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The early-adopter balloon has popped. Electric vehicle sales — even in rebate-frenzied locales such as British Columbia — have fallen off a cliff, and this represents a dark cloud on the horizon for Canada’s automotive industry.
Sales of EVs had surged, driven by pent-up demand after pandemic-induced shortages. But now, dealers have unsold stock piling up. An Audi dealer in Richmond, B.C., home to some of Canada’s richest EV incentives, has 145 Q5 e-Tron EVs in stock. That’s a car some dealers expected to be sold out for two years.
As the federal government’s zero-emission mandate grows closer — regulations stipulate 20 per cent of new-vehicle offerings must be zero emission by 2026, 60 per cent by 2030 and 100 per cent by 2035 — the infrastructure and technology needed to convince Canadians to make the jump remains sadly lacking.
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Some of the reticence to jump is driven by misperceptions. Today’s EVs are remarkably good at satisfying 95 per cent of a Canadian driver’s daily needs, with many requiring charging just once per week. Hydro Quebec estimates 80 per cent of EV charging happens at home, mitigating concerns that public charging infrastructure is insufficient.
Still, the driving across Canada is equivalent to driving from Paris to Kyrgyzstan, and we have a fraction of the population of the 10 countries between western Europe and Asia. With intercity transportation options that largely limit Canadians to driving for short-hop trips such as Winnipeg to Regina, EVs remain problematic for about five per cent of Canadian’s driving needs.
And that only speaks to urban Canadians. Rural Canadians are in tougher straits.
In June, the Canadian Automobile Dealers Association, Canadian Vehicle Manufacturers Association and Global Automakers of Canada released Countdown to 2035, anticipating the country’s needs as the 100 per cent mandate nears. The report estimates Canada has to install 100 fast chargers every day between now and 2035 — more than 400,000 chargers — to make EVs more palatable.
Brian Kingston, president of the Canadian Vehicle Manufacturers Association, said what the federal government seems unable to recognize is that while government can regulate supply, it cannot regulate demand. You can force dealers to stock certain vehicles, but you cannot force consumers to buy them.
That has observers such as Kingston, and southern Ontario dealer Michael Carmichael, worried that Canadians will hoard their internal combustion engines or turn to the used-car market, which isn’t covered by the mandates, to get their internal combustion fix. That will blunt any environmental gains expected from the mandates.
Lest this all be seen as merely an industry pushing back against government regulation, consider that globally, more than US$1.2 trillion has been invested so far in zero-emissions technology. The industry is all-in, as it were.
Even so, this all has potential to hit Canada where it hurts: jobs and income. Ford has pushed conversion of its Oakville, Ont., assembly plant to EVs from 2025 to 2027 and other carmakers are slowing EV production.
Some worrisome math: there are two ways to hit the government’s mandates. The first is that a carmaker can build more EVs. The other is that a carmaker can build fewer vehicles.
If you lower the denominator, the numerator is easier to reach. That will hit jobs and income throughout the sector, from assembly plant workers, parts producers and sales staff commissions.
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