Owning an EV can save thousands, but price incentive not big enough to meet Liberal targets: PBO

'According to our estimates, in order to induce a change in consumer behaviour to reach the 2030 target, the relative cost of owning (an EV) will have to drop by 31%'

Published Aug 29, 2024  •  3 minute read

The PBO found that even without a rebate owning an electric vehicle is cheaper in the long-term. Photo by Doug Ives/The Canadian Press/File

OTTAWA – A new report from Canada’s Parliamentary Budget officer has found that while consumers could be saving thousands of dollars by switching to electric vehicles, costs will have to come down even more to reach the Liberals’ goals by 2030.

The PBO examined the Liberals sales targets that will require automakers to gradually phase out internal combustion engine (ICE) vehicles until all new vehicles are zero-emission vehicles (ZEV) by 2035. Auto manufacturers who don’t meet those targets have to pay into creating charging infrastructure.

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The new target is being phased in with automakers expected to hit 20 per cent by 2026 and 60 per cent by 2030. Parliamentary Budget Officer Yves Giroux said his office doesn’t believe Canada is on track to meet that target.

“Based on our modelling, significant adjustments to domestic market conditions are required to meet the annual ZEV sales targets,” he said. “According to our estimates, in order to induce a change in consumer behaviour to reach the 2030 target, the relative cost of owning a ZEV compared to ICE vehicles will have to drop by 31 per cent compared to its expected cost in 2030 without the standard.”

Giroux’s report found that the average cost of owning a ZEV for eight years would add up to $62,920 assuming you purchased it in 2022, a gas powered vehicle is likely to cost $71,680. The PBO factored in the cost of buying the vehicle, along with the ongoing operating costs and current tax rebates.

The federal government is currently offering a rebate of up to $5,000 for people looking to purchase an EV vehicle and some provinces have incentives as well.

The PBO assumed those rebates will be phased out beginning in 2025, but found even without a rebate owning an electric vehicle is cheaper in the long-term. The report released on Thursday found there are several ways this price reduction could be achieved including possibly continuing subsidies for longer than planned.

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“These include faster changes in consumer preferences, unexpected technological advances, policy measures and price adjustments by auto manufacturers,” the PBO wrote.

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The PBO also found that charging stations, especially the more advanced chargers that can quickly charge a vehicle, will fall behind demand headed out to 2030.

Environment Minister Steven Guilbeault said he views the PBO report as a sign the government’s plan is working.

“The federal government’s plan is working: To date, over $3 billion has been invested to improve access and lower costs of electric vehicles for Canadians,” he said. “This report confirms that zero-emission vehicle prices are continuing to decline and will become more affordable than internal combustion cars.

He said the PBO didn’t factor in hybrid vehicles, which will count towards the zero-emission target in the short term. He said the government believes EVs are good for the broader economy.

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“Not only are EVs becoming more affordable, but they are driving record investment into the Canadian economy while transportation emissions have declined to levels not seen in decades—demonstrating that Canada can grow its economy while also fighting climate change.”

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