Electric vehicle sales in Canada may grind to a halt in the coming months, some industry watchers fear, as consumers wait for the federal government to clear up uncertainty arounda new $5,000 tax credit.
In Tuesday’s federal budget, the government announced “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,” but said details of the program would follow.
Those details, however, are important, and John Zhang, an analyst who follows electric vehicles at research firm IDC Canada, said buyers will likely hold off buying any electric cars in Canada until the government offers more specifics.
“I think with the news (in the budget), you’re going to see a complete pause of the EV sales for the next few months until the details are released and the program is in place,” Zhang said.
It’s unclear whether plug-in hybrid cars will qualify for the subsidy, or if it will be restricted to pure electric vehicles, although budget language about “zero-emissions vehicles” suggests that the former may not be included.
The $45,000 threshold also divides the market and raises some as-yet-unanswered questions about just how the line will be drawn.
For example, a Chevrolet Bolt with no special options or upgrades has a base price of $44,800, which just barely sneaks under the manufacturer suggested retail price (MSRP) $45,000 ceiling to qualify for the electric vehicle credit. But if you order the Bolt in colours like Kinetic Blue or Mosaic Black, it costs an extra $495, pushing the purchase price above $45,000.
The same conundrum could hit drivers eyeing a 2019 Nissan Leaf. According to the company, the Leaf SV has a MSRP of $40,698 and the Leaf S Plus at $43,998, but the Leaf SV Plus and the Leaf SL Plus — which can come with premium features such as automatic braking and pedestrian detection and leather-wrapped steering wheels — are too expensive to qualify.
Notably, the Tesla Model 3, the most popular electric car in Canada, comes in at $47,600 for the cheapest base model, so it appears that it will be completely excluded from the rebate.
The only electric vehicle actually manufactured in Canada, the Chrysler Pacifica plug-in hybrid, will definitely be excluded from the program, because the base price for the cheapest model is $51,995, and it is a plug-in hybrid so will likely not qualify on the “zero-emissions” basis as well.
In response to follow-up questions after the budget was released, the Department of Finance wouldn’t offer anything in the way of specifics.
When asked why the government chose the $45,000 threshold, a spokesperson said, “This threshold was chosen to encourage Canadians to transition to a low-carbon economy and reduce transportation costs for the middle class. Details on program design will be available in the coming months.”
The Department of Finance also wouldn’t say whether the $45,000 threshold is for the base-price MSRP, or if it applies to add-ons.
Zhang said the $45,000 threshold would likely push consumers away from higher-priced cars and towards cheaper options.
“Really, the rebates are a massive factor in decision making for customers,” he said.
“If I were considering the (Tesla) Model Y before, and all of a sudden the Chevy Bolt is five grand cheaper, I might give the Chevy Bolt another look.”
Wilf Steimle, president of Ontario’s Electric Vehicle Society, and a director with Electric Mobility Canada, said that the $45,000 threshold will mean that most vehicles that qualify will be able to travel around 200 kilometres on a charge.
Steimle said that most consumers opt for higher price vehicles because they have larger batteries and can travel 350 kilometres or more on a single charge, which can be reassuring for somebody switching from a gas-powered car.
“I think the main thing that (the federal policy) does is that it really puts the focus on lower-range cars,” Steimle said.
“We’re really excluding a lot of people that would adopt this technology right now, just because there’s the uncertainty for a first-time buyer.”