Proposed Electric Vehicle Mandate Will Cost at Least $99 Billion: Environment Canada

Minister of Environment and Climate Change Steven Guilbeault rises during Question Period in Ottawa on Nov. 22, 2022. Adrian Wyld/The Canadian Press

A recently proposed federal mandate that would require all new passenger cars and other light-duty vehicles sold in Canada to be zero-emission by the year 2035 will cost at least $99 billion, according to new government figures.

“The proposed amendments are expected to lead to a loss of consumer choice, as the non-ZEVs [non-zero emission vehicles], which are preferred by some, will eventually be phased out of the light-duty vehicle market,” wrote Environment Minister Steven Guilbeault’s department in a regulatory impact analysis statement on Dec. 31, as first reported by Blacklock’s Reporter.

Environment and Climate Change Canada added that zero-emission vehicles (ZEVs) generally are more expensive than gas- or diesel-powered equivalents, and the all-around price increase “could lead to a reduction in the quantity of vehicles purchased.”

“The magnitude of these consumer welfare losses is difficult to estimate,” staff wrote.

Guilbeault announced a number of proposed regulations on Dec. 21 that, if finalized by cabinet without revision, would mandate at least 20 percent of new light-duty vehicles sold in Canada to be zero-emission by the 2026 model year.

That figure would increase to 60 percent by 2030 before jumping to 100 percent by 2035.

Light-duty vehicles refer to passenger cars, SUVs, and light trucks.

And “ZEVs are typically considered battery-electric vehicles that are fueled only with electricity; fuel-cell electric vehicles that operate using hydrogen; and plug-in hybrid electric vehicles that can run exclusively on electricity for a specified minimum distance before they transition to operating as hybrid vehicles, using both liquid fuels and electricity,” according to the announcement.

Guilbeault’s department provided a rough breakdown of the $99 billion figure in its Dec. 31 statement.

Over the analysis period from 2026 to 2050, the “total increased electricity costs” are estimated at $55.8 billion, while the total incremental costs to buy ZEVs and home chargers are estimated at $24.5 billion.

Since 2018, investments of nearly $16 billion have gone toward federal subsidies to vehicle and battery manufacturers, while $1.7 billion will be spent providing rebates to Canadians who buy ZEVs between 2023 and 2025.

On top of that $98 billion, other costs, each below $1 billion, include federal subsidies and financing for building charging stations and money already spent on rebates of up to $5,000 for the purchase of eligible light-duty vehicles.

Other Costs

The $99.4 billion overall price tag doesn’t include related costs such as those of retrofitting auto shops and retraining mechanics to service ZEVs. “Gas stations with attached convenience stores may also lose foot traffic” and “consequently earn less profits,” the statement said.

In addition, “energy savings may encourage consumers to drive more,” potentially leading to more accidents and higher insurance costs. And those accidents could become more fatal since ZEVs “tend to be heavier due to the weight of batteries on board.”

Guilbeault’s department also didn’t account for the cost to “many consumers [who] would purchase charging equipment for at-home vehicle charging.”

“Installation costs have not been accounted for in this analysis and thus may be underestimated,” said the statement.

“There is an urgent need to address climate change and move towards a low-carbon economy. Greenhouse gases are primary contributors to climate change and the transportation sector accounts for 25% of domestic greenhouse gas emissions in Canada.”

The government has committed to funding 50,000 more public charging stations across the country by 2027, which will bring the number of total government-paid charging stations up to 85,000.

Ottawa has spent $1 billion since 2016 to install a nationwide network of charging stations.

Tara MacIsaac contributed to this report.