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Trump’s proposed EV subsidy cuts and tariffs could upend BC’s electric vehicle goals

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From Resource Works

Canada’s regime of electric vehicle subsidies is facing a crisis with United States President-elect Donald Trump’s promise to end his own country’s EV incentives. Trump has proposed eliminating the $7,500 USD tax credit for those who purchase EVs, as well as threatening to impose a 25 per cent tariff on Canadian and Mexican imports.

Considering the interconnection of the North American automotive industry, this has the potential to severely disrupt Canada’s ambitious goals for widespread EV adoption. In British Columbia, whose provincial government has fully embraced the EV transition, the consequences of Trump’s presidency will be felt the strongest.

Trump’s pledge to eliminate the subsidies comes from his economic vision of a reduced role for the federal government in the American economy. This does resonate with vast segments of the U.S. market, but how it will impact Canada’s automakers is far less clear-cut.

EV subsidies in Canada, either at the federal or provincial level, are essential for the EV industry’s momentum to be maintained. Rebates of $5,000 are offered federally, and $4,000 under the CleanBC “Go Electric” program.

BC consumers can afford to buy EVs at a higher rate, and that helps sustain sales.

If Trump terminates the subsidies, automakers like General Motors, which are already dealing with slower EV production, will be reluctant to stay the course. The EV supply will fall, causing higher prices.

BC is Canada’s trailblazer in the EV market, accounting for almost 1 in 5 EV registrations across the entire country despite making up less than 14 per cent of the population. Policies like CleanBC have made EVs an attractive, affordable option for middle-class buyers, and the provincial government is committed to building up EV infrastructure.

The provincial government’s interim mandates are designed to align with federal goals, which aim for 10 per cent zero-emission vehicle (ZEV) sales by 2025, 30 per cent by 2030, and then 100 per cent by 2040.

BC’s progress will be derailed by market turbulence triggered by Trump’s proposed policies. The removal of U.S. subsidies will be paired with his threat of 25 per cent tariffs on Canadian imports.

In addition to the likely reduction in EV supply, automakers like GM and Ford, which produce many of the EV models partially made in Canada for export to the American market, will be made more expensive and price Canadian-made EVs out of competition.

In BC, the EV battery plants being built in Ontario and Quebec will be delayed or even cancelled due to the lack of economic viability. Manufacturers will shift back to producing hybrid or gas-powered cars, hampering BC’s EV and ZEV targets.

As a result, BC consumers will be hit hard by the twin blows of inflated EV prices and slashed rebates. Provincial and federal budgets are already stretched, and CleanBC could be on the chopping block for cuts if the North American EV industry stagnates.

Charging infrastructure, another key component of BC’s EV strategy, might also suffer. As manufacturers like Tesla and GM scale back production, investments in public charging stations could decline, perpetuating range anxiety and further slowing EV adoption rates.

Trump should be taken at his word when he says EV subsidies will be slashed and tariffs will be imposed on Canadian markets. For BC, the stakes are even higher, and the choices made by the province’s leaders may determine if the CleanBC regime and the EV program will survive the next few years.

One thing is clear, the North American automarket is more unpredictable than it has ever been since NAFTA, and Canada as a whole does not hold the balance when it comes to leverage.

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Automotive

Nissan, Honda scrap $60B merger talks amid growing tensions

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Quick Hit:

Nissan is reportedly abandoning merger talks with Honda, scrapping a $60 billion deal that would have created the world’s third-largest automaker. The collapse raises questions about Nissan’s turnaround strategy as it faces challenges from electric vehicle competitors and potential U.S. tariffs.

Key Details:

  • Nissan shares dropped over 4% following the news, while Honda’s stock surged more than 8%, signaling investor relief.
  • Honda reportedly proposed making Nissan a subsidiary, a move Nissan rejected as it was initially framed as a merger of equals.
  • Nissan is struggling with financial challenges and the transition to EVs, still reeling from the 2018 scandal involving former chairman Carlos Ghosn.

Diving Deeper:

Merger talks between Nissan and Honda have collapsed, according to sources, after months of negotiations to form an auto giant capable of competing with Chinese EV makers like BYD. The proposed deal, valued at over $60 billion, would have created the world’s third-largest automaker. However, differences in strategy and control ultimately derailed the discussions.

Reports indicate that Honda, Japan’s second-largest automaker, wanted Nissan to become a subsidiary rather than an equal merger partner. Nissan balked at the idea, leading to the collapse of negotiations. Honda’s market valuation of approximately $51.9 billion dwarfs Nissan’s, which may have fueled concerns about control. The failure of talks sent Nissan’s stock tumbling more than 4% in Tokyo, while Honda’s shares rose over 8%, reflecting investor confidence in Honda’s independent strategy.

