Proceedings of the Standing Senate Committee on
Issue No. 96 - Evidence - May 30, 2019
OTTAWA, Thursday, May 30, 2019
The Standing Senate Committee on National Finance, to which was referred the subject matter of all of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures, met this day at 1:30 p.m. to study the bill.
Senator Percy Mockler(Chair) in the chair.
The Chair: Honourable senators, good afternoon.
My name is Percy Mockler, senator from New Brunswick and Chair of the Standing Senate Committee on National Finance.
I wish to welcome all of those who are with us in the room, and viewers across the country who may be watching on television or online.
I would also like to remind listeners that the committee hearings are public and accessible online at sencanada.ca.
I would ask senators to introduce themselves.
Senator Klyne: Martin Klyne, Saskatchewan.
Senator Pratte: André Pratte from Quebec.
Senator Boehm: Peter Boehm, Ontario.
Senator Neufeld: Richard Neufeld, British Columbia.
Senator Eaton: Nicole Eaton, Ontario.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
The Chair: Thank you, senators.
Honourable senators and members of the viewing public, today we continue our consideration of the subject matter of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019, and other measures. This pre-study of the bill was referred to our committee on May 2, 2019.
Honourable senators, this afternoon we will take a closer look at the provisions of the bill that encourage the purchase and use of electric vehicles.
I am referring to Parts 1(a) and (o) and to Part 2(b), as listed in the summary of the bill.
To discuss these provisions to the committee of National Finance, from the Canadian Vehicle Manufacturers’ Association, Mr. Mark A. Nantais, from Clean Energy Canada, Joanna Kyriazis, Senior Policy Advisor.
The other witness is from Electric Mobility Canada, Mr. Brad Ryder.
Witnesses, thank you very much for accepting our invitation. The clerk has identified that Mr. Nantais will begin, is to be followed by Ms. Kyriazis and Mr. Ryder. Please make your presentations, which will be followed by questions from senators.
Mark A. Nantais, President, Canadian Vehicle Manufacturers’ Association: Good afternoon, honourable senators. I first want to start by thanking you for the kind invitation to appear before you today. Hopefully my remarks will assist you in the task before you.
I am here as a member of my companies, Fiat, Chrysler, Ford and General Motors. Our industry has grown and prospered based on a highly integrated North American marketplace and supply chain, and provides over 136,000 direct jobs to Canadians, about 800,000 direct and indirect jobs across the country.
We regularly contribute over $20 billion to GDP annually. We are the second largest export sector representing about $54 billion.
It’s interesting to note that in Ontario we represent about 22 per cent of manufacturing GDP alone.
We play very prominently in not just the Canadian economy, but also critically important in Ontario.
The CVMA appreciates the government’s commitments in Budget 2019 to invest in the future transportation and to make plug-in electric vehicles more affordable through the iZEV Program. Consumer EVs — and I’m going to refer to electric vehicles as EVs — consumer incentives, improved tax treatments for EV purchases, charging infrastructure funding and infrastructure deployment tax measures are all important policy measures to increase consumer and business demand for EVs across the country.
The CVMA submits that in the development of the electric vehicle market, it requires an ongoing holistic approach on the relevant and evolving market issues respecting the increased consumer demand for electric vehicles enabling this through enhanced recharging infrastructure and developing greater public awareness.
To this end, we support an ongoing process where partnership organizations, and all levels of government, convene, collaborate and communicate to address the challenges and identify market trends in order to move the plug-in electric vehicle market forward and contribute to Canada’s environmental, clean energy and environmental goals.
Our companies are investing multiple billions of dollars. Collectively, about $100 billion in our industry goes into EV development, to bring more electric vehicles to market which includes both battery electric vehicles or pure electric vehicles and plug-in hybrid electric vehicles. Our member companies are among the leaders in EV sales.
Currently, there are more than 40 electric vehicles models available for sale. That number is expected to grow significantly over the next few years.
The increasing array of models across all vehicle segments will provide greater utility, appealing to both families and to fleet managers and owners. Electrified pickup trucks are now on the horizon which will be a compelling new EV product entrant.
As a benchmark, in 2011, for instance, there were only seven models available. We’re now talking about an incredible pace of change. Some have actually suggested that there will be 100 models available in roughly 2023. That, believe me, is an unprecedented pace in which to introduce new technologies like this.
The government’s plan to provide consumer incentives is well-founded. There has been a direct and undeniable correlation between increased consumer adoption rates and electric vehicles in those jurisdictions who have provided consumer purchase incentives. The leading adoption rates are occurring in British Columbia, Ontario and Quebec. These three provinces represent about 97 per cent of total EV purchases across the country.
I would also note that since Ontario ended its rebate program, data is demonstrating a dramatic decline in EV sales. We’ve seen this similar scenario unfold in other jurisdictions who have also taken steps to terminate the consumer incentives, such as the State of California and even B.C. when they took a holiday in terms of EV incentives. Sales plummeted precipitously when those incentives were removed.
This illustrates the importance of consumer incentives to encourage increased consumer demand, and as such, we are supportive of these initiatives in 2019.
The budget proposal for a full tax writeoff in the year a business purchases a zero-emission vehicle up to a capital cost of $55,000 will prove a meaningful incentive to business, fleet owners and operators.
In 2018, for example, approximately 21 per cent of new light vehicle registrations were dedicated to fleets. This is an important segment. It will be important to provide easily accessible information to businesses, fleet owners and managers about zero-emission vehicles eligibility requirements associated with the EV business tax incentive.
The budget provision to expand support for electric vehicle charging stations and electrical energy storage equipment will also support greater consumer and business interest in considering EV purchases.
To effectively encourage the expansion of recharging infrastructure it will be important to ensure the application process for the program is efficient and administrative requirements are kept to a minimum while avoiding overly onerous reporting requirements.
Consumers and business fleets need to have the confidence that they will be able to charge their vehicles when needed on longer trips. The government’s announcement to build on previous investments by providing Natural Resources Canada with $130 million over five years starting in 2020 to deploy new recharging and refuelling stations at workplaces, public parking spots, commercial and multi-unit residential buildings as well as remote locations is definitely a welcome step in expanding EV refuelling network. I must say there’s still a good way to go in that respect.
As the public sees increased availability of charging stations, combined with better education and awareness about the benefits of EVs, and the charging infrastructure, more consumers and fleets will be better positioned to consider and make EV purchase decisions.
On a point of specificity, I note that the Budget 2019 provision Part 2(b) introducing amendments to ensure that the GST/HST treatment of expenses text refers to zero-emission passenger vehicles. We recommend that the government refer to light-duty vehicles versus passenger cars or vehicles to ensure that vehicles used for commercial purposes are not unintentionally excluded.
Many of those other vehicles I talk about are now on the horizon in terms of coming to market.
The general barriers to zero-emission vehicles in Canada have included the upfront purchase cost; technology uncertainty including all climate performance; lack of comprehensive city and intercity charging infrastructure, of public awareness and education. These are and continue to be challenges.
Regarding proposed budget provisions, some very positive outcomes to create conditions that will encourage increased consumer and business demand for electric vehicles are clearly evident in that budget. This in turn will contribute to the government’s climate policy goals over time. I want to say over time because the fleet only turns over about 8 per cent per year so the introduction of electric vehicles and their benefits of those vehicles will take some time, probably more in the medium to long term.
Vehicle manufacturers have and will continue to take significant actions to further improve new vehicle efficiency and build upon the successes of the significantly reduced new vehicle GHG emissions and I might add smog-related emissions as well as to continue to enhance vehicle safety all at the same time. Ongoing government industry collaboration will be a vital component towards growing the zero-emission vehicle fleet. We are committed to working with the government towards this goal. I thank you for your time. I would be pleased to answer any questions. Thank you.
The Chair: Ms. Kyriazis, please.
Joanna Kyriazis, Senior Policy Advisor, Clean Energy Canada: Good afternoon, Mr. Chair and members of the committee.
My name is Joanna Kyriazis. I am a senior policy adviser for Clean Energy Canada, a climate and clean energy think tank at Simon Fraser University. I am based here in Ottawa.
