Environment Committee on Nov. 6th, 2025

[Barry Penner, Chair, Energy Futures Institute]

Mr. Chair and honourable members, thank you for the opportunity to appear on behalf of the Energy Futures Institute regarding the electric vehicle availability standard, better known as the federal EV mandate. I will address a number of pressing issues.

One is the declining market for EVs. Statistics Canada reports a significant drop in market share for EVs. In the first quarter of this year, zero-emissions vehicles—fully battery electric and plug-in hybrids combined—accounted for about 9% of new vehicle sales, down from 12.5% in the first quarter of last year. In the second quarter of this year, the news got worse, with the share slipping further to 8.6%. This represents a one-quarter drop in 12 months and should be a flashing warning sign for policy-makers.

No battery electric passenger vehicles are currently assembled in Canada. The one EV assembly line in our country—for GM's BrightDrop electric delivery van—was recently shut down due to weak demand.

Meanwhile, Toyota and Honda continue to assemble regular hybrid vehicles here in Ontario, such as the Honda Civic and CR-V and the RAV4, many of which I see around the streets of Ottawa, but under both the federal and B.C. mandates, these vehicles don't count towards zero-emissions targets and could face penalties of up to $20,000 per vehicle in B.C. and Quebec.

While Quebec recently announced plans to award partial credit for conventional hybrids, mandates penalize vehicles that are currently built in Canada while encouraging EV imports, strengthening U.S.-based automakers such as Tesla at our expense. Does this make sense?

Second, the compliance credit system transfers money out of Canada. The EV availability standard allows automakers exceeding the sales target to earn credits that can be banked or sold. Those below target must purchase credits. As mentioned under the B.C. and Quebec programs, they may pay large penalties of up to $20,000 per vehicle if they don't get enough credits. In practice, this directs millions of dollars to high-volume EV producers such as Tesla. We recommend redesigning the system so that credits reward Canadian industrial investment, rather than sending money out of our country.

The third issue is electricity demand and infrastructure. Studies estimate that fully electrifying Canada's passenger fleet will increase national electricity consumption by 7.5% to 15%. That equals up to 19 more Site C dams—that's the recently completed $16-billion project in northeastern British Columbia—or up to four more Darlington-sized nuclear power stations just for vehicles.

Recently, hydro-based provinces have been importing power. BC Hydro's latest annual report shows they imported 8,356 GWh, the equivalent to 14.7% of total domestic load, at a cost of $861 million. While that's down from 24% of imported power last year, which cost $1.5 billion, it still means that one in seven electrons used in British Columbia came from imported power, mostly from the U.S., where roughly 60% of electricity continues to come from fossil fuel generation. Hydro-Québec was also a net importer in 2023, bringing in about 7% of required supply. Manitoba Hydro has at times imported electricity in dry years. Let's not deepen our dependence on the United States, for either vehicles or electricity.

The fourth issue is consumer affordability and inequality. EV mandates risk deepening social inequality. An analysis by Jerome Gessaroli of the B.C. Institute of Technology shows that aggressive EV mandates can raise prices by 20% or more by restricting the supply of non-EV vehicles, with a ripple effect pushing up the prices of used cars that lower-income households rely on. Apartment dwellers also face greater challenges and costs, and rural Canadians face longer travel distances with less public charging infrastructure.

Here are our recommendations.

Rather than using mandates that dictate a specific technology, a proven approach is to continue using Canada's Motor Vehicle Fuel Consumption Standards Act, similar to the U.S. CAFE standards, requiring progressive improvements to average fuel economy across manufacturers' fleets. If some form of mandate remains, we recommend giving at least partial credit to regular hybrids and considering full credit if they're assembled in Canada. We should not allow a desire for the perfect to become the enemy of the very good.

Let's remove the cap on plug-in hybrids so that they can count for 100% compliance provided they have at least a certain minimum all-electric range, and 75 kilometres would cover the daily commute of more than 90% of Canadians. Let's reward Canadian value chain investment, such as critical mineral processing, batteries, charging networks and vehicle assembly, with compliance credits. Also, let's align any targets with infrastructure and affordability; consider changing the target years; require percentages to reflect reality; and work with provinces to ensure the grid keeps pace with EV-related growth.

In closing, vehicle electrification can support Canada's climate goals, but government policy needs to be affordable and aligned with industrial and energy reality.

Thank you.

[The Chair, Liberal, Angelo Iacono]

Thank you very much, Mr. Penner.

Mrs. Smith, the floor is yours for five minutes. Thank you.

[Merran Smith, President, New Economy Canada]

Bonjour. Good afternoon. Thank you for having me.

