Canada announces new $5,000 incentive for electric cars, Tesla vehicles excluded

As part of its new budget, the Canadian federal government has announced a new $5,000 incentive for electric cars that cost less than $45,000, however, it excludes Tesla vehicles.

Some Canadian provinces already have EV incentive programs but unlike the US, there has never been a federal program to reduce the cost of electric vehicles.

With the launch of their latest budget, the Canadian government has now announced a new $5,000 incentive program that is not yet completed.

Here’s the current language in the budget:

“To encourage more Canadians to buy zero-emission vehicles, Budget 2019 proposes to provide $300 million over three years, starting in 2019–20, to Transport Canada to introduce a new federal purchase incentive of up to $5,000 for electric battery or hydrogen fuel cell vehicles with a manufacturer’s suggested retail price of less than $45,000. Program details to follow.”

The $45,000 cut off point covers vehicles like the Nissan Leaf, Chevy Bolt EV, and Hyundai Ioniq Electric, but all of Tesla’s vehicles are excluded since the base Model 3 starts at $47,000 CAD.

Along with the direct incentive for some consumer electric vehicles, the budget also includes other initiatives like investments in charging infrastructure and a ZEV mandate — though it sounds like it will include “voluntary zero-emission vehicle sales targets”.

Here are the main points:

• To expand the network of zero-emission vehicle charging and refuelling stations, Budget 2019 proposes to build on previous investments by providing Natural Resources Canada with $130 million over five years, starting in 2019–20, to deploy new recharging and refuelling stations in workplaces, public parking spots, commercial and multi-unit residential buildings, and remote locations.
• Meeting the ambitious sales targets requires automakers to make sufficient models and numbers of zero-emission vehicles available for sale to meet Canadian needs. Budget 2019 proposes to provide $5 million over five years, starting in 2019–20 to Transport Canada to work with auto manufacturers to secure voluntary zero-emission vehicle sales targets to ensure that vehicle supply meets increased demand.
• To attract and support new high-quality, job-creating investments in zero-emission vehicle manufacturing in Canada, automotive manufacturers and parts suppliers can access funding through the Strategic Innovation Fund, which was recently provided $800 million in additional funding through the 2018 Fall Economic Statement.

Electrek’s Take

This has been long overdue. We needed the federal government to be more involved in the acceleration of EV adoption.

I don’t take this is the best way to do it, but it is certainly better than nothing.

The best way is to attach an appropriate price to products that produce carbon emissions in order to represent their true impact on the environment and the health of the population, but it doesn’t seem to be a popular enough idea at this point.

Therefore, we will take the EV incentive.

Now as for the price limit. This is a little controversial. I understand where they are coming from. No one wants to give subsidies for relatively rich people to buy luxury cars.

I am not advocating for that either, but we still have to stay true to the goal of the incentive.

The goal of that subsidy is to incentivize people to buy electric cars over gas-powered cars and represent the value they have on the environment and health of the population in the price of the vehicles.

That’s the case across the entire lineup of vehicles on the market.

In short, if that’s really the goal, you also want to incentivize buyers of premium sedans and SUVs to go electric instead of buying polluting vehicles in the same segments.

Again, that would be easier to achieve with a carbon tax, but they went with the direct subsidy and that’s what creates this strange situation.