I’m here to talk about some of the measures in the proposed Budget Implementation Act that seek to increase the uptake of zero-emission vehicles on our roads. My remarks will cover three key points: The environmental benefits of electrifying more cars, buses and trucks; the benefits to Canadian businesses and our economy; and why the specific measures proposed, the accelerated capital cost allowances for electric vehicles, are a good choice.
Canada is one of the highest emitters of carbon pollution per capita in the world. One quarter of our country’s emissions comes from our transportation sector, second place to our energy sector. Tailpipe emissions also cause serious air pollution and smog impacts. A recent global study showed that one in five child asthma cases in Canada is linked to traffic pollution. That is one of the highest rates in the world.
Electric vehicles are the most promising technology we have to address carbon pollution in transportation. The biggest breakthroughs won’t come from individual Canadians buying electric cars. They will come from businesses that run large fleets of passenger cars and trucks. Commercial vehicles like taxis and delivery trucks are in near constant use. Fleet vehicles are also often bigger, which means higher emission reduction potential. Swapping out 1,000 conventional buses for electric buses, for instance, would save an estimated 500 barrels of diesel every day.
Turning to the economic benefits. Canadian companies can save costs and increase their competitiveness in the longer term by going electric. Research shows that the typical Canadian driver can expect to save an average of $2,500 per year in fuel and maintenance costs by swapping out a gas-powered car for an electric one. The Chicago Transit Authority, who is adopting electric buses, has been saving about $25,000 annually per electric bus.
Leading Canadian companies are seeing these benefits and they’re increasingly moving towards electric. Walmart Canada has purchased 40 Tesla semi-trucks and plans to run 100 per cent of its truck fleet on alternative power by 2028. Loblaw has also ordered 25 Tesla electric trucks and is moving to a fully electric fleet by 2030. This would involve adding 350 zero-emission vehicles and more than 2,500 trailers to Loblaw’s fleet. A significant number.
There are over 65,000 Canadian companies whose primary business is in trucking. Many of these companies are small businesses. They are looking for ways to cut fuel costs and increase their competitiveness. Going electric can help.
Finally, I’d like to speak to the effectiveness of the specific proposed measures. The sticker price of electric vehicles is still slightly higher than their gas and diesel powered counterparts. This continues to be a barrier to uptake. Policies like the accelerated capital cost allowance can help to overcome these upfront cost hurdles, then unlocking the cost savings that businesses can enjoy in the long run.
Using tax incentives to accelerate the uptake of EVs and other technologies has a demonstrated history of success.
The U.S. has had a federal tax credit in place to promote EVs since 2009. Last month, a bipartisan group of democrats and republicans proposed a bill to extend and expand that incentive due to its popularity. EV sales in the U.S. have increased from about 17,000 in 2011 to 360,000 in 2018. That’s an increase of 2,000 per cent over the time that the tax incentive was in place.
Norway was also used tax measures to increase EV uptake since the 1990s. Almost 60 per cent of new cars sold in Norway are now electric. These policies work.
In Canada accelerated capital cost allowances have been used for decades to encourage investment in a range of sectors, from computers and software, manufacturing, liquefied natural gas facilities and new mines. It’s a tried and true approach used by various government administrations.
To sum up, a well-designed accelerated capital cost allowance like this one will lower emissions, reduce costs and help our businesses to better compete. Thank you for the invitation to speak today. I look forward to your questions.
Brad Ryder, Chief Executive Officer, Electric Mobility Canada: Greetings, Mr. Chair and committee members.
On behalf of Electric Mobility Canada, I am pleased to appear before this committee to share our association’s support for measures to encourage the use of electric vehicles in Bill C-97, the budget implementation bill. I am joined by the chair of EMC’s government relations committee, Mr. Travis Allan, vice-president of public affairs and general counsel of AddÉnergie Technologies Inc, who, with your permission, may assist if you have any questions related to our testimony.
EMC is the only national organization dedicated exclusively to accelerating the electrification of all modes of transportation and represents the complete value chain of this growing industry in Canada. We represent all elements of the electrified transportation value chain, including automobile and component manufacturers, EV charging providers, utilities, fleet managers, non-profit organizations, owners’ groups and academic and research institutions.
As committee members are no doubt aware, Canada has made significant international commitments under the Paris Agreement to a 30 per cent reduction of greenhouse gas emissions against 2005 levels by 2030. Transportation emissions make up the second-largest source of Canadian greenhouse gas emissions and they have grown significantly since 2005. This means that, without making bold changes in the transportation sector, Canada will have little chance of achieving its Paris commitments.
Canada is blessed with one of the cleanest electrical grids in the world, with over 80 per cent of Canadian electricity generated without greenhouse gas emissions, meaning that increasing EV use by Canadian businesses has a significant positive impact on both greenhouse gas emissions and local air quality.
Increased EV adoption is also likely to support well-paying Canadian jobs. This includes electric bus and charging station manufacturing, areas in which Canada already has leading players. It also includes increased demand for metals used to make batteries, such as lithium, cobalt, copper and nickel, which are all seeing increased interest thanks to increased EV consumption in Canada and globally.
In recognition of the many factors supporting transportation electrification, the Government of Canada has set important targets for EV adoption, striving to achieve 10 per cent light-duty ZEV sales by 2025, 30 per cent by 2030 and 100 per cent by 2040. EMC believes these targets, while ambitious, are achievable with the right mix of policies.
At present, EVs tend to have higher upfront purchase costs than equivalent internal combustion engine vehicles, even though they can have a relatively short and very attractive payback for owners.
Despite the possibility of a positive return on investment, initial purchase cost and availability of charging infrastructure are both important for adoption. Canadian survey and sales data support the position that EV buyers, including businesses, are motivated to purchase EVs in greater numbers when there are economic incentives that effectively reduce purchase prices, particularly in jurisdictions where there are adequate charging stations.
Over 97 per cent of Canadian EV sales since 2011 have occurred in provinces with government-based consumer EV purchase incentives and relatively advanced charging station deployment, namely, British Columbia, Ontario and Quebec.
For these reasons, EMC strongly supports the federal government’s recently announced EV purchase incentive and committed funding to support additional EV charging station deployment. The proposals at issue today, namely, a temporary enhanced first-year capital cost adjustment allowance of 100 per cent for EVs, as well as an accelerated capital cost allowance for EV charging stations and HST/GST support, will have an important complementary impact.
Businesses are rationally responsive to tax changes. Those proposed in the budget bill will make a material difference in the return on investment of purchasing EVs and installing more of the EV charging stations needed to make driving electric accessible to all Canadians. It is EMC’s belief that these changes will be well received by business and will complement other federal initiatives targeted at promoting EVs all in furtherance of Canada’s EV sales and Paris Agreement commitments.
Thank you for the opportunity to present to you today. I look forward to any questions you may have.
The Chair: Thank you, witnesses.
Senator Marshall: Thank you for being here today. Each of you alluded to some of the issues I want to raise. I’ll raise three issues. I want you to respond to them.
A population of these vehicles isn’t large. It’s restricted by the sufficiency of the charging stations. Mr. Ryder, you mentioned that. I would think climate also has an impact and also the extent of the distance covered and the speed achieved.
Could you respond to those? I’m from Newfoundland and Labrador. If I were to leave the capital city, St. John’s, and drive to Gros Morne National Park and I wanted to drive up the Great Northern Peninsula, I don’t think there are any charging stations up there.
Can you talk about the restrictions? You’re saying that the number of vehicles purchased is on a decline because of the rebates. Maybe owners are not having a good experience with their vehicles. I would see all the issues I raise as being issues of concern if I were going to purchase an electric vehicle. Could you talk about that?
Ms. Kyriazis: I’m happy to touch on at least two of those issues. In terms of the car battery electric vehicle ranges, they’re a lot higher than I think many Canadians realize. The average range of all EV models available for sale in Canada is about 360 kilometres per charge. Over 90 per cent of Canadians do not drive more than 70 kilometres back and forth to work on a regular day. I know that you’re mentioning a longer road trip, in which case sufficient, fast, public charging being available along those routes is important.
In terms of the climate impacts, I assume you’re thinking of the cold weather impacts.
Senator Marshall: I am.
