Car News

Why Some Automakers Are Saying No to Government EV Rebates

Update (August 12, 2019): Nissan Canada Vice President of Sales Operations Marc-André Nault also responded in support of the rebate: "Federal incentives generate something we at Nissan value tremendously when it comes electric vehicles – awareness. The zero emission era of driving is upon us, but a large majority of people in Canada still does not know the numerous benefits of EV ownership. A nationwide incentive helps drive awareness, and this is essential in shifting to what is still a relatively new concept of motoring."

Furthermore, Nissan "applauds the federal government’s 'iZEV' Program" as a whole: In addition to the immediate benefit to individual buyers and businesses, "the significant investment in charging infrastructure, and voluntary, staggered zero emission vehicle targets in the coming years will result in major progress in EV adoption, and ultimately a more sustainable future."

Update (August 9, 2019): Hyundai Auto Canada President and CEO Don Romano responded to this story, speaking in support of current government EV rebate schemes: "Electric vehicles are crucial for meeting our GHG (greenhouse gas) reduction goals. In the long term, EV production expansion will eventually achieve improved economies of scale which will result in lower production costs and lower prices. But [in the] short term, without government support, manufacturers would not be able to increase EV demand fast enough to meet governments’ aggressive GHG reduction requirements.

Original story follows:

This week, Transport Canada released figures propping up its electric vehicle (EV) incentive program, saying it helped drive a 30 percent increase in national EV and plug-in hybrid (PHEV) sales in the first six months of 2019.

The province of Ontario, meanwhile, scrapped its provincial EV incentive program last summer, which may have contributed to a 54 percent decrease in electric and plug-in sales between last year and the end of Q1 2019.

Environmental advocate groups like Electric Mobility Canada side with the federal government, claiming incentive programs are "an essential role that government must play to support the market," until EV prices are on par with gas vehicles. Some automakers are on Ontario's side of the fence, however, saying that EV incentive programs don't help to promote EV adoption and don't address the true cause of greenhouse gas emissions.

One of those brands is Honda Canada, which wants to see the Canadian government place emphasis on reducing fleet-wide vehicle emissions, rather than putting a small number of EVs and plug-ins on the road.

“From a much broader perspective, we believe that the path to environmental sustainability involves reducing the emissions of the total fleet of light-duty vehicles on the road, as opposed to selling a small number of PHEVs and EVs annually,” Honda Canada CEO Dave Gardner told Automotive News Canada in a recent interview.

Not only do the rebates focus too heavily on electrified tech, they also make it hard for automakers to get a clear, realistic picture of the market, making product planning for clean vehicles a challenge. “We see distortions of consumer demand, product competitiveness undermined, and unsustainable behaviour created," Gardner added. "For these reasons, we are opposed to any types of rebate programs which determine winners and losers in the marketplace.”

Jaguar Canada president Wolfgang Hoffmann echoed this sentiment, saying the company doesn't agree with an EV incentive that does not include all electric vehicles. The automaker's electric I-Pace crossover does not qualify for the $5,000 federal rebate as it is above the $55,000 market cap. Most Tesla vehicles also do not qualify for the program, save for one version of the Model 3.

To truly promote the widespread adoption of EVs, Hoffman says, you must make living with them easier – not incentivize them to make their initial purchase price cheaper.

“From a pure and consumer standpoint and also for the environment going forward and adoption rate, we need more of the [charging] infrastructure than incentives, I believe,” he said. “Some municipalities are moving forward in a much faster pace [because] all new condominiums have to have electric charging stations for each parking spot, but I think also [more] public charging stations [are needed].”

Transport Canada spokesperson Simon Rivet doesn't think that responsibility falls solely on the federal or provincial governments, though, telling AN Canada in a statement that "everyone has a role to play in supporting the decarbonization of the transportation sector."

EV and plug-in market share in Canada stood at 1.89 percent at the end of Q1 2019 - up from 1.5 percent in Q1 2018. During that time, the Tesla Model 3 was the most popular EV in the country with 1,594 units sold, while the Hyundai Kona Electric was second with 1,163 units sold.