Will there be enough EVs to meet Canada’s target, or do we need a Plan B?

ANALYSIS: Nearly all cars sold in Canada will need to be electric-only by 2035 — but some experts worry that automakers may not be on pace to deliver
Written by John Michael McGrath
Environment Minister Steven Guilbeault details his plan to eventually phase out the sale of gas-powered vehicles in Canada at an announcement in Toronto on December 19, 2023. (Frank Gunn/CP)

Under a recently passed federal regulation, nearly all cars sold in Canada will need to be electric-only by 2035: while manufacturers will be allowed to make a relatively small number of hybrids that must also be able to charge from the power grid (plug-in hybrids), those manufacturers will have to make at least 80 per cent of their vehicles entirely gasoline- or diesel-free.

There’s a pretty obvious hitch in the plan: What if industry doesn’t respond as quickly as the government would like? That’s a question posed by a new report from the C.D. Howe Institute, which warns that the current pace of investment from global automakers may not actually be able to deliver the number of EVs required to provide for Canadian demand in a zero-internal-combustion scenario — and urges the government to come up with a Plan B.

“Always have something in mind if Plan A doesn’t work out,” says Brian Livingston, the report’s author. “You need to have some flexibility for when things go wrong.”

Livingston tallied up the current existing and under-construction facilities for manufacturers like Tesla, Kia, BYD, and other global automakers and projected how many vehicles those automakers will be able to build at full tilt. Assuming that 2 per cent of those cars are either made in Canada or imported here (roughly Canada’s current proportion of global auto demand), he estimates how many battery-electric vehicles (BEVs) will potentially be available in 2035.

The answer: Canada would face a shortfall of new vehicles of nearly 55 per cent, or 650,000 cars, SUVs, and vans, Livingston says.

“The real question to me is: If this happens, what are people going to do if they want to buy a vehicle?” Livingston asks. “People do what they need to do to live their lives; you can’t assume the mandate means people will just do what they’re told.”

Livingston’s conclusion, however, is staunchly opposed by environmentalists, who reasonably see the current ZEV rules as a crucial part of transitioning Canada away from fossil fuels and their related pollution.

“Honestly, it’s probably one of the shoddiest pieces of work I’ve ever seen,” says Nate Wallace, clean transportation manager for Environmental Defence. “We’ve found that automakers really do react to these kinds of regulations. It sends a strong market signal. It changes where they invest. It changes how they price their vehicles, and how fast they ramp up production.”

“[The report] ends up adding up numbers that don’t meet the targets, but it’s almost constructed so they don’t,” Wallace adds.

(Livingston says, of Wallace’s assessment of his work, “I’ve been called worse things by better people.” He also says public commitments aren’t always borne out by events.)

One of Livingston’s specific recommendations for the federal government is lifting the cap on plug-in hybrids — vehicles that have smaller onboard batteries but then engage an internal combustion engine when the electric range has been depleted. Under the current rule, they can count toward only 20 per cent of the manufacturer’s sales total, something Livingston says is making the perfect the enemy of the good.

In principle, plug-in hybrids could still meet the vast majority of auto trips without using a fossil fuel: most daily commutes for drivers are under 40 kilometres, and the majority of car trips overall are shorter still. Drivers would benefit from having reduced range anxiety (and reduced concerns about cold-weather performance) while being able to do nearly all their driving in all-electric mode. Several models now on the market from Toyota, Chrysler, Ford, and others offer all-electric ranges from 27 to 70 kilometres. The federal ZEV mandate, however, credits only cars with a range of 80 kilometres or over.

“If it were me, I’d go to the automakers and ask, ‘What’s magic about 80 kilometres?” says Livingston. “Why can’t you do more and do 200 kilometres?” He further suggests that pickup-truck owners will be particularly skeptical of going battery-exclusive and that plug-in hybrids could be a more effective way of decarbonizing that market segment.

Wallace agrees with Livingston that plug-in hybrids are a transitional technology — he just wants the transition to be faster. He also warns that real-world assessments of plug-in hybrids have shown that they don’t deliver the same pollution reduction or fuel economy that manufacturers and regulators certify them for.

A December 2022 report from the International Council on Clean Technology found that plug-in hybrids used their all-electric modes as much as 50 per cent less than advertised; fuel consumption could be as much as 67 per cent higher. That ICCT report recommended more stringent regulations of plug-in hybrids to ensure that the advertised all-electric range matches the reality and that automakers actually deliver the claimed economic and environmental benefits.

Wallace says, though, that weakening Canada’s current ZEV mandate by lifting the cap on plug-in hybrids would be a mistake.

“You need that cap to limit plug-in hybrids to a transitional technology; it’s really more applicable to rural areas,” Wallace says. “That 20 per cent cap is aligned with the market share for those rural areas where it’s going to take longer for charging infrastructure to reach.” If plug-in hybrids play a larger role in the energy transition, “you end up significantly reducing the emissions benefits of this policy.”

Wallace also notes that this is just one front where the federal ZEV mandate is under attack. Automakers have also criticized the mandate and argued that the government should focus on boosting consumer demand by tripling the current purchase incentives, something Environmental Defence modelled and concluded would not be as effective as the mandate.

That this battle will be part of the next federal election seems certain. Conservative leader Pierre Poilievre has referred to the ZEV mandate as a “car tax” and said his party would work with manufacturers with “light touch regulations” in an interview with the Toronto Sun last year.