Ms. Kyriazis: Weather impacts and patterns of use have an impact on batteries. They also have an impact on internal combustion engine vehicles and conventional cars. We can point to a study that looked at the impacts of cold weather climates on electric bus batteries. The City of Edmonton did the most comprehensive study in North America on this before they committed to purchasing 25 electric buses. They tested the performance of electric buses in the deep freeze of Edmonton’s winter and found that they performed comparably to diesel-powered buses on regular bus routes. They can be implemented in a cost-effective and reliable way even in colder temperatures.
In terms of the speed, I’m not sure if one of my fellow witnesses has more to say on that issue.
Mr. Nantais: If I may, senator, I have a couple of things to add. Often people like to present a very positive view of and perspective on the performance of electric vehicles. There’s no question that battery development has come a long way. The distance that one can now travel is much greater than it used to be.
I would suggest that, on average, a 340-kilometre distance is at the high end range, not necessarily in our view on the average end.
I mentioned all-climate performance. There’s no question that Canada’s cold environment does play havoc with one’s distance to travel and battery performance. Depending on the vehicle, the type of battery and the load that’s placed on that battery in terms of the vehicle operations and even driving behaviour, can drastically change the battery performance and distance travelled.
You could see as much as a 60 per cent reduction.
Senator Marshall: That’s significant.
Mr. Nantais: I’m not saying this to discourage, because, as I said, a great deal of progress has been made. These are still the realities and some of the challenges that we face in terms of new electric vehicles.
We will get there, believe me. When we talk about recharging and given the distances that one can travel with certain batteries and the climate, clearly, there’s a need to expand the infrastructure. Many of the new vehicles will require at least stage 2 recharging units. If one wants to travel, as you suggest, a little farther than just a simple commute day-to-day, which is not a bad thing, then one has to look at the inner city arrangement or the inner city network of recharging stations that would enable both consumers as well as, ultimately, fleet managers to use electric vehicles to their maximum.
Senator Marshall: How long would it take to recharge your battery? My understanding is that some recharging stations can do it faster than others.
Mr. Nantais: That’s true.
Senator Marshall: That’s correct?
Mr. Nantais: That is a correct statement. Depending on what level of recharging unit you have, it can vary. Generally, the next or higher generation of recharging units takes a lot less time. That’s why, when you start looking at inner city highway corridors you will probably see recharging units there that are at the highest level, so that when somebody comes in to get a coffee or whatever, they can plug in their vehicle and in a relatively short time have that vehicle recharged or at least sufficiently to get to the next stage.
Senator Marshall: Thank you.
The Chair: On that same question, Mr. Ryder, I believe you would like to have Mr. Travis Allan, Chair of the National Government Relations Committee of Electric Mobility Canada come forward. Mr. Allan, please come forward.
Travis Allan, Chair, National Government Relations Committee, Electric Mobility Canada: I have some important things to add. Thank you, Mr. Chair and senators, for having me here. My colleague Brad recently joined our organization. We’re delighted to have him. We thought it might be helpful to have someone from the charging industry visit in case there were any questions related to EV chargings, which it seems there were.
I’m the Vice President of Public Affairs at AddÉnergie Technologies Inc. which is the largest Canadian manufacturer of electric vehicle-charging equipment. We have a factory in Shawinigan, Quebec, where we produce a range of charging equipment, including home residential charging units, which we call level 2. They typically charge like a dryer plug. It’s about a 240-volt plug. We produce all the way up to direct current fast-charging, which is what you would use in a corridor if you were looking to get a quick charge while you go in someplace to grab a bite to eat on a longer drive. The current market standard for those is a 50-kilowatt-hour charger.
Depending on the climatic condition — if it’s cold or warm — and how far people are charging, you can typically get a complete charge for a normal electric vehicle in 15 to 25 minutes. That will take you to around 85 per cent of a charge. Then you need to slow down in order to protect the battery of the car.
The reason the numbers can challenging is because there are some technical constraints. However, we find that as you get more charger penetration in areas, like we’ve got in Quebec and as British Columbia is starting to do — New Brunswick has a network by New Brunswick Power called the eCharge network, which is expanding. Most users start to feel very confident, because they plan out their trips and know where they drive. As Ms. Kyriazis said, people typically charge at home 80 per cent of the time. This usually comes up on a longer trip.
Senator Pratte: Thank you to all the panel members. My question is on business adoption rates of EVs. Since the apparent possible reduction in costs and reduced maintenance requirements, why don’t businesses buy electric vehicles? Why haven’t they really gone electric before these new tax measures? Why are these tax measures necessary?
Mr. Nantais: In the overall context, electric vehicles are essentially a new technology. Fleet owners like to know the technology they’re buying. They like to see the reliability of that technology. They like to see the cost and, as you point out, the maintenance costs of those technologies.
They’ve been working with and buying, historically, conventional internal-combustion engines. They know the costs, et cetera. When you move into new technology, they like to know what they’re getting into. That’s part of the issue, I think. You got a new technology. They want to get familiar with that technology.
Then, around that technology, can I buy a number of vehicles I need at a good price? Currently, electric vehicles are still at a premium relative to the conventional vehicles they’re accustomed to buying. That’s another issue. It’s a big issue.
When you talk about the maintenance, obviously if you have a vehicle that’s a lot more reliable — and even if it costs a bit more money, the reliability might offset that to the point where it’s more positive.
You look at multiple determinants in terms of purchasing a fleet of vehicles. Now that the technology is a proven technology, we need to work on infrastructure, as I think we have all acknowledged. Now they’re at a point of asking how we get that initial cost down.
Vehicle manufacturers, certainly when it comes to passenger electric vehicles, we’re still losing about $10,000 per copy — a loss. Then we get into larger vehicles that need larger batteries and so forth. That could put in question the payload of the vehicle, for instance. Obviously you want to provide a vehicle that has the utility the fleet manager needs to do the job, et cetera. These are all things that they want to consider.
Now if you’ve got some clear indication of what the accelerated capital cost would be, that’s a good thing. That’s something that they can actually pocket. The additional tax treatment is another thing they can look forward to.
It’s the combination on both sides of the ledger in terms of whether it meets the requirements, purposes and utility. Is it at a cost, both at purchase and during operation, that is workable relative to, say, conventional internal-combustion engines?
It’s all of those things together that will determine, as a fleet owner, whether you will buy that vehicle. We’re addressing many of those issues, and much of the technology is proving itself. Now we got to give them something they can actually use to do the job.
Senator Pratte: Ms. Kyriazis?
Ms. Kyriazis: I echo a number of points made by my fellow witness. The upfront cost differential is a barrier. There’s also the longer life span of these vehicles. The average bus lasts about 12 years. Heavier-duty vehicles can be on the road for over 20 years. The uptake will take time, as these vehicles are retired.
I also think there is a lack of awareness about the potential benefits in operation and maintenance costs — the fuel cost savings — that need to be better communicated for businesses to realize what they stand to gain.
Mr. Allan: I wanted to note that you’re quite right, senator, that some leading Canadian businesses have already started adopting electric vehicles. I can think of some examples: Cascades, which is in the paper industry; Bell Canada; and a number of others have already started making important investments in electrifying their fleets or providing opportunities for their employees to charge. That’s really exciting because it gives people who might not otherwise try an electric vehicle the opportunity to drive at work and then contemplate purchasing at home.
We’re also starting to see a number of businesses who are leveraging Canadian telematics technology such as those provided by a company in Ontario called Geotab. That allows businesses to assess which vehicles in their fleets might be appropriate for electrification, based on current battery ranges and driving patterns.
We’re at a point now where businesses are starting to get the tools they need to make informed decisions. The question is not where we’re going but rather how fast we’re going, and whether we can do it at a rate that is needed in order to meet Canada’s EV adoption targets and international climate objectives. The importance of the policies we’re discussing here today is that they have the potential to help more businesses make those investment decisions earlier and help us achieve those targets on time.
Senator Pratte: Thank you. I’ll go on a second round, please.
Senator Neufeld: I thank all of you for being here today. Just a few questions. Some of mine have already been asked.
I live in a cold climate, in northern B.C. — not in Vancouver, so the climate is much different.
