Question Period Note: Incentives For Zero-Emission Vehicles Program

Incentives for Zero-Emission Vehicles Program

• In Canada, transportation accounts for about a quarter of our greenhouse gas emissions. That's why the Government of Canada has an ambitious target of 100 percent zero-emission vehicle sales by 2035, coupled with a suite of support measures from purchase incentives to charging infrastructure.
• Zero-emission vehicles (ZEV) have the potential to significantly reduce Canada’s greenhouse gas 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 eligible ZEVs.
• To date, the Government of Canada has invested $2.3 billion in the iZEV Program, which will continue until March 2025.
• Since its launch in May 2019, Canadians and Canadian businesses have benefitted from the Program, with over 210,000 incentive claims having been 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 published in the Canada Gazette Part 1 in December 2022.

On availability of ZEV infrastructure:

• The Government of Canada recognizes the importance of deploying charging and hydrogen refuelling stations to increase consumer and business confidence in zero-emission vehicles. Since 2016, the Government of Canada has invested over $1.2B to deploy charging infrastructure from coast to coast to coast, with the goal of supporting at least 84,500 new chargers across Canada.

On ZEV Safety Regulations:

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

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 make more vehicles eligible for the purchase/lease incentive.
• Given the dynamic nature of the ZEV market and recent announcements regarding the US Electric 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 U.S. electric vehicle tax credits. Our iZEV Program currently captures more affordable ZEV models than the US program.
• Additionally, even at current incentive levels, ZEV market share in Canada continues to reach new heights each year. In 2022, ZEV market share in Canada reached 8.9% of total new light-duty vehicle registrations.

On ZEV Sales Targets and Volkswagen Announcement:

• We are witnessing a once-in-a-generation shift in the North American automotive sector towards electrification and the production of zero-emission vehicles. This has been exemplified most recently by PowerCo (Volkswagen Group)’s announcement to invest $7 billion to establish its largest battery cell factory to date, in St. Thomas, Ontario – making this the largest EV-related investment in Canadian history.
• This plant will be the second-largest battery plant in North America, once it reaches full production. Investments such as this are key to unlocking the ambitions of both Canada and the United States towards achieving a zero-emission vehicle future.

• 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 ZEV regulations, which will set annually increasing requirements towards achieving 100% LDV ZEV sales by 2035, including mandatory interim targets of at least 20% of all new LDVs offered for sale by 2026 and at least 60% by 2030.
• 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.
• Building on previous investments, Budget 2022, included more than $2.6 billion in measures to support accelerating LDV ZEV adoption including $900 million to build ZEV charging infrastructure.
• Many provinces and territories are also offering consumer purchase incentives that can be combined with the iZEV incentives to make zero-emission vehicles even more affordable.
• 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 US performance standards for minimum noise requirements.
• Through the Inflation Reduction Act (IRA), the U.S. 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) off 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.

Location: National