Environment Committee on Nov. 25th, 2020

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Here's the thing, Mr. Wudrick. Around the world there are jurisdictions that are really leading when it comes to the transition to zero-emission vehicles. Among those jurisdictions, do you know of any that lack or that don't have a zero-emission vehicle incentive like the one that you're so opposed to?

[Aaron Wudrick]

Not to my knowledge, but the question is, when do we reach a critical mass? I think we know the answer to that. We're going to reach a critical mass of take-up when the price point drops to a significant point where they're competitive with other vehicles, and that's not going to be achieved by a $5,000 subsidy at a $55,000 price point.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Here is my last question for you.

Part of your argument around low-income Canadians has merit. You expressed some willingness to look at changes to the incentive program. What specific changes do you think would best allow lower-income Canadians to buy zero-emission vehicles in the context of an incentive program?

[Aaron Wudrick]

To be clear, we don't support this approach, but if you were going to do it, lower the ceiling. Right now it applies to vehicles that cost up to $55,000. I think lowering the ceiling would ensure that the money is more likely to go to people who could use the subsidy rather than to those who are just happy to get it.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Wudrick.

I'll go back to Mr. Breton.

In British Columbia you can buy a used Nissan Leaf for about $12,000. That's pretty affordable, especially given the very low operating costs.

Have you thought about what kinds of incentives could be used to help lower-income Canadians purchase zero-emission vehicles and contribute to this larger policy goal that we're trying to achieve?

[Daniel Breton]

Yes, actually we have. We support some kind of rebate for used EVs or PHEVs in Canada. Actually, there is a rebate in B.C. There's one in Quebec as well.

For people who can't afford or don't want to pay for a brand new vehicle, whether a gas vehicle or an electric vehicle, getting people to come on board with EVs or PHEVs that are used is not an issue for us. We think it only makes sense.

I would add that the average purchase cost of a gas vehicle in Canada in 2019 was over $40,000, and now we see that gas vehicles at a very cheap price point, such as the Honda Fit and the Nissan Micra, are all disappearing. Now the beginning price point of a vehicle is not $15,000 anymore; most cars cost $25,000 at least.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

We'll go to the five-minute round now, starting with Mr. Redekopp.

[Brad Redekopp, Conservative, Saskatoon West, SK]

Thank you to all the witnesses for being here today.

I want to start with Mr. Wudrick and carry on with this theme a little bit, just to recap what you were telling us.

It was interesting to hear the story of Tesla, which essentially gamed the system to get the Model S in under that price point so that it could qualify for the program.

I share your view that a $55,000 vehicle would be a luxury vehicle for most Canadians. Just comment a bit on this. Essentially what we're doing is subsidizing a vehicle that a wealthy person is going to buy, but at the same time we are not really helping out the person struggling to get by who is buying the $25,000 vehicle.

Is there a policy rationale for this that you can figure out?

[Aaron Wudrick]

Not really. There is good intention here; I understand what the government is trying to do. I don't think anybody objects to the idea that we would be better off if people were driving cleaner vehicles. I think that's a noble objective. The question is whether the policy is actually doing that. If there is evidence, we have not seen it, and I think that's something worth investigating.

The reason for the subsidy, again, is as I said that these cars are very expensive. I think we need to ask ourselves whether mass take-up, in terms of market share, is ever going to happen unless the average price point reaches a point where these become competitive, so that mass numbers of Canadians can purchase them.

[Brad Redekopp, Conservative, Saskatoon West, SK]

Right. You're probably well aware of NDP's position on this government, in fact the reason we still have a government, is that the NDP has been supporting the Liberals on key legislation that they've been bringing forward. To hear the NDP support for this incentive, which benefits primarily the super rich, is thus a little rich, given that they also at the same time support the Liberal carbon tax policies, which affect the working class.

Do you think it's a little rich in that sense?

[Aaron Wudrick]

Look, I just think we need to separate the intention from the outcome. I think most folks and all parties have good intentions, but that doesn't mean that the policy is going to be designed in a way that actually achieves the outcome.

I just don't see that this policy is doing so.

[Brad Redekopp, Conservative, Saskatoon West, SK]

In my riding, Saskatoon West, people are concerned about Jagmeet Singh's comments about holding up this Liberal government.

You've seen these incentive programs. As you think ahead, can you comment on some economic devastation that an NDP-Liberal coalition will do to Saskatoon, with environmental policies going in this direction?

[Aaron Wudrick]

I would just say that we have to remember that there are costs involved here. When we undertake policies with a good intention, there are collateral effects. That's the reason the government, with the carbon tax, for example, introduced the rebate. We don't believe the rebate always compensates people to the point that the government claims, but they recognize that there is a cost. That's why they introduced the rebate.