We talk about electric vehicles costing more. Give me an idea. A half-tonne pickup is how much more electrified versus gas? Can you tell me? How many dollars is that? Pick another vehicle. I don’t care — a car, if you want.
Mr. Nantais: If I may, senator, pickup trucks aren’t there yet. They’re coming. I cannot give you a specific delta on the price of a conventional pickup versus electrified.
Senator Neufeld: How about a small car?
Mr. Nantais: It depends on the fuel economy and the size of the vehicle versus a comparable-size electric vehicle. It could be as much as $15,000 or $20,000.
Senator Neufeld: That’s the difference in cost?
Mr. Nantais: It could possibly be, which is why the incentives are so critical. The idea of the incentives — and I might add, we support incentives for a definite period of time. Once you get cost parity for conventional vehicles versus an electric vehicle, there are no incentives anymore. We recommend at that point in time those incentives need not be continued. That’s the important thing. It’s about getting momentum to get to that point in time. Some have said 2025 and others have said 2028. As an industry we’re looking more at 2028.
Senator Neufeld: You said electric vehicles are a new technology. I’m an old car guy. They had electric vehicles in the early 1900s, but in any event, the technology today is obviously different from then, but there were electric cars.
Mr. Nantais: I also live in a rural area. I have a problem with charging infrastructure. I also live in an area with a lot of power outages.
When you get into application of pickup trucks and things like that, generally every year or every few years you hit another milestone in terms of a technology breakthrough or a material change or improvement. That doesn’t necessarily mean the cost is going to come down. That cost of the new battery technology may be just as much as it was two years ago until we get more in field experience and volumes increase and those costs come down.
It’s kind of like a moving target to try to pin exactly what the delta is on the price. Rest assured that an electric vehicle pickup truck for the near term versus its conventional counterpart is going to be more money.
Senator Neufeld: The take-up on electric vehicles will already be in the business world in cities where there are short routes and available charging every night or when it’s not in use, if it’s night or day. Would you agree with me on that?
Let’s say where I live, I want to drive to Edmonton. I better get from Fort St. John to Edmonton because it’s my knowledge there is no plug in between.
Mr. Nantais: The point you raise about rural Northern B.C. is an issue we’ve raised with the government of B.C. with regard to the policies they’ve put in place. Businesspeople who need pickup trucks, in many instances, those are their offices. They spend 12 to 14 hours a day in their pickup trucks and they need the reliability and the confidence that they can go from point A to point B.
I’m not going to say the costs will be overwhelming. No. At some point those costs are going to come down and it will be very cost-effective for them, particularly when you look at maintenance and changing technology as we go forward.
I’ve so often said that this will never happen only to be proven wrong. I welcome that because we can’t put a timeline on technology development, but we know that it’s continuous. Progress is continuous.
Senator Neufeld: Joanna — I’ll just call you Joanna, if you will let me do that. You talked about 60 per cent in Norway. What did that relate to? I misunderstood you.
Ms. Kyriazis: Sixty per cent of new cars being sold right now are electric in Norway.
Senator Neufeld: I guess that’s understandable knowing the size of Norway and the population. The population is about the same as British Columbia and Norway would fit comfortably in the smaller part of British Columbia. You can get across Norway in 360 kilometres and there are not a lot of roads. Would you agree with me? I get what you’re saying to say that this is really great this is happening and it is, but only where it’s applicable. I just spoke to Mark in areas where people work out of their trucks. Let me tell you, I know that. I’ve done that for a good part of my life. In cold weather it probably will not work.
Ms. Kyriazis: Norway does have a cold climate so in that regard it’s a good comparator.
In terms of the range issues, again, yes, it’s something that needs to be considered but the technology continues to improve. Ranges continue to improve every year.
In terms of the battery cost, just to get a sense of how fast these changes are happening, since 2001, battery costs have come down over 80 per cent. They’re expected to be reduced a further 45 per cent by 2021. The battery costs are typically half the cost of an electric vehicle.
Technology and range advances and falling prices are all something that we will continue to see. The range questions raise the importance of charging infrastructure, and not just charging infrastructure anywhere but strategically and thoughtfully placed charging infrastructure that I think should consider two points. One is that the charging infrastructure is visible so that Canadians see charging infrastructure. They know they can plug in when they need to. Also, especially for fleet purposes, downtown urban core charging infrastructure where a lot of deliveries are going to be made. We want to have charging there so when the taxi driver is taking his or her break, they can plug in. Or other places that again are strategic like airports where fleets are kind of sitting around waiting for the next passenger, they can plug in. Thoughtfully placed and publicly supported charging infrastructure is very important to increase uptake.
Senator Neufeld: Thank you.
Senator Klyne: Thank you to the panel. Very informative. I’m going to pick up and build on a couple of points that were already made. Through the lens of Saskatchewan, where approximately half of the province is more northern, rural, remote, I can see where these programs will probably fit well across the southern parts of Canada along number 1 where we have corporate centres, critical mass, so on and so forth.
The further out you get, one comment made was that the half-tonne is a working vehicle and that’s their office. It doubles as the personal family vehicle after hours. Many of the ones who create jobs are small businesses. They rely on the half-tonne with torque, payload and long travel. I don’t know when the time will come that will cross for the economics of the electric pickup versus the fossil fuel one right now. I think it’s probably a ways out.
When it comes to the capital cost allowance, I think many small businesses lease. The question around Bell, for instance, it’s probably small vehicles they’re converting to electric. They’re probably leasing those, you would think. I don’t know if the CCA is going to be a benefit or inspiration to them. Can you comment on the vehicles of a business nature that are leasing these small fleets or even leasing their fleets, period?
Mr. Allan: I can’t speak for Bell’s internal arrangements on cars. I acknowledge, Senator, that a number of businesses lease their vehicles and that is a large business where leasing companies would be the ultimate purchasers of the vehicles.
The interesting thing about the way the bill is currently proposed is that it also includes the ability to apply some of the same tools towards charging infrastructure purchases. Even a business that perhaps leased vehicles, if they wanted to create charging infrastructure in their parking facilities, which can be a not insignificant cost, would still be able to take advantage of this and have some benefit.
To your very accurate remarks about trucks, to reiterate, even with the government’s ambitious targets, the 2030 target is 30 per cent of light-duty passenger vehicles. I think there is room in Canada for supporting increased electric vehicle adoption where it makes sense and not pushing people where it doesn’t make sense.
I very much acknowledge if you need a full half-tonne truck, right now, as Mr. Nantais said, no available model. I think that makes sense to all of us. What we would love to do is try and help move along those who can adopt, and for whom it makes sense, so we can take a little bit more time to try and find ways to make those other parts of the transportation pie more sustainable.
Mr. Nantais: One thing, when we speak about pickup trucks, which are coming, let’s remember there is pure battery electric vehicles and then there is plug-in electric hybrid electric vehicles.
I think it’s probably fair to say that for the general introduction of pickup trucks or larger vehicles like that, they will be plug-in hybrid electric vehicles.
The benefit of that, first off, we look at that as a transition technology. The benefit of that is you have a second mode of power and it’s gasoline. You’ve got so much battery capability or capacity to run on electricity for a distance, you also have the added advantage of gasoline, which gets you through the longer distances that you need, particularly in the applications and environments to which you speak about.
Senator Klyne: Okay. Thank you for that. It’s a good point to make.
The reference to — I’m just going to rephrase what you said. You can’t paint Canada with a broad brush and call it done. For northern halves of our country, it will probably be a municipality or a Crown agency that will put in these charging stations, or none at all, simply because the critical mass and the distances are not there. If you did something in between Prince Albert and Regina, say a five-hour drive, how many charging stations would you have to have midway? It just wouldn’t make sense. Is that one of your points?
Mr. Allan: Until now, a lot of investments in fast-charging infrastructure in Canada have been funded by a program that NRCan led, which was targeted at building a coast to coast network for fast-charging stations. That program responded to survey information that has shown again and again that if you want people to adopt EVs, as Ms. Kyriazis said, they need to visibly see there is charging infrastructure available if they want to go on a longer trip. Those investments have had very high ROI in terms of awareness. Now those stations are starting to operate and help people.
