Groups say electric-car quota will hurt consumers
Dealers say policy will lead to higher vehicle prices
Quebec’s new rules aimed at increasing the number of electric vehicles on provincial roads is nothing but a disguised tax that will hurt consumers and local dealers, two groups say.
Both the Canadian Automobile Dealers Association and the Montreal Economic Institute came out this week against the new regulations, details of which were recently released by the government.
John White, president and CEO of CADA, says his group supports measures that help reduce greenhouse gases, but he believes the provincial policy will lead to higher prices and will hurt Quebec dealers.
“We will start to fail right away. There’s no doubt. We can’t meet that target right now,” White said. “When you look at the percentage of vehicles that are being sold, it’s not going to happen.”
Under the rules, in Bill 104, the Quebec government has set a goal of having 100,000 electric or hybrid vehicles on provincial roads by 2020, and one million by 2030. The target is part of Quebec’s plan to reduce greenhouse gas emissions by 37.5 per cent below 1990 levels by 2030.
White says the system will act like a tax because of penalties that manufacturers and dealers will face for not meeting the requirements, which he said will ultimately lead to higher costs to consumers.
“There’s only two ways to recoup your costs: A is you absorb them, or B is you pass them on to the consumer. And you pass them on to the consumer through the rest of your product portfolio.”
White suggested that Quebec should delay implementing the legislation until it hears recommendations from a federal advisory committee looking into getting more zero-emission vehicles on Canadian roads. The goal of that committee is to have a policy in place by next year.
As of the 2018 model year, 3.5 per cent of vehicles sold in Quebec must be electric or plug-in hybrids, the regulation states. By 2025, 22 per cent of vehicles sold in Quebec must be either electric or plug-in hybrids. In 2016, only one per cent of vehicles sold in Quebec would have met the government’s criteria for credits.
Each qualifying vehicle sold earns the manufacturer credits, up to a maximum of four.
Any manufacturer that doesn’t earn enough credits can purchase them from another company that has attained its goal, or they can be acquired from the government. Each credit will cost $5,000.
CADA had urged the government to allow regular hybrids — ones that aren’t plugged in to recharge — to count toward manufacturer credits, but it says the government ignored that recommendation.
“We believe that the period to introduce battery electric vehicles is too aggressive because there is just not the wide choice from the manufacturers today,” White said.
“It’s eventually going to come. It’s just going to occur at a slower pace.”
The office of Environment Minister David Heurtel issued a statement defending the policy, stating that the goal of the new rules was to stimulate the supply of zeroemission vehicles.
The government says the policy isn’t intended to raise revenue, and that Quebec is the only place that allows the sale of pre-owned electric vehicles to count for credits.
Quebec also defends itself against the claim by CADA and the Montreal Economic Institute that the policy will lead to higher prices for conventional internal combustion engine vehicles.
The government says that, in U.S. states that have similar ZEV mandates, there has been no increase in the price of other vehicles.
Germain Belzile, senior associate researcher at the MEI, wrote a report published this week that claims the policy will lead to an increase in vehicle prices of as much as $1,100 because manufacturers that are forced to buy credits will pass the cost on to consumers.
Équiterre co-founder and senior director Steven Guilbeault said any claim of a price hike is not realistic.
“There is no basis for their claims. A ZEV mandate is in place in 10 U.S. states and this (a price increase) is not something we have seen happen in those states,” he said.
“All of a sudden, because Quebec is doing it, we would see these on other vehicle models? It’s ridiculous.”
Guilbeault says it’s important to take a long-term approach to the policy, even though he would have welcomed a more ambitious goal for 2025.
“What I would say is that in the short term, it’s true that electrification doesn’t give us a lot of bang for our buck in terms of emission reduction,” he said.
“But when talking about climate change, we can’t just be fixated on the short term.”
For Belzile, the goals of the plan are already quite ambitious, given the number of electric vehicles in Quebec.
“There are about 13,000 (electric vehicles) right now, so that’s a big jump,” he said.
Belzile said a company like Tesla stands to benefit the most from this policy, since each vehicle it sells will earn the full four credits. That means each vehicle represents $20,000 for Tesla, which Belzile equates to a subsidy to the automaker disguised as a tax.
“If you want to be more precise, they will get $20,000 out of the pockets of people who buy standard cars,” Belzile said.
In effect, we are taxing the poorer people and giving a huge subsidy to buyers of electric cars, who have bigger budgets. I think it is indefensible.”