiple polls have shown that this is the price the vast majority of Canadians wish to pay for a new car, electric or gas-powered (Clean Energy Canada commissioned a to-be-published survey in Toronto and Vancouver that found 73% of respondents wishing to spend less than $40,000 on a new EV). The federal government has multiple policy tools at its disposal to help achieve this goal. While the EV Availability Standard will play an important role, EV rebates, reducing tariffs on Chinese-made EVs, and other policy approaches can also assist.
In a newly published survey from Abacus Data, “lower costs and help Canadians get ahead” was ranked as the No. 1 most important priority for the Carney government, with 89% of Canadians saying it was a priority. After housing costs, transportation spending is the second biggest bill for households, and simply put, creating the conditions for more affordable EVs that will in turn save their drivers thousands of dollars a year on fuel and maintenance is one of the best affordability maneuvers any government could possibly make right now.
A successful package to deliver affordable, under-$40,000 EVs in Canada could include:
- Retooling the EV Availability Standard to help support consumer choice by attracting models at competitive price points. If the federal government is going to revisit its targets, it should focus on near-term adjustments to help automakers weather this temporary storm while maintaining the longer-term trajectory and market signal that Canada is committed to going electric. Any additional flexibility added in the regulation should be designed to achieve other EV-related goals, such as delivering more affordable EVs and building out Canada’s charging network.
- Reigniting EV demand by recapitalizing the EV incentive program with a focus on affordable EVs, using lower eligibility price caps to help drive down vehicle prices. The rebate should start at $5,000 and decline by $1,000 each year, providing consumers and automakers with a well-communicated phaseout that avoids periods of artificially lowered EV sales as buyers await the return of rebates or at least clarity.
- Reconsidering Canada’s trade approach by lowering the tariff on Chinese-made EVs (72% of Canadians support) and allowing in a limited quota of these affordable vehicles while also recognizing EU-approved vehicles (70% support). Doing so would open Canada’s vehicle market to fill important market gaps, drive innovation and ultimately make our auto sector more competitive.
On clean energy generally and EVs specifically, Canada must now decide whether to follow the path of the U.S. in becoming an island of fossil-fuel-powered and aging technologies, or if we wish to chart a course that better aligns with global direction and that balances the critical objectives of consumer affordability and domestic industrial competitiveness.