That program recently closed another funding round. I’m not sure if any stations yet are targeted for the particular corridor you mentioned, but that has been the plan, to go on major highways.
NRCan has recently launched another program called the ZEVIP, zero-emission vehicle incentive program, which allows a whole range of businesses, municipalities, religious institutions, the whole gamut, also provinces and utilities, to invest in charging infrastructure where it makes sense for their community.
I think the idea is to try to let people use their local understanding and awareness to site those stations rather than a government agency telling them where they have to go. We’ve seen very good adoption in a number of areas. If you don’t have a lot of EV ownership in a particular community, that’s probably not initially going to be high on your list.
Senator Klyne: Thank you. Second round.
Senator Duncan: Thank you to the panel for your presentations. I’d like to share, and I will do this through the clerk, an article that recently appeared in the Yukon News written by an economist, Yukon’s first Tesla powers through winter. It talks about this particular vehicle, how much it cost and how it survived the winter. It’s entertaining, as well as a very good read. It answers a lot of the questions that have been posed today including a lot of the comments. This particular Tesla was $43,000, slightly more than what I paid for my Honda.
I also had the opportunity to discuss this notion with the construction industry on the break. I understand that it’s not difficult to put in the charging station for an electric vehicle. It’s like wiring a dryer, as Mr. Allan said.
My comment is built upon, first of all, providing this to the clerk for circulation to everyone. Following up on Mr. Nantais’ comments about two of the issues being all-weather a concern and public awareness. The answer — and I just build upon the other comments of the 40,000 people in the Yukon, there are more than 34,000 vehicles. Looking at my own driveway, the need is for the pickup truck. It is the family car, it’s the work vehicle, it’s the vehicle of choice for most of Northern Canada, I believe, and probably Atlantic Canada as well. The business uptake, we need that truck.
The other issue to raise and question I wanted to ask, the problem in the Yukon is the lack of power and water to generate that power. We don’t have enough.
On the other side of that, we have a strong tourism industry like Newfoundland. I’m wondering about doing this from the back end in the Field of Dreams analogy of “If you build it he will come,” what would happen if we had the charging stations in the communities, whether they realize they need it now, it would build upon that infrastructure in the country. What does it cost to put in a charging station in a community? What’s the home dryer analogy cost and what’s the cost of the commercial, fast-charging?
Mr. Allan: I can give you general ranges. For home charging stations, there are very inexpensive models. In fact, some people, especially those who drive plug-in electric hybrid vehicles, they just plug right into an AC outlet in the wall. That’s not the recommended approach for a couple reasons. There may be concerns about how it impacts battery health, it can lead to some interesting things happening on the electrical outlet. We recommend that people use a proper electric vehicle supply equipment. Those can range in price from a couple hundred dollars up to just north of $1,000. There the issue is, is it made out of plastic? Aluminum? Our company makes ours out of Canadian aluminum because we want them to work in Quebec and Northern Canada in the winter, but there are many different models. Of course, the aluminum ones are more expensive.
The other key factors, are they connected to the network so they can report your data on how much you’re charging your vehicle and they can link in with the utility demand response program eventually, which can help utilities spread out when people charge. That’s really important. If everybody comes home and plugs in after work and then turns on the hockey game and starts cooking dinner, your local utility distribution might have some concerns. That’s something a number of Canadian utilities are already piloting projects on.
Sorry for a bit of a digression. There is a range. You can buy one for around $1,000. Then installation depends on your building’s existing electrical capacity. Do you have room on your panel for 30 to 40 amps? You’re absolutely right, the installation process can be quite inexpensive with an electrician to hard-wire that in.
We find in many situations, especially where people don’t mind waiting a couple hours, a level 2 charger, but meant for commercial use, is a great choice. If you drive around downtown Montreal, you’ll see large chargers on the street. You can plug in your vehicle, and those can charge 80 per cent of a charge in two to four hours. It can work well for people who are working or staying over. You can have many of those deployed in a mall or a community centre parking lot without impacting the electrical load too much.
Those can range in cost from around $2,000 to, maybe, $4,000 to $6,000, depending on how many bells and whistles and how much you expect it to be used.
For the more expensive DC fast chargers, those typically range in price, I think, from a low of maybe $30,000 or $40,000 to $50,000. The installation costs depend on whether there’s existing electrical capacity at the site. If you’re doing it at a mall or somewhere that has some electrical capacity, it’s cheaper. If you’re doing it on a highway corridor then, of course, it will be more expensive.
Senator Duncan: Most of our goods arrive by truck. It will stay another day and only charge two hours at a time, which is another tourism incentive, or we could have this $50,000 unit and we would have to have them for these large trucks that are hauling freight for Loblaws and Walmart and travel through Fort Saint John north on the Alaska Highway. We’d have to have these charging station for these semi-trucks how far apart? That’s a question.
Mr. Nantais: I don’t know. The sense I’m getting here is we’re talking about class 8 transport trucks. Right now, to apply electric powertrains and batteries and so forth to those types of vehicles, you would basically have to have a trailer for the batteries and a trailer for your load.
Again, it’s one of these things where technology is being developed. We may get there, and maybe batteries won’t be the source of power at some point. Maybe it will be something else like fuel cells or something else again. We don’t know at this point. Knowing what we know at this point, it would take a huge battery capacity to pull a load like that any distance.
I would like to pick up on the infrastructure piece of this. Earlier in the week I was at the Clean Energy Ministerial conference. A representative gave a presentation from a major fleet firm. One of the major costs, aside from the cost of the equipment, was — and you pointed this out, Travis — the installation costs, where taking the power from the building to the outlet sometimes can far exceed the cost of the equipment itself.
There are still some realities that one would have to consider.
Senator Duncan: Thank you.
Senator Forest: Are you ready for the French part of the meeting?
The charging network is a core component for developing the electric vehicle market. Regular charging stations will have to be installed. Previously, four years ago, fast-charging stations cost about $25,000 to $30,000. In a city like Rimouski, it cost $60,000 to $65,000 at the time. All that has an impact on tourism. When gas vehicles came along, we needed places where we could refuel, to develop our region. The question that comes to mind about programs that limit incentives to vehicles worth $45,000 or less, which are generally vehicles with less range, is this: why are the incentives limited to that amount?
The profile of the electric vehicle buyer is currently as follows: generally a woman or a man with a level of education, concerned about the environment, who has reached a certain professional level and is interested in vehicles of higher value.
By limiting the value of the vehicle, a whole host of highly appropriate vehicles are eliminated. What do you think of the $45,000 limit?
Mr. Nantais: That is a question that we asked ourselves at the time the program was announced, because, at this point, it excludes a number of vehicles.
The change made initially, even though the threshold is $45,000, if your base model is $45,000 or less, any other subsequent model and trim line, even though it may be more money — I think it’s up to $55,000 but I may stand corrected — would be eligible.
That was one way to expand the coverage of vehicles. There are some vehicles, of course, and particularly those that have longer-range batteries, that can come in over $100,000. One is then involved in this question: If a person can afford a $100,000-plus vehicle, do they need an incentive to buy that vehicle, or would they buy that vehicle in any case simply because they are affluent enough to buy it?
Again, there’s the cost. I think we’ve all acknowledged here that this market segment is going to grow considerably and very quickly, and then there’s the overall affordability of a program like this. As we’ve seen in every province that has brought forward consumer incentives, the costs are in the hundreds of millions of dollars.
There may well be, as a policy consideration, a question of whether it is affordable to include an incentive threshold or boundaries for what does and does not qualify. Obviously, I know industry and government don’t have bottomless pockets. How do you balance the policy in a way that is fiscally responsible? I think that is the question.
I think they’ve tried to expand coverage. If every vehicle could get it, great. One has to question whether that’s a reasonable policy. Is it practical?
Senator Forest: Developing the market is very challenging. We have seen that, in some sectors such as the taxi industry, which has many hybrid vehicles, owners have understood that there is a cost advantage. They generally live in or around urban areas. The vehicle will operate for 12 hours if they work for 12 hours.