I'm Merran Smith, the president of New Economy Canada. We're a new initiative that's uniting the industrial, mining, clean energy and technology sectors that are committed to accelerating investment in Canada's clean economy. We represent 410,000 employees and over $200 billion in annual revenues.

I'm also a former board member of BC Hydro, the Crown utility. I'm currently appointed by the B.C. government to conduct an independent review of its climate plan, including its zero-emissions vehicle mandate.

I want to begin by situating Canada's EV availability standard in the context of three trends in the automotive sector.

The first trend is in sales. Globally, sales of internal combustion vehicles peaked in 2017. They're now in decline, with EV sales growing faster than anticipated. EV sales exceeded $17 million globally in 2024, reaching a sales share of more than 20%. This was driven by demand, predominately in Europe and Asia. The global shift from ICE vehicles to electric vehicles continues apace and is inevitable. Why are EVs taking off faster than expected? It's because they're better to drive, cheaper to run and cleaner, and they free drivers from volatile fuel prices.

The second trend is with the auto manufacturers. Around the world, the auto sector is pivoting to secure the critical minerals, supply chains, intellectual property and manufacturing capacity needed to compete in the electric era. We're starting to see it happen here in Canada. In St. Thomas, Ontario, as Matthew mentioned, Volkswagen's PowerCo is investing $7 billion in building an EV battery plant that will employ up to 3,000 highly skilled workers. In just four years, Ontario has attracted $46 billion in new investments, connecting northern critical mineral wealth with southern manufacturing expertise.

For the third trend, let's talk about affordability. Canadians stand to benefit significantly from a greater availability of EVs, because they drastically lower fuel and maintenance costs and deliver cleaner air, which means healthier communities. A Canadian study found that over the lifetime of a vehicle, the average EV fuel cost savings will be $20,000 to $40,000, depending on how much you drive. Another study found that transitioning to EVs and a cleaner grid would result in $115 billion in health savings.

The EVAS is the right tool to help Canada modernize its auto manufacturing sector. It sends a clear, long-term market signal not only to automakers but to the entire supply chain, including the mining sector, battery manufacturers, charging companies and utilities powering the grid. It tells the world that Canada is serious about EVs and committed to the policy certainty that makes it the place to invest in the EV future. If that certainty disappears, Canada and Canadians will ultimately lose out on better cars, cleaner cars and the long-term investments and jobs that support Canadian communities.

There are challenges currently facing automakers and consumers. What can we do about them?

We should calibrate and add flexibility to the current EVAS. I support getting rid of the 2035 prohibition on ICE vehicles. Give people choice. Adjust the 2026 through to 2030 EV sales targets to be more readily achievable. Rebates should be resumed, but with a clear plan to phase them down and end them by 2030 so that both consumers and automakers have certainty.

Ultimately, we need to ask ourselves a simple question: Do we want Canada to have an auto sector for the next five years or the next 50 years? The EVAS isn't just environmental policy; it's also economic policy. Repealing the EVAS would be like doubling down on the horse and buggy, instead of embracing the Ford Model T. If we want to continue to retool Canada's auto sector to compete into the future and capitalize on new opportunities created for the mining sector and battery supply chain, we need to maintain the clear market signal the EVAS sends.

In closing, the countries that are leading the way are combining regulations with consumer incentives, investments in charging infrastructure and—for those that have a domestic auto sector—an industrial strategy. It's paying off.

The EVAS is working, not just in driving down emissions but in offering Canadians a cleaner and more affordable transportation choice, while also spurring innovation and investment in our mining sector, our emerging battery supply chain and a clean and competitive auto sector. Let's retool it and let it work.

Thank you. I welcome any questions.

[The Chair, Liberal, Angelo Iacono]

Thank you.

Mr. Ross, the floor is yours for six minutes.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Thank you.

Mr. Penner, thank you for your submission. Thank you for being here.

This government talks about an electric vehicle future, but refuses to talk about the infrastructure and the cost to allow that future to take place. Your submission talks about national electricity consumption going up by 7.5% to 15%, which would equal 19 more Site C dams, the $16-billion project in B.C. that took years. I doubt we'll ever see another Site C dam completed in B.C. within the next 20 years.

Could you talk more about where we make up the difference? Where does the electricity come from to make up for that deficit in B.C. for electricity? Where is that electricity sourced?

[Barry Penner]

As I mentioned, BC Hydro has been a net importer of electricity now for, I think, three consecutive years. We've had record amounts. We were a net importer in previous years, but historically, we've tended to export as well. We have a record amount of imported electricity due to a prolonged dry spell and below-average precipitation. When we're short, we import primarily from the United States, and that continues today.

