Automotive
Of all top-heavy Liberal climate policies, electric-vehicles mandate is the worst
From the MacDonald Laurier Institute
“History has shown us time and again that government quotas are no match for the market.”
To meet Canada’s commitment to its Paris Agreement climate goals, the federal government has announced increasingly heavy-handed emissions reduction policies this year. It culminated Monday in the publication of regulated targets for electric-vehicle sales: an EV mandate.
History has shown us time and again that government quotas are no match for the market. The Liberals want to show us one more time why this is the case.
There is absolutely nothing wrong with EVs. Those who own them tend to love them. The car manufacturing industry is all-in on EVs, and globally has committed US$1.2-trillion toward electrification.
The problem is in the attempt to dictate, by government fiat, what consumers can or cannot buy. In the case of the EV mandate, the federal government is using dealers to enforce their strategy. One hundred per cent of light duty vehicles sold in Canada by 2035 must be EVs, with mandatory sales targets starting at 20 per cent in 2026.
If a dealer falls under the prescribed target for a particular year, they are required to buy expensive credits or pay for public charging stations to atone for their sin. The most likely response will be to sell fewer gas-fuelled vehicles than demand would indicate in order to meet the required ratios and avoid the penalties.
You don’t have to be an economist to predict the outcome: waiting lists, shortages and a black market for internal combustion engines. But it’s worth being specific about why a federal EV mandate can’t overcome the laws of supply and demand.
The first is the cost of EVs: They are more expensive than internal combustions engines. EV adoption is overwhelmingly led by urban, high-income consumers who can charge at home. Aside from nudging auto manufacturers to build charging stations, whose uptake is questionable, the mandate addresses none of the logistical and financial constraints that apartment dwellers, renters and low-income car owners face in owning an EV.
The federal government has pointed to Norway, where almost 90 per cent of new car sales are EVs, as an example of how these challenges can be overcome. But that country’s EV uptake is driven by a hefty subsidy, more than triple the Canadian amount, at about $16,000 a vehicle (and made possible by the revenues from their oil and gas exports). That’s the equivalent of a $700 a tonne carbon tax, and last year it represented 2 per cent of their national budget. I can think of no more expensive way to reduce emissions.
The second problem with the EV mandate is that the dealers don’t control the electricity grid. In parallel with the mandate, the federal government is also pushing Clean Electricity Regulations, which will severely strain utilities’ ability to meet additional demand. And it’s not just capacity that matters – it’s the ability to distribute additional power into millions of homes. In many neighbourhoods and small towns, that distribution capacity does not exist, and it will be very expensive to add.
The third is range in rural and remote areas. The federal government acknowledges that lack of charging infrastructure and battery performance in cold weather is an issue. But they just assume that it will be worked out over time – no need to worry about it now.
Fourth is the ability of manufacturers to ramp up their production to meet EV mandates and incentives across the Western world. This will depend on a supply chain that does not yet exist, from critical minerals, to mechanics, to electricians. And it will depend on greater profitability in the sector, which, outside of China, is mostly selling EVs at a loss.
No amount of regulation from Ottawa can solve all of these problems. There are some that see the EV mandate as a Hail Mary from a government that is unlikely to win re-election. The mandate, therefore, is a foolish but benign distraction.
But for refiners, whose profitability depends on some level of gasoline demand, it causes tremendous uncertainty. As long as the EV mandate hangs over their heads, they will be unlikely to invest in upgrading their existing assets, even to produce clean fuels (as mandated this year under the Clean Fuel Regulations, but which EVs would not use), and they will be very reluctant to invest in new refineries.
With our fast growing population, this will inevitably squeeze the availability of the many refined products and distillates the Canadian economy still needs. There is a cost to these policies, even when unimplemented.
The series of climate policies the Liberals have imposed since Steven Guilbeault was appointed Minister of Environment have mostly applied to industry. But the EV mandate targets consumers, limiting what they can and cannot buy when it comes to their vehicle.
Alas, consumers are voters. And command economies don’t work well in democracies.
Heather Exner-Pirot is director of energy, natural resources and environment at the Macdonald-Laurier Institute.
Automotive
Bad ideology makes Canada’s EV investment a bad idea
It doesn’t bode well for our country that our economic security rests on tariff exceptions to be negotiated by Liberal politicians who have spent the majority of Trump’s public life calling him a “threat to liberal democracy” and his supporters racists and fascists. Their hostility doesn’t lend itself to fruitful diplomacy. In any event, Trump’s EV rollback and aggressive tariffs will spell disaster for the Canadian EV sector.
What does Donald Trump’s resounding win in the recent U.S. election mean for Canada? Unfortunately, there doesn’t seem to have been much thought about the answer to this question in Ottawa, because the vast majority of our political and pundit class expected his opponent to be victorious. Suddenly they’re all having to process this unwelcome intrusion of reality into their narrow mental picture.
Well, what does it mean?
It is early days, and it will take some time to sift through the various policy commitments of the incoming Trump Administration to unpack the Canadian angle. But one thing we do know is that a Trump presidency will be no friend to the electric vehicle industry.
A Harris administration would have been. But, Trump spent much of his campaign slamming EV subsidies and mandates, pledging at the Republican National Convention in July that he will “end the electric vehicle mandate on day one.”
This line was so effective, especially in must-win Michigan, with its hundreds of thousands of autoworkers, that Kamala Harris was forced to assure everyone who listened that the U.S. has no EV mandate, and that she has no intention of introducing one.
Of course, this wasn’t strictly true.
First, the Biden Administration, of which Harris was a part, issued an Executive Order with the explicit goal of a “50% Electric Vehicle Sales Share” by 2030. The Biden-Harris Administration (to use their own formulation) instructed their Environmental Protection Agency (EPA) to introduce increasingly stringent tailpipe emission regulations on cars and light trucks with an eye towards pushing automakers to manufacture and sell more electric and hybrid vehicles.