Has industry thought about electric vehicles? I had actually asked the government officials the question. Cities are not eligible, yet they really want to be leaders. Employees who work in security or maintenance or who look after parking meters use those types of electric vehicles and never leave the city limits. Acquiring them would be in the cities’ best interests. Unfortunately, they are not eligible.
Has the industry really thought about those markets? Right now, you have a very niche industry, developing very specialized products and targeting very specific clients. If a manufacturer makes police vehicles, those vehicles will always be within the city limits, and there are no constraints on accessing a network of charging stations, as they are available at the police stations. Today, we have very specialized SUVs, we have the convertibles that disappeared in the 1980s, so we have many niche markets. In terms of electricity, has your industry considered market segments, types of vehicles that often remain in or around urban areas and that could be accessible? Clearly, heavy trucks are a major challenge, and we are seeing more and more buses. Has your industry zeroed in on any market segments?
Mr. Nantais: Right now, some police agencies are already buying electric vehicles. Not in large quantities, but we see evidence in various communities across North America.
If you talk about a high performance pursuit vehicle that is outfitted with a whole bunch of law enforcement type things, that may come. That’s just one application for which a police force may use a vehicle.
When you look at the expansion of the market segments that I spoke about — small sport-utility vehicles going to larger sport utility vehicles — police agencies and municipalities will all have an interest. I would suggest that is happening already and will continue to happen.
When you’re in a fleet like that and you mentioned a fleet where you have geoboundaries, it makes a lot of sense to do centralized recharging. If you have a police pursuit vehicle or something that may not be the immediate purpose for which you buy an electric vehicle. There are other applications that make a whole bunch of sense to purchase for their fleets.
Senator Boehm: I would like to take you south to southern Ontario, in particular the Montreal-Windsor corridor, which is very congested, and you also have a high population concentration.
In the work that you do as you look at this, you’re looking at best practices in other jurisdictions. There are, in the United States, some areas that are quite concentrated as well, also around the Great Lakes. But particularly in Europe, with the turn away from diesel for emission reasons and scandal reasons, there is more focus on electric vehicles. They had a real experience there in many countries. I spent some time in Germany where charging stations are important. It’s obviously a smaller geographic mass to deal with. That’s the one where I’d like to know whether you’re looking at best practices all the way across and at what other manufacturers are doing, for example. I’ll ask my second question because I know we have a time constraint. That is awareness, awareness in southern Ontario, for example, you’ll get it in various ways. Have any of you approached the rental car companies? It is so easy — and many of us do this: We fly into Toronto, go to Avis or Hertz and rent a car. Generally speaking, it’s not big distances that we cover.
Is there a pickup there at all? That could be a great way to provide incentives and distribute the knowledge.
Mr. Allan: I share your frustration about not being able to get a rental electric vehicle. I travel all across the country and it is really frustrating not to be able to live the values that our company wants. That is a real lack. The only solution we’ve been able to find is using an app that let’s you rent someone’s car the way Airbnb works but it’s not a formal rental program. I think that’s a great idea. I’m not aware of any current programs.
To your first question about best practices. I can say that with great assurance yes, we and others in our industry are constantly looking around the world to try and figure out how to do what we need to do in the most cost-effective but also the most user-effective way. We took a lot about coffee table conversations because we know that people aren’t really going to adopt electric vehicles en masse unless they talk to their neighbours and their neighbours say, “It actually worked for me. I didn’t think it would work and it did.” I’m from a small community and that’s the way things work. People trust their neighbours.
That means that the experience and charging needs to be reliable and it needs to work well. One thing we learned from looking at some unfortunate experiences in other jurisdictions is that there were issues around stranding, there were issues around charging stations that didn’t work for the weather conditions. I think you’re starting to see is a lot of competition by good players who are building very high-quality equipment. That was one really key element.
The other thing that we heard from other jurisdictions was: Don’t make this really complicated for users because in some places in Europe or even in the United States you had to have many different cards to use the charging stations. It was very complex when you got there. That, of course, is a point of friction that users don’t like.
We entered into what we’re calling roaming agreements, which are very similar to the agreements that you have when you use your cellphone in a different service territory. The idea is that high-quality charging networks allow you to seamlessly tap your card. If you’re on our network, you can use one of our competitor stations without having to download a whole new app and go through more work.
Those were, I would say, two of the biggest learnings that we took. The one that we’re taking now is looking at some of the most advanced municipalities and charging corridors and looking at what they’re doing, for example, in Amsterdam. How did they deal with the fact that in Amsterdam many people can’t park in a garage because they don’t have a garage, they just park on the street. That’s a problem that we see in Toronto, Vancouver and Montreal. We use curbside charging in that case. How are people dealing with people who live in apartments and condos that might be more expensive for them to install charging? What are the best practices that you can use to facilitate their access? NRCan has been doing some really great work on building codes and trying to figure out a solution.
We’re very fortunate to have a lot of dialogue often facilitated by the Government of Canada with other jurisdictions to try and do it as well as we can. That’s what we continue to do.
Senator Boehm: Are you exporting?
Mr. Allan: Yes, we started selling our charging stations in the United States last year. We’re going to be offering more Canadian-made charging stations there and even more product lines this year.
The Chair: Are there any other comments from the witnesses?
Mr. Nantais: On the issue of public education, when CVMA put forward the framework for the electric hydrogen vehicle advancement program in Ontario, one of the things that we relied heavily on was best practices in other jurisdictions. That program is really based on, even though it’s not operating anymore, that was based on best practices many other jurisdictions. It did two things. One, it made sure that if you were a key stakeholder, in other words, you had something to benefit from in terms of electric vehicles, sales and recharging and so forth and that included dealers and government and even NGO groups that had had direct influence or input, that a committee would form to look at the challenges, opportunities and so forth.
It also ensured that, whether it’s manufacturers or dealers or governments, everybody had a role in ensuring that the public understood the benefits of electric vehicles. That’s something which we’ve seen in Norway, in the state of California and in other jurisdictions. Everybody has something to contribute and benefit from. By doing and having that collaborative approach, not only do you get some of the best expertise at the table but some of the best solutions to the challenges that confront the industry or the advancement of EVs.
The Chair: Thank you. We will now go to second round.
Senator M. Deacon: Thank you all for being here. It feels almost like a training session on electric cars and trucks. It’s very interesting when we compare what we’re learning from other countries, given some of the geographical challenges from Canada.
Earlier, I think it was you, Mr. Ryder, who indicated that 90 per cent of our electric vehicle uptake is taking place in the provinces that have the incentives; Quebec and Ontario and B.C. I know Quebec’s number of vehicles is off the radar over top of the other provinces. It’s about a $14,000 incentive, if I recall correctly from our learnings this summer in Ontario. In mid-July, the premier came forward, this is no secret, and cancelled the electric vehicle incentive program. It was an anticipation and there was an announcement and then there was a period of time when people could, perhaps, jump and get their vehicles and then it was over.
What I’m wondering, and also cancelling the incentive of the $8,000 for the vehicle charging in homes. We can say yes, that was a lost financial incentive. I think there’s probably numbers out there on that piece.
I’m wondering, from Ontario, about the impact beyond just the number of vehicles and the number of uptakes. Does it impact the momentum of this really important work and effort?
B.C. pulled out and then returned, but can any of you provide comments about this — it could be a behavioural aspect — beyond the sheer numbers of purchases of electric vehicles, the impact of that kind of distraction?
Mr. Nantais: Senator, you put forward a very interesting example of Ontario. When the $14,000 incentive was there, basically the percentage of vehicle sales versus the industry sales was about 4 per cent. When that was terminated, it dropped to 0.6 per cent, over a couple of months. That was what I was alluding to earlier. Once you remove the incentive, and given the upfront cost of those vehicles, it really brings into question the value proposition for the people who may be considering electric vehicles.
That’s a problem. It doesn’t mean vehicle manufacturers are going to step away from building them by any means. Whether it’s a province in Canada or the entire country of Canada, the market is not big enough to basically shift market design. That’s why we operate on the integrated basis in North America. It’s the entire North American market where we can use the economies of scale to keep the cost of vehicles down and more affordable for consumers.
