Ownership costs for electric vehicles will have to come down by at least 31% if the government wants to reach its sales target of 60% EVs by 2030, according to the latest report from the Parliamentary Budget Officer.
“Assuming that preferences, technology and policies remain unchanged from a baseline scenario without the standard, PBO estimates that the relative ownership cost of battery-electric vehicles (BEVs) would need to decrease by 31% to meet the ZEV sales target of 60% in 2030,” reads the PBO report released on Thursday.
“That is, the ownership cost of ZEVs relative to internal combustion engine (ICE) vehicles in 2030 under the standard would need to be 31% lower compared to the baseline scenario without the standard in 2030.”
The Trudeau government announced its Electric Vehicle Availability Standard last December, which mandates zero-emission vehicle sales targets for the auto industry.
The targets require all new light-duty sales to be electric or plug-in hybrid in Canada by 2035, with interim targets of at least 20% of all sales being EVs by 2026 and 60% by 2030.
Auto manufacturers who fail to meet the government’s targets will be forced to pay infrastructure charges, however, the targets have already been called unrealistic by industry leaders.
“We need to make sure that we’re revisiting targets to align targets with reality,” Frank Voss, president of Toyota Motor Manufacturing Canada, told Bloomberg in June. “The government can only do so much to entice consumers to purchase vehicles that they would like to see implemented. Consumers will choose what they need.”
According to the latest statistics, EVs only accounted for 11% of registered vehicles in Canada last year and while some project that they may account for 70% by 2035, sales have dropped in recent years.
That statistic is not surprising when the average consumer cost of an EV was $73,000 last year, according to the Canadian Black Book.
“In the absence of a government mandate and regulations forcing manufacturers to sell at least 60 per cent of zero-emission vehicles, that’s the price differential that one would need to meet these targets,” Parliamentary Budget Officer Yves Giroux told CTV News on Thursday.
The PBO said that consumers will save money in the long run by purchasing an EV in the form of operating costs.
“It means that the relative price has to go down for EVs. It can be done by bringing the cost of electric vehicles down, but it could also be by increasing the cost of all the other alternatives, which is the gas- and diesel-powered cars and trucks,” said Giroux.
The report claimed that further subsidies or price adjustments by automakers could help see a drop in EV costs over time but that there remains the issue of EV charging stations, which are still far behind targets.
“We estimate that by 2030 the market provision of public charging ports will be somewhat less than what is required according to a needs analysis commissioned by Natural Resources Canada,” reads the report.
Canada currently has over 25.000 public EV charging stations but the government’s own research shows the country will need at least 40,000 new charging stations to be installed each year for the next decade to meet the new targets.
Additionally, Canadian automakers have begun shifting away from manufacturing EVs themselves, due to increasing low demand.
Ford has completely shifted away from EVs, announcing last month that it plans to build large super duty trucks at an Ontario production plant it had originally intended to use for electric vehicle production.
The automaker’s Oakville assembly complex was set to be converted into an all-electric vehicle plant but now Ford recently said it will be investing $2.3 billion into super duty truck production instead.
Despite taxpayers committing $590 million to Ford in the form of a subsidy partnership between the federal and provincial governments to build EVs, the company has delayed all EV plans for at least the next three years and laid off employees in the sector.