Their EPA also issued a waiver which allows California to enact auto emissions regulations that are tougher than the federal government’s, which functions as a kind of back-door EV mandate nationally. After all, auto companies aren’t going to manufacture one set of vehicles for California, the most populous state, and another for the rest of the country.
And as for intentions, though the Harris camp consistently held that her prior policy positions shouldn’t be held against her, it’s hard to forget that as senator she’d co-sponsored the Zero-Emission Vehicles Act, which would have mandated that all new vehicles sold in the U.S. be “zero emission” by 2040. During her failed 2020 presidential campaign, Harris accelerated that proposed timeline, saying that the auto market should be all-electric by 2035.
In other words, she seemed pretty fond of the EV policies which Justin Trudeau and Steven Guilbeault have foisted upon Canada.
For Trump, all of these policies can be filed under “green new scam” climate policies, which stifle American resource development and endanger national prosperity. Now that he’s retaken the White House, it is expected that he will issue his own executive orders to the EPA, rescinding Biden’s tailpipe instructions and scrapping their waiver for California. And though he will be hindered somewhat by Congress, he’s likely to do everything in his power to roll back the EV subsidies contained in the (terribly named) Inflation Reduction Act and lobby for changes limiting which EVs qualify for tax credits, and how much.
All of this will be devastating for the EV industry, which is utterly reliant on the carrots and sticks of subsidies and mandates. And it’s particularly bad news for the Trudeau government (and Doug Ford’s government in Ontario), which have gone all-in on EVs, investing billions of taxpayer dollars to convince automakers to build their EVs and batteries here.
Remember that “vehicles are the second largest Canadian export by value, at $51 billion in 2023 of which 93% was exported to the U.S.,” according to the Canadian Vehicle Manufacturers Association, and “Auto is Ontario’s top export at 28.9% of all exports (2023).”
Canada’s EV subsidies were pitched as an “investment” in an evolving auto market, but that assumes that those pre-existing lines of trade will remain essentially unchanged. If American EV demand collapses, or significantly contracts without mandates or tax incentives, we’ll be up the river without a paddle.
And that will be true, even if the U.S. EV market proves more resilient than I expect it to. That is because of Trump’s commitment to “Making America Great Again” by boosting American manufacturing and the jobs it provides. He campaigned on a blanket tariff of 10 percent on all foreign imports, with no exceptions mentioned. This would have a massive impact on Canada, since the U.S. is our largest trading partner.
Though Justin Trudeau and Chrystia Freeland have been saying to everyone who will listen how excited they are to work with the Trump Administration again, and “Canada will be fine,” it doesn’t bode well for our country that our economic security rests on tariff exceptions to be negotiated by Liberal politicians who have spent the majority of Trump’s public life calling him a “threat to liberal democracy” and his supporters racists and fascists. Their hostility doesn’t lend itself to fruitful diplomacy.
In any event, Trump’s EV rollback and aggressive tariffs will spell disaster for the Canadian EV sector.
The optimism that existed under the Biden administration that Canada could significantly increase its export capacity to the USA is going down the drain. The hope that “Canada could reestablish its export sector as a key driver of growth by positioning itself as a leader in electric vehicle and battery manufacturing, along with other areas in cleantech,” in the words of an RBC report, is swiftly fading. It seems more likely now that Canada will be left holding the bag on a dying industry in which we’re invested heavily.
The Trudeau Liberals’ aggressive push, driven by ideology and not market forces, to force Electric Vehicles on everyone is already backfiring on the Canadian taxpayer. Pierre Poilievre must take note — EV mandates and subsidies are bad for our country, and as Trump has demonstrated, they’re not a winning policy. He should act accordingly.
Automotive
Major Automaker Exec Flatly Says Liberals’ EV ‘Mandates’ Are ‘Impossible’ To Meet
From the Daily Caller News Foundation
Toyota’s North American Chief Operating Officer (COO) Jack Hollis criticized U.S. policies promoting electric vehicle adoption (EV) on Friday, according to Bloomberg.
The Toyota COO said that electric vehicle policies are “de facto mandates” that are not in sync with consumer demand, according to Bloomberg. Hollis also said that EV mandates such as those in California are impossible to meet, according to CNBC.
“The whole EV ecosystem is ahead of the consumer,” Hollis told reporters Friday, “It’s not in alignment with consumers. It’s just not.”
The Biden-Harris administration has introduced various EV-related policies as part of President Joe Biden’s climate agenda, including introducing a tailpipe emissions rule in March that would require about 67% of all light-duty vehicles sold after 2032 to be EVs or hybrids. Biden has been leading a push to build half a million public EV chargers nationwide by 2030, that has so far been met with various slowdowns.
Various American automakers have backpedaled on EV goals despite the current administration funneling billions of dollars in subsidies as part of its EV agenda. The California Air Resources Board’s “Advanced Clean Cars II” regulations require that 35% of 2026 model-year vehicles be zero-emission.
“I have not seen a forecast by anyone … government or private, anywhere that has told us that that number is achievable. At this point, it looks impossible,” Hollis said of the zero-emission regulations. “Demand isn’t there. It’s going to limit a customer’s choice of the vehicles they want.”
Many automakers have experienced issues with EV sales, including used EV models experiencing drastic price cuts due to slackening consumer demand. Ford Motor Company announced in October that it lost an additional $1.2 billion on EVs in the third quarter and announced in September that it would offer free EV chargers and home installations to incentivize customers.
Toyota did not immediately respond to a request for comment from the Daily Caller News Foundation.
(Featured Image Media Credit: Flickr/Ivan Radic)
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