We’re also faced with some of the most stringent fuel economy standards that have ever existed. That’s the 17 through 2025 GHG standards that we’ve aligned on with the United States. We don’t have a compliance pathway to meet those standards, which is basically a 50 per cent improvement between now and 2025. We cannot meet those standards without electric or hydrogen vehicles or a multitude of technology pathways.
If one jurisdiction decides to remove those incentives, that’s not going to change the direction of EV development. It changes that market, and the scenario for consumers in that jurisdiction. That in itself is a problem. If we want to make sure that we have the growth that we’ve seen, the year-over-year triple digit growth in some cases, then incentives, infrastructure and public education are key. These are the three principles that we’ve maintained throughout the whole discussion. That’s absolutely critical.
First off, we also have to put in a point of reality. The vehicles are often used as the sole means of achieving our GHG targets for Canada. Nothing could be further from the case. That’s just one avenue.
Even though we say transportation accounts for 25 per cent of our GHG emissions, that’s total transportation. Part of the biggest growth area in that 25 per cent is in commercial shipping. Passenger cars and light-duty vehicles are about 12 per cent of the total. This is why electric vehicles initially are going to be fairly minimal in terms of GHG reductions. They will grow over time.
The State of California has had almost 26 years of mandated sales requirements for electric vehicles. It was for air quality reasons in the Los Angeles Basin. Oddly enough, the improvements, which were quite dramatic and phenomenal, did not come from electric vehicles. They came from improved internal combustion engine vehicles.
That’s a point of reality I want to interject. This is not going to happen overnight. It is very important for the future.
Ms. Kyriazis: I think having the right policy environment in the province and country sends an important message to global automakers. Twenty-nine of the top global automakers announced they’re investing $300 billion in electric vehicles. None of that investment was destined for Canada. I think it’s a mix of general policy uncertainty, introducing a rebate and then pulling it back and just sending a message that the province of Ontario is open for business and open for this type of business. We are going to be able to offer the skill sets, training and facilities to help make the future that these automakers are thinking, which is electric. Many of them have indicated we’re going to help that come to fruition.
Mr. Allan: I generally echo the importance of incentives, as we’ve stated throughout the presentations. Right now, the cost of electric vehicles is higher than the cost of ICEs. It’s important we continue with the government incentives that have been put in place until we see price parity, which some predict may happen within a few years. I think that we are all in agreement on that point.
Then there is the other point about consumer education and the importance of investing in charging stations. On those three points, hopefully we leave the committee with the sense that we’re all in agreement on those three points today.
Senator M. Deacon: Who is the top global producer of electric cars right now?
Mr. Nantais: A good question.
Ms. Kyriazis: Tesla?
Mr. Nantais: Tesla sells the most, I believe. We have to keep in mind Tesla is basically one product manufacturer. The companies that produce in Canada are what we call “multi-line manufacturers.” They’re the ones who not only have to produce electric vehicles for compliance purposes to those regulations I mentioned, recognizing where the market is going. They also have to continue to produce vehicles for the people who live in rural parts of Canada outside of that 400 kilometres. The need for utility and internal combustion engine vehicles will continue for quite a while. That’s a market we can’t afford to abandon at this point in time.
Senator Pratte: I have two short questions. First, Mr. Nantais, we know that 25 per cent of GHG emissions result from transportation. You said passenger cars account for 12 per cent. Is that 12 of the 25? Is that it?
Mr. Nantais: Yes. I may stand corrected. It may be the total contribution. But that’s correct.
Senator Pratte: You said the rest, basically, is commercial shipping. You mean trucks?
Mr. Nantais: The largest increases come from commercial shipping, yes.
Senator Pratte: We haven’t mentioned the details of the accelerated capital allowance, one of which is the upper limit, which is $55,000. Is that adequate? I’m thinking especially for companies who want to buy semis or delivery trucks. I don’t know the prices of these vehicles.
Ms. Kyriazis: My understanding of the incentive is that the $55,000 cap applies to light-duty vehicles but does not apply to medium and heavy-duty vehicles. That’s a 100 per cent accelerated capital cost allowance with no cap.
Senator Pratte: Thank you. I didn’t know that.
Mr. Nantais: That would have been my answer. Canada is going to be looking at the medium and heavy-duty EV commercial applications. When we enter into these types of studies and so forth, it’s really important that the people who build the vehicles and the people who are the fleet owners and so forth be part of those discussions. I will say this, and it’s not meant as a criticism, but we have seen many of those studies being undertaken without any input from the manufacturers.
It’s important that when the department enters into those types of studies they have to have the people who are actually building the vehicles.
Senator Pratte: Thank you very much.
Senator Marshall: My question is for Mr. Nantais. You’re with the Canadian Vehicle Manufacturers’ Association. You might be able to help me.
The government, in its budget book, has indicated that they have set a target to sell 100 per cent zero-emission vehicles by 2040, with sales goals of 10 per cent by 2025 and 30 per cent by 2030.
Do you have any comments? Wouldn’t that depend on available rebates, accessibility of charging stations and types of available vehicles?
Mr. Nantais: Yes, all of those things. Right now, we’re below 4 per cent.
Senator Marshall: Four per cent.
Mr. Nantais: We’re talking about light-duty vehicles.
One has to wonder — it’s now 2019, 2025, it’s conceivable when you look at the rate of EV introduction, maybe the 10 per cent. When we get to five years later, three times that amount, things start to get pretty blurry. And 100 per cent by 2040, I don’t think anybody has a line of sight on that.
Senator Marshall: Thank you very much.
Senator Neufeld: Just to refer back to the question about Ontario cancelling their program for EV vehicles, there was a study done by the Montreal Economic Institute — I’m not familiar with it. They say that with the subsidies that Ontario was giving, the cost of reduction per tonne of GHGs, when you take it all into account, was $523. That’s pretty substantial. There are a lot cheaper ways to get a reduction than $523 in the present market. That’s just a matter of interest.
Joanna, you talked about Loblaws and Walmart buying some Tesla trucks. Mr. Nantais, you talked about a truck would have to pull two trailers, one with batteries and one with a payload. Can you tell me, is that what’s happening? Will Loblaws be pulling two trailers, one for the batteries and one for the groceries?
Ms. Kyriazis: I don’t know if I know enough about the way Tesla semi-trucks are engineered. My understanding is they’re fully electric. Not two trailers. I don’t know.
Mr. Nantais: What I’m referring to, senator, is the fact that at this point in time, where battery technology is at, you have to have a considerable sized battery to meet the demands of that vehicle. The Tesla trucks are concept vehicles at this point in time. I honestly don’t know when they’re coming to market.
Senator Neufeld: Somebody is buying, I think, 150 for Walmart.
Mr. Nantais: What they do is put a down payment, just like on a Tesla 3 vehicle. I don’t think they are in production at this point. I could be wrong, but I don’t think they are in production.
Senator Neufeld: The purchase of these vehicles is something that may happen in the future?
Ms. Kyriazis: I think right now the Tesla trucks are supported by cantilevers that are able to use the overline wires to supplement their charge, and that’s part of the design.
We haven’t talked too much about hydrogen today. We’ve talked a lot about the limitations and the heavy-duty truck applications, whether it’s climate range and weight concerns. Hydrogen fuel cell technology is available and can address all of those concerns. We also have some leading manufacturers of hydrogen fuel cell technology in Canada. There is a Mississauga-based company called Hydrogenics, which is providing hydrogen fuel cells to the largest train fleet in the world, in Germany, and is working with China on the largest hydrogen fuel cell bus fleet in the world. These are technologies now available as we’re waiting for the battery technologies to get them where we need them to be.
There is another company called Ballard Power in B.C., which is a leading manufacturer of hydrogen. That’s a piece of this puzzle. The particular measure we’re talking about today extends to hydrogen fuel-cell vehicles. I wanted to be sure that was raised as an option.
Senator Neufeld: Yes, it is. I’m aware of that.
Senator Klyne: I have two questions. One for Mr. Ryder or for Mr. Allan, I can’t remember which, but there was reference made to some analytics that look at a vehicle and determine if it fits the right profile. Do you happen to know what that appropriate vehicle or driving profile is to suggest that you should convert? Or it makes sense to convert?
