Federal electric-vehicle rebate uses half its three-year budget in eight months

Electric car on display at the North American International Auto Show in Detroit, Jan.15, 2013. (Melanie Borrelli / CTV Windsor)

OTTAWA — Transport Minister Marc Garneau is thinking about expanding the government's rebate program for people who buy electric vehicles after eager car-buyers gobbled up nearly half the funds in just eight months.

Garneau launched the incentive payments last May, offering up to $5,000 off the price of buying new electric and hybrid passenger vehicles to try and bring their price tags closer to those on similar gas models.

Ottawa funded the program with $300 million, on a first-come, first-served basis, over the next three years.

As of Jan. 19, Transport Canada reports that more than $134 million in rebates have already been issued to 33,000 Canadians. At that rate of uptake, the funds will be entirely gone before the end of this year.

"It's very encouraging to see how many people are now thinking about and actually going ahead and buying (zero-emission vehicles)," Garneau said outside the House of Commons Monday afternoon.

While the government expected the program to be popular, the briefing book prepared for Garneau after he was reinstated as the transport minister after the fall federal election, says "the program has induced more new sales than projected."

According to Transport Canada, overall electric vehicle sales jumped 32 per cent after the rebates were launched, compared to the same period the year before. In 2019, electric cars made up three per cent of all vehicle sales, up from two per cent in 2018.

That is still a long way from the goals the federal Liberals set last year to have electric cars make up 10 per cent of all light-duty vehicle sales by 2025, 30 per cent by 2030 and 100 per cent by 2040. It is a significant part of Canada's efforts to cut greenhouse gas emissions, with light-duty vehicles emitting 12 per cent of all emissions in Canada in 2017.

Garneau noted his mandate letter from Prime Minister Justin Trudeau instructs him to do more to meet those quotas, and he said looking at doing more with rebates is among the possibilities, including extending them to used cars as well.

"I'm certainly working very hard in that direction," he said, though he wouldn't speculate about the specifics about what an expanded program would look like. It's likely any expansion would be included in the next federal budget.

Cara Clairman, CEO of the non-profit electric vehicle advocacy group Plug'n Drive, said a 2017 study by her organization found price to be the main deterrent for consumers when it comes to buying an electric car, so incentives are definitely helpful.

"There are people buying electric vehicles without them but definitely it helps," she said.

She said a program in Ontario to offer $1,000 incentives to buy used electric cars spurred the purchase of more than 300 used electric cars since it launched in April. That program, run by Plug'n Drive with funding from the private M.H. Brigham Foundation, is expanding next month to add an additional $1,000 incentive to not just buy a used electric car but to scrap a gas-powered vehicle in the process. The scrapped vehicles will be disposed of by the Automotive Recyclers of Canada.

Canadian electric vehicle sales are still heavily concentrated in Quebec and British Columbia, which offer provincial rebates on top of the federal rebate. B.C. drivers can get up to $3,000 more back from the provincial government, and Quebec drivers can get up to $8,000 on top of the federal incentive.

Electric Mobility Canada reported late last year that 75 per cent of all electric cars sold in Canada were purchased in B.C. (29 per cent) and Quebec (46 per cent.) Twenty per cent were bought in Ontario, leaving the remaining seven provinces with just five per cent of all the sales.

Ontario had a rebate program until it was scrapped by the new Tory government in 2018, leading to a significant drop in electric car purchases in that province. Electric Mobility Canada says the sale of electric cars in Ontario fell 44 per cent in the third quarter of 2019, compared to that period in 2018.

This report by The Canadian Press was first published Jan. 27, 2020.