Question Period Note: Incentives For Zero-Emission Vehicles Program

Incentives for Zero-Emission Vehicles Program

• Zero-emission vehicles (ZEV) can reduce Canada’s greenhouse emissions and support Canada’s transition to a low-carbon transportation system.
• The federal Incentives for Zero-Emission Vehicles (iZEV) Program provides a point-of-sale incentive of up to $5,000 for the purchase or lease of an eligible ZEV.
• Through Budget 2022, the iZEV Program has received an additional $1.7 billion to expand the types of vehicle models eligible under the Program to include larger vehicles (i.e., vans, SUVs, pick-up trucks).
• Since 2019, Canadians and Canadian businesses have benefitted from the Program, with over 185,000 incentive claims submitted to Transport Canada.

If Pressed

On ZEV Sales Regulations:

• The Government of Canada is introducing regulated sales targets that will ensure at least 20% of new light-duty vehicle sales will be ZEVs by 2026, at least 60% by 2030, and 100% by 2035. Draft regulations were released in Canada Gazette Part I in December 2022, which is followed by a 75-day comment period

On ZEV Safety Regulations:

• Vehicle safety remains a top priority for Transport Canada, including supporting the safe use of electric, hybrid, and alternative fuels.

On the suggested retail price cap for larger ZEVs not capturing pick-up trucks:

• Through Budget 2022, the iZEV Program has expanded the manufacturer’s suggested retail price caps to broaden the vehicles eligible for the purchase/lease incentives.
• Given the dynamic nature of the ZEV market and recent announcements regarding the United States Electronic Vehicle tax credit, Transport Canada will continue to monitor iZEV results and assess the need for adjustments to the program to ensure it is meeting its objectives.

On suggesting the iZEV Program should match the incentive amounts proivded by the U.S. Electric Vehicle Tax Credit:

• We continue to monitor developments related to the United States electric vehicle tax credits. Our iZEV Program currently captures more affordable ZEV models than the United States program.
• Additionally, even at current incentive levels, the ZEV market share in Canada continues to reach new heights each year. As of the third quarter of 2022, the ZEV market share reached 9.5% of total new light-duty vehicle registrations.

On re-entry of Tesla Model 3 into the iZEV Program:

• In January 2022, Tesla reduced the price of its Model 3 RWD (i.e. its base trim), making this one trim once again eligible under the iZEV Program. We welcome any time ZEV models are made more affordable and are hopeful that this becomes a more widespread trend as competition for market share increases in the years ahead.

• Light-duty vehicle (LDV) emissions account for approximately 50% of Canada’s transportation-related greenhouse gas emissions, and 12% of the country’s total emissions.
• Under Canada’s 2030 Emissions Reduction Plan, the Government of Canada is developing LDV Zero-emission vehicles (ZEV) regulations, which will set increased annual requirements towards achieving 100% LDV ZEV sales by 2035.
• In April 2022, the iZEV Program’s manufacturer’s suggested retail price (MSRP) caps were increased to accommodate more vehicles. To be eligible:
  o Base model passenger cars must have an MSRP under $55,000, with higher trims eligible up to a maximum of $65,000.
  o Station wagons, pickup trucks, SUVs, vans, and special purpose vehicles must have a base model MSRP under $60,000, with higher trims eligibility up to a maximum of $70,000.
• Through Budget 2022, the Government of Canada is investing more than $2.6 billion in measures to support accelerating LDV ZEV adoption including $900 million to build ZEV charging infrastructure.
• In April 2022, the Government of Canada published a draft regulation in Canada Gazette Part I, for minimum noise requirements for electric and hybrid vehicles based on UN standards followed by the EU, as well as United States performance standards for minimum noise requirements.In addition, Transport Canada continues to work through the World Forum for Harmonization of Vehicle Regulations (WP.29) to develop globally aligned technical regulations on battery, hydrogen, and fuel cell safety.
• Through the Inflation Reduction Act (IRA), the United States is offering a clean vehicle tax credit that would provide eligible individuals with up to $7,500 (approx. $9,600 CAD) off an eligible new vehicle and up to $4,000 (approx. $5,100 CAD) of an eligible used vehicle. The tax credit includes several requirements for eligibility. These include North American assembly, critical mineral, and battery component requirements, as well as MSRP caps and income thresholds for consumers.
• On November 23, 2021, Tesla increased the price of its Model 3, making the vehicle no longer eligible under the iZEV Program. Transport Canada continued to provide incentives for vehicles ordered prior to, but delivered after, this date.

Location: National