I checked this morning, and at one o'clock this morning, we were importing about 1,900 megawatts from the United States to help us balance our system. When we're short, we tend to import, and not just here; as I mentioned in my opening remarks, Manitoba Hydro and Hydro-Québec have in recent years also had to reverse the usual flow in order to make up the difference.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

It's my understanding that we also import electricity from Alberta. Is that correct?

[Barry Penner]

That's correct. British Columbia has an intertie with Alberta. About 75% of the electricity generated in Alberta today comes from natural gas.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

From what we understand, from the testimony from different witnesses, the electric vehicle mandate is possible through rebates and subsidies, but the lower-income citizens of Canada can't really afford electric vehicles, even with rebates and whatnot. Is there a social inequality equation here that this government is not considering?

[Barry Penner]

Yes. Energy Futures has issued reports on this topic. We commissioned Jerome Gessaroli, a business instructor at the B.C. Institute of Technology, to look at this issue.

We all remember that during COVID, when there was an interruption in supply chains and you couldn't get new vehicles, the price of used vehicles shot up dramatically. Who typically buys used vehicles? Lower-income people. Jerome's conclusion is that the electric vehicle mandate will disproportionately punish lower-income Canadians more than higher-income people, who can comfortably afford to buy an EV today and have a stand-alone home where they can securely plug in their vehicle at night to access lower-cost, residential rate electricity. If you live in an apartment building, as 40% of British Columbians do, your challenge is finding access to charging infrastructure. If you turn to public charging stations, you're not paying the residential rate for electricity; you're paying a higher price.

It presents a challenge by accentuating social inequality, rather than overcoming it.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

We've heard different comments about the infrastructure cost. They've been focused mainly on the supply, meaning dams, nuclear power or natural gas turbines, for example. We've also talked about transmission lines and that cost.

There's a neighbourhood-by-neighbourhood cost as well. A cost that was relayed to me is a transformer being installed in a neighbourhood where all of the homeowners would have to chip in to pay for that cost. Has that cost been brought down to the level of each homeowner and neighbourhood?

[Barry Penner]

I don't know. I haven't seen any studies that have looked at that individual cost, but you raise a good point. I talked about the extra amount of electricity that would be required if all of Canada's personal vehicle fleet was transformed to an electric mode. That's daunting. As you mentioned, it would be 19 Site C dams at a cost of $16 billion each. That project was announced in 2010 and it's almost completed now, 15 years later and after a lot of money was spent. That's probably the easiest part of the challenge.

The much more difficult part of the challenge is building transmission lines to move that additional electricity, building the transformers in individual neighbourhoods—no one wants one close to where they live—and then upgrading the distribution system into apartment buildings and older dwellings so that people can charge their vehicles overnight at the same time. That represents a much more daunting task than building 19 more Site C dams.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Your submission talks about needing 19 more Site C dams to fully achieve the EV mandate as put forward by this government. That's a huge cost. That's going to take a lot of time, and we don't have the power, the infrastructure or anything else to actually achieve that.

However, there are first nations that want to use natural gas to produce electricity, for example. The costs you're talking about are strictly to the EV mandate. We're not talking about additional electricity demand, such as what we're seeing in B.C., where we can't even keep up with New Economy in terms of, say, building an AI plant to compete with the United States, for example.

Are there some increased costs we should be looking at in terms of overall electricity demand in Canada, apart from the EV?

[Barry Penner]

Future EV demand represents a very small percentage of anticipated electricity growth in Canada. If you look at British Columbia, at Energy Futures, we recently did a freedom of information request to BC Hydro and found out that they have 7,000 megawatts of unmet industrial demand waiting to be served. That's not EVs. That's for industrial demand that we currently don't have.

[The Chair, Liberal, Angelo Iacono]

Thank you. I'm sorry. The time is up.

Mr. Grant, you have the floor for six minutes.

The floor is yours.

[Wade Grant, Liberal, Vancouver Quadra, BC]

Thank you.

Thank you to the witnesses for joining us.

Mr. Fortier, my first questions are really simple. What are the consequences of us totally eliminating the EVAS, and what impact would that have on consumers?

[Matthew Fortier]

I think that if we eliminate the EVAS, we're sending a signal that Canada's not taking this transition seriously. If we really want to be tracking the investment into supply chain projects, critical mineral projects, battery projects and manufacturing projects, we really do need to be walking the walk, as well.

We need Canadians to be driving these vehicles. That sends a strong signal to investors and to companies that build big projects that we are a country that's transitioning. That would be the first point.