I think that applies to other policies. This is a policy that costs money. This is $300 million that could go to any number of other things, including things that might be seeking the same objective but do a better job of it. I think we have to be mindful and not waste money. Especially with measures like this, if you're going to target the money, target it where it's most needed. I would suggest that the people who can afford a $55,000 vehicle are not the most needy.

[Brad Redekopp, Conservative, Saskatoon West, SK]

Thanks.

Mr. Adams, I was looking through your notes. On the one hand, you're saying that supply will lag demand. I think this gets a little bit to the point we were just speaking about. You said that supply will lag demand “for the immediate future”, and therefore having short-term regulatory interventions is “out of step”. But in your recommendation three, you want the government to re-fund the ZEV incentive program.

To me, those are inconsistent. If the issue is that there is more demand than supply, then why do we need an incentive for that? The demand is there. The cars will get bought. People have the money to buy the Teslas. Why do we need the incentive program at all?

[David Adams]

The demand is there because the incentive is there. I think that's what's been proven in British Columbia and to a lesser extent in Quebec. British Columbia had a market penetration of about 9% ZEVs because they have had an incentive in place for the last many number of years. That is now stackable with the federal incentive. The same is true in Quebec as well.

Some might ask if an incentive is a good thing or a bad thing. I think Mr. Wudrick makes a good point; if you do the analysis in terms of cost per megatonne reduction, is this the best mechanism to spend money on? Maybe, maybe not; but the reality from the automotive industry is that those vehicles will not sell unless there is an incentive in place.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

We'll go to Ms. O'Connell.

Ms. O'Connell, are you ready to take part?

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Yes. Thank you, Chair. I had some Wi-Fi issues earlier.

I want to first pick up on this idea that was exchanged in the last round, that somehow incentives support vehicle purchases of $55,000 but not $25,000. They absolutely would. This notion is absolutely ridiculous. There is an upset limit. I want to clarify that for the record.

The other point that I think is important is the incentives to ensure that manufacturers are in fact investing in Canada. I come from Durham region. GM is here. Manufacturers across this country were on the verge of closing. All those workers would have been laid off if it weren't for electric vehicles and retooling in our country. I find it a bit rich, especially from the Conservatives, that they talk about taxpayers and protections but they don't seem to care about the workers who are actually making these vehicles in our community and in our country. I wanted to start off with that point. They forget that it's actually taxpayers receiving the benefits of these incentives, not to mention the environmental benefits as well.

On this point, I want to ask a question that perhaps you can answer, Mr. Adams. In some of our briefing documents, we have information that manufacturers could lose approximately $12,000 U.S. per vehicle just from retooling, resetting or re-establishing these vehicles within their fleet. One, is that a figure you would agree with? Two, do you or the industry have an idea of when that loss could over time be incorporated into the normal course of business, which would reduce costs overall and then reduce some of the need for these incentives to encourage manufacturers to move to electric vehicles?

[David Adams]

Sure.

I would start by saying that I don't believe at this point there's any manufacturer that is making money on a zero-emission vehicle. The quantum of that inherent loss is debatable, but there have been public figures out there in the neighbourhood of $9,000 to $15,000 or something like that. Again, it would depend on the vehicle.

As you know, the chief source of cost in the vehicle is the battery, so when the battery cost comes down significantly, which it is doing rapidly, then we'll get to a situation where we're coming into cost parity, where—to Mr. Wudrick's point—we wouldn't need a subsidy or an incentive anymore because the vehicles would cost the same amount.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

Do you have some idea of a time frame of where you would be in a position of cost neutrality, if not profit, which is the ultimate goal?

[David Adams]

In terms of cost parity with ICE vehicles, there are numerous dates out there. By the end of this decade is generally conceived to be a fairly accurate time frame.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

Mr. Breton, you talked about California's being a leader, and frankly, there are other countries and jurisdictions around the world.

Can you speak about any jurisdiction that has successfully integrated and built up domestic production of EVs without offering consumer incentives to change consumer purchasing patterns?

[Daniel Breton]

I haven't. I can't. All of them have included....

To us, what we see as the best pattern is to have rebates—subsidies—for the purchase of electric vehicles, as well as regulation. They go hand in hand.

With regard to the last question you asked, I remember when Toyota came out with the Prius 23 years ago. It was said, “You'll never make money out of this.” The former VP of GM said it was a joke, a PR stunt. Now, there are over 10 million hybrid vehicles sold. They're making a lot of money, and they're saying that they're making money with them.

Someone from Ford said that the first Mustang Mach-E that will be out on the market in a few months will make money, so it's not 10 years from now; it's right now.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you very much.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you very much.

[The Chair, Liberal, Francis Scarpaleggia]

Go ahead, Ms. Pauzé.