Evidence of meeting #17 for Environment and Sustainable Development in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was vehicles.
A recording is available from Parliament.
Liberal
The Chair Liberal Angelo Iacono
Thank you very much.
For six minutes, Mr. Fanjoy, the floor is yours.
Liberal
Bruce Fanjoy Liberal Carleton, ON
Thank you.
Mr. Reuss, we've talked about how, at present, there is a higher upfront cost that's overcompensated for by a lower total ownership cost over a lifetime. If it was easier, perhaps with the return of an EV subsidy, to make it possible for Canadians to make the switch sooner, would the supply of EVs in Canada be there to meet that demand?
President and Chief Executive Officer, Canadian Automobile Dealers Association
Let me start by saying that while operating costs for the individual are less over the life cycle of an electric vehicle, that is in no way enough to overcompensate for, as was said, the initial price difference that still exists in the market between an EV and a vehicle with an internal combustion engine.
The incentives that were in place reduced that gap somewhat, but they have now completely gone away—
Liberal
Bruce Fanjoy Liberal Carleton, ON
If I can interject, are you saying that the total cost of ownership of an EV is greater than for a combustion engine vehicle?
President and Chief Executive Officer, Canadian Automobile Dealers Association
No. It is lower than for an internal combustion vehicle, but that amount, that life cycle cost that's lower does not overcompensate for the upfront difference in the price, meaning that if there is a price gap of $10,000, your life cycle cost difference might only be $1,000 or $2,000.
Liberal
Bruce Fanjoy Liberal Carleton, ON
However, you would agree that over the lifetime of the vehicle, a consumer would pay less for an EV.
President and Chief Executive Officer, Canadian Automobile Dealers Association
That depends on what he is paying up front as the price.
Liberal
Bruce Fanjoy Liberal Carleton, ON
Okay.
It also depends on the distance that people drive, because the farther you drive, the greater the benefit from lower operating costs. Could you explain to me how, when people drive longer distances in rural parts of the country, that would not benefit rural Canadians?
President and Chief Executive Officer, Canadian Automobile Dealers Association
The problem for them is that they can't make that long trip because the charging infrastructure is not there for them to complete the trip. The sparse charging infrastructure currently in place unfortunately is not functional a lot of times. You might start out on a trip of 400 kilometres, assuming that there is is a charging station at 200 kilometres that you can stop at for 40 minutes and have a Tim Hortons and then keep driving on, but when you get there, all of a sudden that charging station is not working.
By the way, you have to stop for 45 minutes, not the five minutes needed to gas up.
Liberal
Bruce Fanjoy Liberal Carleton, ON
In the majority of cases, and I would venture the vast majority of cases, even in rural parts of the country—I live in and represent one myself—people are driving for everyday needs. I realize there are extreme cases in which you might have to drive farther, but usually it's every day, and you return home at night or at the end of the day and you can charge at home.
Why would that not be beneficial for people? Why would we not want rural Canadians to save money with an electric vehicle?
President and Chief Executive Officer, Canadian Automobile Dealers Association
It's not that we're saying we don't want them to save money. What we are saying is that the infrastructure is not there to support that use case of those electric vehicles in those areas.
There is, however, a very good use case for other technologies, such as hybrids, that are already coming into the market. However, we're not accounting for them strongly enough in any targets or regulations that we're putting in place—hence our concrete proposal to include all types of hybrids, not just plug-ins, in any adjustments that are made.
Liberal
Bruce Fanjoy Liberal Carleton, ON
Mr. Bernard, you're an economist. Economic history is littered with industries and companies that failed to adapt fast enough to new and superior technology.
What would you foresee being the impacts on the Canadian automotive industry—we all can agree we want to maintain a strong industry here in Canada—of moving too slowly in the face of shifting technology and market demand?
Chief Economist, Canadian Automobile Dealers Association
Thank you for your question. I think it's pertinent.
I would also say that the study of economic history is rooted in data, and the history of the data of the EV market is that it's not moving too slowly. It's quite the opposite. The supply side of the equation, which the EVAS is about, is following a trend that's meeting what the market is demanding. The data is proving that if that EVAS curve goes too fast for the demand curve, that gap is going to generate negative effects that are not related to technology that's going too slow or too fast. I think they're more related to a policy that might have been adequate for a context, and in a new context, it doesn't make any sense to go further.
That would be my economic history take.
Liberal
Bruce Fanjoy Liberal Carleton, ON
Are you familiar with the global market where EV adoption is the fastest in the world?
Chief Economist, Canadian Automobile Dealers Association
It is Norway, yes.
Liberal
Chief Economist, Canadian Automobile Dealers Association
It's a fair argument. The thing about Norway is it never put in a mandate. They didn't choose the technology. They made it very enticing to choose one, and that's on the demand side of the equation, which, once again, is not the goal of the EVAS.
It's also a centralized country where there was no difference between what it was doing—
Chief Economist, Canadian Automobile Dealers Association
I'm sorry.
Thank you.
Liberal
The Chair Liberal Angelo Iacono
Thank you, Mr. Bernard.
Mr. Bonin, you have the floor for six minutes.
Patrick Bonin Bloc Repentigny, QC
Thank you, Mr. Chair.
Good morning, gentlemen. Thank you for being here.
Mr. Kingston, you said that billions of dollars were paid to Tesla to buy credits. Is that what you said?
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
Yes, that's right. The way it works is if a company can't meet the mandated target that the EVAS has established, you have to buy credits, so yes, it's billions.
Bloc
Patrick Bonin Bloc Repentigny, QC
I’m sorry to interrupt you, but I know how it works. I just wanted to confirm that you spoke about billions of dollars.