The second point is that eliminating the EVAS sends a signal to Canadians that we're willing to just dump a policy because there's opposition to it, instead of maybe looking at that policy and seeing how it can be tweaked to be made better. There are options to make it better, including incentivizing investment into the supply chain.

[Wade Grant, Liberal, Vancouver Quadra, BC]

Thank you.

Ms. Smith, I have the same question. What consequences would eliminating the EVAS have, especially for consumers?

[Merran Smith]

I think Matthew has covered the investment signal that it sends to companies setting up battery supply chains around the world. People are going to set them up in the next few years, and that's where they're going to be. Then we will be importing that technology. This transition is inevitable, so we should be acting right now to attract those manufacturers to come to Canada.

On the affordability side, it means that consumers are going to miss out on the opportunity to save $20,000 plus, depending on how much they drive. The majority of Canadians do live in urban places, so for those drivers who are driving 50 kilometres or less a day, an electric vehicle is really an amazing new transportation system for them. For rural communities, like I said, I believe that if you want to have an ICE vehicle because you don't think the conditions work for you, I would encourage all consumers to look at it.

However, I believe that everybody should have a choice. If consumers want to buy a gas vehicle, they can, but rural Canadians actually do stand to benefit the most, as I heard Joanna Kyriazis mention in the previous session.

[Wade Grant, Liberal, Vancouver Quadra, BC]

Thank you, Ms. Smith.

New Economy Canada welcomed the review of the EVAS, which ended on Monday. You said that it would be an opportunity to strengthen the policy. How do you think we could strengthen the policy?

[Merran Smith]

I outlined a couple of things.

Because of choice, I think, that's why we need the EVAS: to make sure the electric vehicles come to Canada so that people who want to choose an electric vehicle have that choice. The way I would strengthen it is that I would get rid of the 2035 ban on ICE vehicles, so that people feel like they have the choices they want. I would recalibrate the 2026 through 2030 targets to adjust for the global economic situation we're in, but I'd still keep us on a trajectory to have that electric vehicle standard requiring the sales.

I heard your session before and...the man who had the auto dealership. The truth is that each auto dealership doesn't have to sell a percentage of cars. It's the auto manufacturers as a whole. If you're GM, sell your cars in the urban centres. That auto dealership is not required to sell them. It's the manufacturers as a whole. That dealership is not required to sell them.

Those are a couple of things I would do.

I also would use the credit system in a more effective way. I would use the credit system so that you can get credits for investing in charging infrastructure and for reducing the price of those vehicles.

The last thing I'd say to government is that I do think we need the subsidies to come back. One of the reasons why people aren't buying cars right now is that there's a pause on that subsidy. It's the same with British Columbia, where there's a pause. Anybody who's looking to buy an EV is going to wait until that pause is taken off and there's a clear signal. If there is a subsidy, then let's have it. Let's create a subsidy plan and stick to it, so that between now and 2030 those subsidies can start here and get ramped down, because the cost of vehicles is coming down.

I would also really open up the conversation here about those vehicles from the EU and Asia that cost $40,000 or under for those 21 models of vehicles that are not available to Canadians. In the 1970s, we invited Toyota and Honda to come to Canada and to set up shop here, using Canadian auto workers. Before that, we just had the U.S. auto manufacturers. We did that because those companies were not creating fuel-efficient vehicles, so we invited in the competition: Toyota and Honda. That's why they're here in Canada today, employing Canadians and manufacturing cars here.

There are other companies. It's 50 years later. Maybe it's time for us to be inviting a couple of other companies to set up shop here in Canada using Canadian auto workers and using those metals and minerals from Canadian mines and the Canadian supply chain. What we're seeing at Powerex today is they're using Canadian steel and Canadian cement to build that plant, and that's what we need: more Canadian production using Canadian parts and creating cheaper vehicles for Canadians to consume.

[Wade Grant, Liberal, Vancouver Quadra, BC]

I think I'm out of time. Thank you for your answer.

[The Chair, Liberal, Angelo Iacono]

Thank you very much.

Mr. Bonin, over to you for six minutes.

[Patrick Bonin, Bloc, Repentigny, QC]

Thank you, Mr. Chair.

I'd like to thank the witnesses for being here with us.

My questions are for Ms. Smith or Mr. Fortier.

You talked about restoring a sense of certainty to consumers and industry. In your opinion, has the suspension of Canada's electric vehicle availability standard created uncertainty in the EV market? If so, what kind of uncertainty is it?

[Matthew Fortier]

Yes, absolutely, it creates uncertainty. I also think the support that has been given—