Does buying an electric vehicle make financial sense?

An electric vehicle is charged in Ottawa on Wednesday, July 13, 2022. THE CANADIAN PRESS/Sean Kilpatrick

Electric cars have become increasingly popular as a more environmentally friendly alternative to traditional combustion engines. While there are many benefits to electric cars, the question of whether they are a good financial choice in Canada is still up in the air.

Although electric cars can cost more upfront, they may offer long-term financial benefits due to lower operating costs and government incentives. Below, I’ll break down some of the main pros and cons of investing in an electric vehicle, so you can determine if it’s the right choice.

Are there any tax breaks or incentives for having electric cars in Canada?

This past December, the government of Canada passed a federal mandate to increase the total supply of electric vehicles in the country. This mandate will require auto importers and manufacturers to meet a certain sales quota for new electric or zero-emission vehicles, as follows:

In other words - by 2035, all new vehicles sold in Canada must be zero-emission vehicles. For now, this means electric vehicles. However, some auto manufacturers are also pursuing alternatives, such as vehicles powered by hydrogen-powered fuel cells.

To support this, the federal government and provincial governments are offering incentives and tax breaks for EV owners, including:

Which is the most reliable electric car?

EVs are taking the market by storm, and most major auto manufacturers have released an EV or are actively working on producing one.

Since the technology is relatively new, though, there have been some hiccups, and not every EV is a reliable investment.

Currently, the Tesla Model 3, Nissan Leaf, and Kia EV6 are the most reliable electric cars, according to Consumer Reports.

Advantages of an electric car

Electric cars have several notable advantages over combustion-powered vehicles, including:

Disadvantages of an electric car

Unfortunately, EVs also come with their fair share of disadvantages, including:

How long do electric cars last?

Since EVs are relatively new, there’s no conclusive data on how long they last. However, most estimates claim that EV batteries should be able to last between eight and 15 years, depending on their usage. Canada’s extreme climate will likely contribute to batteries dying quicker.

That being said, Tesla is currently working on designing a battery capable of lasting up to 1 million miles (1,609,344 km). So this could change very quickly.

Aside from replacing the battery, though, EVs require very little maintenance. Most issues involve common wear-and-tear items, such as tires, brakes, sensors, and switches.

What is the main problem with electric cars?

The main problem with EVs in Canada is that the country lacks the infrastructure to support mass EV adoption. The government plans to invest in more EV charging stations; there are currently 20,641 chargers across 8,770 charging sites in Canada.

Canada’s growing electric vehicle infrastructure

To facilitate faster addition of zero-emission vehicles, the government is investing heavily to help support Canada’s EV infrastructure.

The government is investing in 50,000 EV charging stations throughout the country, offering increased tax rebates to those who’ve purchased a new EV, and investing in Canadian EV manufacturers.

As long as the government continues to provide support to reach its goals, then Canada’s EV infrastructure could support widespread adoption by its target date of 2035.

Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on his Wealth Awesome website.

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