Mr. Allan: The thing that makes this such a fun industry to be in, is it’s like being a lawyer. I’m a lawyer, and you can never give a straight answer because it’s always, “well, this but maybe that.”
When you’re talking about a light-duty passenger vehicle, the typical metric to assess appropriateness is basically the normal commuting range. As Ms. Kyriazis already pointed out, most Canadians don’t drive as far as they think to commute back and forth to work every day. Particularly, for a two-vehicle family, what you’re really look at is how far do you have to go to work, and maybe if you do some errands after, how does that line up with the available battery capacities and typical range, all of which is available comparing the current vehicles?
When you start getting into applications like school buses — school buses are the next big wave to go because it’s our kids, there is a huge air quality benefit, and the best part is they’re in the station a lot of the day and they have very predictable routes. They can charge using level 2, which is the cheaper form of charging, lower energy, and you get the air quality benefits and you get to help your kids learn about the environment and be part of the solution.
In those cases, and as Senator Forest pointed out, there are these niche applications where it’s starting to become eminently clear that those will be the next ones to go. We’re lucky in Canada because we have some of the best electric bus manufacturers in the world, as well as hydrogen manufacturers. There are a lot of opportunities.
Definitely when you start getting into the heavier duty applications, I think there is still a lot of technological advancement that needs to be made. Those are assessed based on driving and tonnage.
Senator Klyne: I have another question. My colleague posed a good question that I wasn’t aware of, but from coast to coast to coast, are the costs of electricity significantly different such that one region may be prohibitive or borderline?
Mr. Allan: When you’re looking at the operational costs, you will find that the cost differential tends to be very favourable towards electric vehicles, even in jurisdictions that may not have the lowest electricity prices in Canada. I believe when that assessment has been done in the past — of course, electricity rates vary — it is pretty much always the case that if you ignore the upfront capital cost differential you’ll find that driving an electric vehicle is quite favourable in the short-term.
Senator Klyne: That was Senator Duncan’s question, not mine. My second question goes to Ms. Kyriazis. It kind of plays on the comment Mr. Allan made with respect to air quality benefits. One of your earlier comments was around Canada being the highest emitter per capita in the world, did you say?
Ms. Kyriazis: One of them.
Senator Klyne: This question isn’t to challenge, a theory. I am interested, and as clean energy I thought you might have an answer.
With the vast amount of geographic coverage in Canada with lakes, forests and vegetation, are we a positive emitter or a negative emitter?
Ms. Kyriazis: I believe we are still a positive emitter. I know there has been talk about our vast carbon sinks, including our forests. In response, there have been studies done and they came out with the conclusion that our forests are not net sequesters. The breakdown of organic waste within forests and whatnot also release emissions. Reforestation and conservation efforts are very important for sequestering emissions and carbon from the air, but we can’t say Canada is a net non-emitter.
Senator Klyne: Lakes included?
Ms. Kyriazis: Yes.
Senator Forest: Reducing greenhouse gas emissions is another responsibility for forests.
Senator Pratte: Your name suits you, Senator Forest.
Senator Forest: That’s right. I am interested in the rollout of the network of charging stations. Right now, more and more private companies see this as an advantage, and I am thinking of the St-Hubert restaurants that have invested in the sector. In some sectors, companies use the charging stations because they make a profit and they generate traffic. In areas without the critical mass of private companies, would you not agree that municipalities should be encouraged to develop those networks? There is a clear advantage to developing fast-charging stations over regular charging stations, because we can see the difference in traffic. The station is not occupied for two, three or four hours, and that generates customer turnover.
Should we not encourage and educate municipalities to take a leadership role? I am asking for an answer from the point of view of a user, not from the point of view of a lawyer.
Mr. Allan: I might have been overly ambitious that I not use the translation. I think I heard you ask if it is important that municipalities lead the way. The answer is we will not get there without strong action from our municipalities. They are so important.
It’s not an either-or because we know in Canada and when we look at other jurisdictions abroad, we get the best charging station availability typically where our utilities are involved because of the important issues around providing electrical capacity and figuring out where the grid can afford to have those high-powered charging stations. You need municipal cooperation. There needs to be a mix of fast charging for certain applications and level 2. In Montreal, the level 2 stations have been extraordinarily successful because people who live in condos, for example, can use them to charge.
We need involvement from our provincial governments because they are the ones that control the building codes and the condo or strata acts. Those are essential tools that we must fix in order to allow more Canadians to have access to charging. We are lucky that NRCan has done great work in trying to be persuasive and to change the national model code and provide guidance on how to deal with those issues. The municipalities and provinces are the ones that have a lot jurisdictional authority. They are key players.
Senator Forest: Ms. Kyriazis, Norway is achieving truly spectacular results. It does not only provide incentives to buy. Many measures in Norway encourage the purchase of electric vehicles, such as reserved lanes, free parking, discounts for charging, and even free registration. A whole host of favourable conditions encourage people in Norway to buy electric vehicles. It is not just a purchase credit or a depreciation allowance. Am I correct in making that statement?
Ms. Kyriazis: Yes, that’s true. There is a whole slew of incentives. I’ve got the list right here. No value-added tax on the leasing of electric cars. Electric vehicles are exempt from registration tax. They have reduced licensing fees and annual road taxes, as well as charging-type incentives.
What we’re talking about today is a very important set of measures that helps to overcome one of the top barriers of the upfront cost differential. As one of the senators mentioned, we’ve set these sales targets of 100 per cent by 2040. Those can’t exist in midair. We need to have complementary policies. The ones we’re talking about today are very important. They’re not sufficient. Public charging types of incentives, other types of incentives, whether it’s HOV lane access for electric vehicles, free parking, free charging in certain parts of the city, these are all very good ideas.
Senator Marshall: I have one last question. Senator Klyne said something that tweaked something in my mind.
Mr. Ryder, you were saying 80 per cent of the energy in Canada, electricity generated is clean energy, talking about hydro. Some of our electricity is produced by coal, isn’t it? The whole objective is to reduce our greenhouse gases. We don’t always end up with a net benefit with regard to the reduction in greenhouse gases, do we?
Mr. Ryder: Not always as significant as when the grid comes from non-emitting sources, that is true.
Senator Marshall: Has anybody ever done a study on that?
Ms. Kyriazis: There is a 2017 study done by the Two Degrees Institute that compared on a province-by-province basis. The emission reduction potential on a lifecycle basis. In every province it’s still a net benefit, including Alberta, Saskatchewan and parts of Atlantic Canada, where we are still more reliant on coal. The top of the range was in Quebec and Manitoba, where we saw an 85 per cent reduction in emissions on a lifecycle basis by swapping gas-powered cars for electric cars. Then in Alberta, which was the lower end of the range, it was still 25 per cent net benefit.
Senator Marshall: That’s interesting. Thank you.
Senator Duncan: Sorry, was that study just restricted to the provinces or did it include three northern territories?
Ms. Kyriazis: It included the three northern territories. Yukon was 81 per cent net benefit and U.S. states. I’m happy to share that study.
The Chair: As we close, I have a question and I’d like to also be informative. In order to answer Senator Marshall’s comment and question about electric vehicle chargers, New Brunswick will accommodate any vehicle from east of the Trans-Canada Highway that starts in Sackville, New Brunswick, with Tesla charging centres. Then one also that is 500 kilometres long from Sackville, New Brunswick, to the border of Quebec and New Brunswick on the TransCanada highway. Halfway of that 500 kilometre, you have one in Fredericton to accommodate e-vehicles. Then when we arrive in a big town called St. Leonard, you also have one there.
To the witnesses, I have a question. Do any of you drive electric vehicles?
Mr. Nantais: At this point I don’t. I’m in a rural area that has no recharging. I have a considerable amount of power outages that happen on a regular basis and I have a fairly large commute.
The Chair: Joanna? It’s on the Trans-Canada Highway.
Ms. Kyriazis: I just purchased my very first car a few weeks ago. It is not an electric vehicle in part because we live in an apartment with no access to charging.
The Chair: Mr. Ryder and Mr. Allan?
Mr. Ryder: I don’t for the same reason. I’m also in a condo in Toronto that has no charging capacity.
The Chair: With that, to the witnesses, thank you very much.