Nissan, already in the midst of a turnaround plan involving 9,000 job cuts and a 20% reduction in global capacity, now faces mounting pressure to restructure on its own. Analysts warn that the failed merger raises uncertainty about Nissan’s ability to compete in an industry rapidly shifting toward EVs. “Investors may get concerned about Nissan’s future [and] turnaround,” Morningstar analyst Vincent Sun said.

Complicating matters further, Nissan faces heightened risks from U.S. tariffs under President Donald Trump’s trade policies. Potential tariffs on vehicles manufactured in Mexico could hit Nissan harder than competitors like Honda and Toyota. The stalled deal also impacts Nissan’s existing alliance with Renault, which had expressed openness to the merger. Renault holds a 36% stake in Nissan, including 18.7% through a French trust.

While both Nissan and Honda have stated they will finalize a direction by mid-February, the collapse of this deal signals deep divisions in Japan’s auto industry. With Nissan’s financial struggles and the growing dominance of Chinese EV makers, the company must now navigate an increasingly challenging market without external support.

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Trudeau must repeal the EV mandate

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By Dan McTeague

Last Monday, Transport Canada released a bombshell statement, announcing that the Trudeau government’s program granting a $5,000 rebate to Canadians purchasing an Electric Vehicle (EV) had run out of money and would be discontinued, “effective immediately.” This followed a prior announcement from the government of Quebec that they would be suspending their own subsidy, which had amounted to $7,000 per EV purchased.

This is, of course, a game changer for an industry which the Trudeau government (as well as the Ford government in Ontario) has invested billions of taxpayer dollars in. That’s because, no matter the country, the EV industry is utterly dependent upon a system of carrots and sticks from the government, in the form of subsidies and mandates.

EVs have remained notably more expensive than traditional Internal Combustion Engine (ICE) vehicles, even with those government incentive programs. Without them the purchase of EVs becomes impossible for all but the wealthiest Canadians.

Which is fine. Let the rich people have their toys, if they want them. Though if they justify the expense by saying that they’re saving the planet by it, I may be tempted to deflate them a bit by pointing out that EVs are in no way appreciably better for the environment than ICE vehicles, how all the lithium, nickel, cobalt, manganese, aluminum, copper, etc, contained in just one single EV battery requires displacing about 500,000 lbs of earth. Mining these materials often takes place in poorer countries with substandard environmental regulations.

Moreover, the weight of those batteries means that EVs burn through tires more quickly than gas-and-diesel driven vehicles, and wear down roads faster as well, which among other issues leads to an increase in particulate matter in the air, what in the old days we referred to as “pollution.”

That is a potential issue, but one that is mitigated by the fact that EVs make up a small minority of cars on the road. Regular people have proved unwilling to drive them, and that will be even more true now that the consumer subsidies have disappeared.

Of course, it will be an issue if the Trudeau Liberals get their way. You see, Electric Vehicles are one of the main arenas in their ongoing battle with reality. And so even with the end of their consumer subsidies, they remain committed to their mandates requiring every new vehicle purchased in Canada to be electric by 2035, now just a decade away!

They’ve done away with the carrots, and they’re hoping to keep this plan moving with sticks alone.

This is, in a word, madness.

As I’ve said before, the Electric Vehicle mandate is a terrible policy, and one which should be repealed immediately. Canada is about the worst place to attempt this particular experiment with social engineering. It is famously cold, and EVs are famously bad in the cold, charging much slower in frigid temperatures and struggling to hold a charge. Which itself is a major issue, because our country is also enormous and spread out, meaning that most Canadians have to do a great deal of driving to get from “Point A” to “Point B.”

Canada is sorely lacking in the infrastructure which would be required to keep EVs on the road. We currently have less than 30,000 public charging stations nationwide, which is more than 400,000 short of Natural Resources Canada’s projection of what we will need to support the mandated total EV transition.

Our electrical grid is already stressed, without the addition of tens of millions of battery powered vehicles being plugged in every night over a very short time. And of course, irony of ironies, this transition is supposed to take place while our activist government is pushing us on to less reliable energy sources, like wind and solar!

Plus, as I’ve pointed out before, the economic case for EVs, such as it was, has been completely upended by the recent U.S. election. Donald Trump’s victory means that our neighbors to the south are in no immediate danger of being forced to ditch gas-and-diesel driven cars. Consequently, the pitch by the Trudeau and Ford governments that Canada was putting itself at the center of an evolving auto market has fallen flat. In reality, they’ve shackled us to a corpse.

So on behalf of my fellow Canadians I say, “Thank you,” to the government for no longer burning our tax dollars on this particular subsidy. But that isn’t even half the battle. It must be followed through with an even bigger next step.

They must repeal the EV mandate.

Dan McTeague is President of Canadians for Affordable Energy.

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