The electric vehicle industry has become a black hole, and no economically viable model exists.
Commentary
Over 10 years ago, experts with most tribunes were assuring the world that combustion engines were on the way out and electric vehicles would soon dominate markets. Despite this optimism, Canadians didn’t embrace EVs widely, thus the call for subsidies for manufacturers and purchasers went out. The federal government answered the call and billions in tax dollars were dedicated to rebate programs, subsidies, and loan guarantees for EVs.
Sales of EVs did increase somewhat while EV manufacturers began springing up like daisies.
Today, however, EV manufacturers are falling like dominoes rather than growing like daisies. Ford Canada backed away from EV plans after the company reported losses of US$4.7 billion in 2023. Umicore in Ontario received almost a billion dollars in grants from the Canadian and Ontario governments only to halt construction of its plant a year later. Quebec’s Lion Electric took grants from both Canada and the USA to build electric school buses and has now entered bankruptcy protection with orders unfulfilled. The cities of Calgary and Edmonton ordered electric buses from Vicinity Motor Corporation and Proterra. Both suppliers have gone broke while the cities were stuck with dysfunctional fleets.
Most recently, Northvolt AB filed for bankruptcy protection after Ottawa provided $1.34 billion in capital and Quebec $1.37 billion to build a battery plant in Quebec. Further incentives would have added up to $4.6 billion but they weren’t enough to make the company viable.
The federal “Incentives for Zero-Emission Vehicles” (iZEV) program was formed in 2019 and spent $2 billion to offer rebates of up to $5,000 to people purchasing EVs. The program has now been paused as funding has run out.
Related Stories
Along with the carrots offered, the federal government presented a stick to auto manufacturers and dealers: it mandated that 20 percent of new light-duty vehicles sold in 2026 must be zero-emission vehicles. By 2030 the number is to climb to 60 percent, and a total ban on sales of combustion engine vehicles is to be in place by 2035. Not only are the targets impossible and the policy an infringement on freedoms, this requirement has chilled expansion and investment into combustion engine vehicles—and still hasn’t put Canadians into EVs.
While EV sales have grown, only 10 percent of new vehicles registered in 2024 were zero-emission vehicles. The number must double in a year to meet the first target.
With all efforts to build a viable EV manufacturing sector failing in Canada, the government imposed a 100 percent tariff on Chinese-made EVs with the hope it would shore up Canada’s domestic market. The move has failed to stabilize the economic picture for Canadian EV manufacturers and has made consumers less likely to enter the EV market as low-cost alternatives have been removed.
The tariff on Chinese EVs has also drawn retaliatory moves, with counter-tariffs placed on Canadian agricultural and seafood goods. China is a major customer and the tariffs could be ruinous for Canadian producers. This is on top of the already economically harmful trade war with the United States.
The top EV supplier in Canada has been Tesla, which is now facing a consumer backlash due to Elon Musk’s relationship with President Trump; this strikes yet another blow to aspirations to get Canadians to embrace EVs.
The prime proponent of Canada’s EV policies was former Prime Minister Justin Trudeau. Much of his focus during his mandate was on emission reduction and he saw EVs as a prime component in his plans. With Trudeau now out of office, there is no better time to examine and repeal many of Canada’s EV policies.
The targets set for EV sales defy reality. They must be repealed so the automotive sector can plan for realistic demand and sales trends. As well, all subsidies for battery and EV manufacturing must end. The industry has become a black hole, and no economically viable model exists. If the market appears, innovative private interests will form to fill the void. The government can’t try to pick winners and has a solid record of picking losers.
With an upcoming election, the timing is ideal to promise new policies and garner a mandate from voters. Taxpayers are weary and don’t want to hear of more investment failures, nor do they want to see higher costs for vehicles.
The day may come when EVs replace conventional vehicles. That day is still on the distant horizon, though, and no effort from the government will make it appear any faster. The market must be left to develop naturally. If it’s viable, EVs will come.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
