(Bloomberg) -- Prime Minister Justin Trudeau’s plan to require that 20% of new light-vehicle sales in Canada be zero-emissions by 2026 hasn’t got enough money behind it to spur that level of consumer consumer demand, according to the head of an automakers’ group.
To help reach the sales goal, the government said Tuesday that it’s planning C$400 million ($320 million) in extra funding to build 50,000 charging stations, along with C$500 million for charging infrastructure through the Canada Infrastructure Bank and C$1.7 billion to extend an incentive program for buyers of electric cars.
The zero-emission-vehicle sales mandate is a key part of Canada’s emissions reduction plan, which seeks to reduce greenhouse gases by more than 40% by 2030. But despite the billions in planned spending, the electric-vehicle plan doesn’t go far enough to raise consumer demand to 20% of new sales, according to Brian Kingston, president of the Canadian Vehicle Manufacturers Association.
“The government needs to be very careful around how they do this, and they better be more ambitious on incentives and charging or you’re going to see a significant problem,” Kingston said by phone.
About 5% of new vehicles registered in Canada last year were zero-emission, according to data from IHS Markit.
Canada will need 4 million charging stations by 2050, exponentially more than the current target of 50,000, he said.
Beyond 2026, the government’s plan mandates that at least 60% of light-duty vehicle sales will be zero-emission by 2030 and 100% by 2035. Failing to construct an adequate charging network and forcing vehicles to wait in lines for hours would be “disastrous” for electric-vehicle adoption, Kingston added.
“We’re encouraging the government to overbuild right now so that we have more than enough infrastructure for these vehicles coming to market,” he said.
Norway and Iceland have achieved global leadership in zero-emission-vehicle adoption through a series of consumer incentives, such as price incentives, tax reductions, access to high-occupancy lanes, removing tolls and free public parking, Kingston said. They’ve also been “extremely ambitious” in building charging infrastructure, he said.
By contrast, Canada’s current C$5,000-per-vehicle incentive doesn’t cover the C$10,000 to C$15,000 premium that many electric vehicles command over internal-combustion vehicles, so simply adding more money to that program won’t provide much help, Kingston said.
That premium may widen as manufacturers sell more electric sport-utility-vehicles with larger, more expensive batteries, he said.
“In an environment of rising inflation, asking Canadians to make the switch and not providing them with an incentive to offset that cost is going to be a real problem,” Kingston said.
©2022 Bloomberg L.P.
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