Province’s finance minister says the tax is to ensure both drivers of electric and gas vehicles ‘are treated the same.’
Albertans who drive electric vehicles will have to pay an extra $200 when they register their cars with the province starting Thursday.
The province’s new electric vehicle tax will take effect on Feb. 13, and Alberta’s finance minister says the tax amount is “in line with” what drivers of a typical internal combustion engine vehicle would pay in fuel tax each year.
“This is a fair way for all drivers to contribute to public services, and to help keep roads and highways safe and smooth,” said Nate Horner in a press release on Feb. 6.
“Alberta is joining a growing number of places across North America introducing this tax so that drivers of both electric and gas vehicles are treated the same.”
Exemptions will apply to those who own hybrid vehicles, electric motorcycles, and electric off-highway vehicles, such as ATVs.
The tax will be collected either by registry agents or online through MyAlberta eService when owners register their vehicles and each year when they renew their registrations, the province said.
‘Fairness Concerns’
The electric vehicle (EV) tax was first announced as part of Alberta’s Budget 2024, published Feb. 29 last year, and subsequently passed in the provincial legislature last fall.
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The budget’s fiscal plan for 2024–27 said that even though the number of EVs in Alberta “is currently low,” they “are being purchased in ever-increasing numbers.” The province cited concerns over fairness to other vehicle types.
“EVs tend to be heavier than similar internal combustion vehicles and cause more wear and tear on provincial roadways while their owners pay no fuel tax,” according to the fiscal plan.
“While fuel tax revenue is not dedicated to funding construction and maintenance of provincial roads, there are nevertheless fairness concerns with drivers of other vehicles and longer-term challenges associated with declining fuel tax revenue.”
The EV tax was projected to generate $1 million in revenue in 2024–25, $5 million in 2025–26, and $8 million in 2026–27, according to the fiscal plan, with the assumption at the time that EV adoption will continue to accelerate.
The federal government put in place an emissions reduction plan in 2022 that included phasing out sales of new gasoline or diesel-powered light-duty vehicles in Canada by 2035.
“To help decarbonize the transportation sector, we need to accelerate the adoption of ZEVs [zero-emission vehicles]. That is why the Government of Canada committed to achieve 100% zero-emission vehicle sales by 2035 for all new light-duty vehicles, including interim targets of at least 20% by 2026 and at least 60% by 2030,” states Transport Canada.
What’s considered ZEVs are battery-electric, plug-in hybrid electric, and hydrogen fuel cell electric vehicles. Most personal vehicles, like passenger cars, SUVs, and light pickup trucks, fall into the light-duty vehicle category.
An online survey conducted on behalf of Natural Resources Canada in early 2024 indicated that fewer than 4 in 10 Canadians (36 percent) are considering buying or leasing a ZEV, marking a decline in interest since 2022, when that figure was 51 percent.
“Canadians hold mixed views on ZEVs and continue to have a general lack of knowledge about these vehicles,” said the report conducted by by EKOS Research from Jan. 17 to Feb. 7, 2024.
The report noted that a majority of the respondents—75 percent—said ZEVs were “too expensive,” up 5 percentage points since 2022. In addition, 59 percent said ZEVs “perform poorly in cold weather,” up from 37 percent in 2022, and 56 percent said ZEVs “cannot travel far enough on a full charge,” up 7 percentage points since 2022.
Incentives
To encourage the adoption of ZEVs, Ottawa launched the Incentives for Zero-Emission Vehicles (iZEV) program in May 2019, which offered eligible consumers rebates of up to $5,000 when buying or leasing ZEVs.
The program, however, was paused in mid-January this year, with Transport Canada saying in an update on its website that the “funds have been fully committed.” The program was scheduled to pause either on March 31, 2025, or once all of the available funding had been accessed by Canadians.
In a press release on Jan. 10, the department said the program “has been a huge success,” as over 546,000 ZEVs have been sold or leased with incentives through the program since it began in 2019. It added that new ZEV sales accounted for 11.7 percent market share in 2023, up from 3.1 percent in 2019.
Automakers called on Ottawa to end the EV sales mandates shortly after the incentives were halted.
“[A] pause in the Incentives for Zero-Emission Vehicles (iZEV) Program will significantly reduce ZEV sales in Canada,” said Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers’ Association, in a statement on Jan. 13.
“This comes at the same time as a slowdown in the buildout of public charging infrastructure that is weighing on the pace of the transition to electric. As a result of these developments, the federal government’s mandated ZEV sales targets are increasingly unrealistic.”
Matthew Horwood and The Canadian Press contributed to this report.
