Transport Committee on May 2nd, 2022

[David Paterson]

You don't have to convince my company. We have them pouring toward us. If there are people who have orders, the only reasons people are getting slow orders are the other things we were talking about, like supply chain issues with semiconductor chips and the like.

You have a shortage problem outside of the Lower Mainland in British Columbia. I beg to differ. You have a direct correlation between Quebec and British Columbia, because those are the only two provinces that have sales assistants in those provinces. It really doesn't have to do with your sales mandate. I can tell you, as a company that operates in both of those jurisdictions, that our sales of EVs in British Columbia and Quebec are not because of sales mandates; they are because there are more aggressive sales targets.

There is also a better charging network, but it's insufficient.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Paterson.

Thank you very much, Mr. Bachrach.

Next we have Mr. Dowdall. You have five minutes. The floor is yours.

[Terry Dowdall, Conservative, Simcoe—Grey, ON]

Thank you, Mr. Chair.

I want to thank all our witnesses for their testimony. I wish it was broken up into two sections because there's a lot to ask of both, whether it's about the port or the automobile business.

I want to ask a question of Brian and perhaps the fellow from General Motors.

I have Honda manufacturing in my riding. I'm very proud. They got some funding lately.

What I've heard from some of the people in the industry—and I've heard it before—is that it should be industry-driven and perhaps government-driven. Are we looking enough into hybrid vehicles as a better way to move forward, to get that out there and to get to the spot to where we want to be? We're putting in so much effort. That's what I'm hearing. I'm hearing that this is what we want.

I think it's the right way; don't get me wrong. However, as an example, I have people in my riding who buy four- or five-year-old cars all the time, just because they can't afford anything else. We know inflation is up. There are costs and there's a huge segment of society that is going to have to buy used vehicles down the road, which will certainly be difficult.

Do you think from the manufacturing side that they're discounting the hybrid section?

[Brian Kingston]

On that question, I'll pass it over to Dave Adams. He represents Honda specifically.

[David Adams]

Thank you, Brian.

Thank you very much for your question, Mr. Dowdall. I appreciate it.

You're right that when we look at the challenge that's before us—and it speaks to the previous question as well—what we need to look at is a wide range of options to get to where the government wants to go. I think the whole industry is of the view that our focus should be on the reduction of greenhouse gas emissions from transportation, and not on a particular technology that gets put on the road.

This is going to take, as you say, the wide spectrum of electrification, from conventional hybrid electric vehicles to plug-in hybrid electric vehicles to pure BEVs and fuel cell electric vehicles. We need all of that, and then we also need, frankly, renewable fuels and low-carbon fuels for the existing vehicles on the road.

Thank you very much for that question. I appreciate it.

[Terry Dowdall, Conservative, Simcoe—Grey, ON]

David, do you have your hand up to speak or was your hand just left up?

[David Paterson]

I don't think Honda would mind my pointing out that we have a partnership for electric vehicle development and batteries in North America.

At General Motors, we decided to go to pure battery electric and not skip steps with gasoline vehicles that also have a little bit of battery support in them. We do believe we can get to the point where we can sell full-battery electric vehicles at a very cost-competitive rate and that we should put our heads down and get there because, frankly, it cuts more greenhouse gas.

Every company is going to have a different pathway and strategy, and investments that go with it. We should support them all in that movement. I don't think there is a silver bullet in this; there's silver buckshot.

[Terry Dowdall, Conservative, Simcoe—Grey, ON]

As a follow-up to that, I don't know if we're putting the cart before the horse particularly, and I'm more speaking about here in Ontario, but do we have the infrastructure if everyone starts buying these vehicles? What date are we looking at?

That's my concern as well, because the system will fail if we start selling all kinds of vehicles and we don't really have the infrastructure. We'll have one of two things. Perhaps there will be brownouts or people will just be frustrated with their purchase.

[Brian Kingston]

Yes, I can answer part of that.

There are two components to it.

First of all, no, we don't have the infrastructure. We're not even close. The federal government committed to 50,000 public chargers in the most recent budget. According to our estimates, a fully electrified fleet will require upwards of four million publicly accessible chargers, so we're not even remotely close to what will be required.

Second, from an electricity generation perspective, it's very important that the federal government is coordinating with utilities, provincial governments and grid operators. If we do achieve the levels of ZEV adoption that the current targets are putting us on track for, there will be a spike in energy demand. We have to make sure that it's managed appropriately, because the last thing you want to do is have someone make a shift to an EV and then be frustrated by energy prices or by a lack of charging and then go back to a gas-powered vehicle. We must avoid that outcome.

[Terry Dowdall, Conservative, Simcoe—Grey, ON]

Thank you.

[David Adams]

Mr. Dowdall, I think the important thing too is that this infrastructure needs to built out now. It needs to precede the vehicles coming to the road to give consumers the confidence to actually purchase them.

[Terry Dowdall, Conservative, Simcoe—Grey, ON]

Thank you.

Do I have time for more one quick question?

[The Chair, Liberal, Peter Schiefke]

I'm sorry, Mr. Dowdall. That was your five minutes on the nose, so that's very well done.

Mr. Badawey, the floor is now yours. You have five minutes.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chairman.

I'd like to drill down a bit on some of the comments that Mr. Kingston had made with respect to mandates.

Mr. Kingston, you argue that a ZEV mandate will take us out of regulatory alignment with the United States, yet is it not the case that multiple American states have committed to ZEV mandates of their own?

Can you comment on that, please?

[Brian Kingston]

Yes, thank you.

This industry exists because we have a long history, since the 1960's, of regulatory alignment with the U.S. We build cars for a North American market. Not only has the government chosen to put in place the ZEV sales mandate, but it is out of line with the federal U.S. That's the key.

You are right that some states have this, but at the federal U.S. level, there is no ZEV sales mandate, so we are now coming out of long-standing regulatory alignment with the U.S., which is very serious and should be avoided. That is a significant change.

Not only that, but the government has now misaligned its sales targets for the United States. We were currently on track, previous to the emissions reduction plan, to target a 50% ZEV sales rate in 2030. The federal government has changed that to 60%.

What underpins all of this is that we have aligned emissions regulations with the federal EPA. We cannot move out of alignment. It would make investment in Canada a challenge, and there is no reason to do so. The Americans are on the same track as us. We have to work with them and keep our alignment in place.

[Vance Badawey, Liberal, Niagara Centre, ON]

With that said, Mr. Kingston, is it not the case that 14 American states, which account for nearly 40% of new U.S. car sales—namely California, Connecticut, Maine, Maryland, Massachusetts, New York, New Jersey, Oregon, Rhode Island, Vermont, Colorado, Washington, Virginia and Minnesota—have adopted ZEV standards?

[Brian Kingston]

That's correct. California is the most significant of those markets.

[Vance Badawey, Liberal, Niagara Centre, ON]

In fact, the U.S. is quickly adopting the ZEV mandate at the state level, and the risk to Canada of regulatory misalignment is actually more in going too slow in doing the same.

[Brian Kingston]

I disagree, because we align with the federal EPA, not with individual states. We can't start aligning our regulations with individual U.S. states.

[Vance Badawey, Liberal, Niagara Centre, ON]

Is it not the case that other countries as well are also committing to ZEV mandates—for instance, China and South Korea? Won't countries that have ZEV mandates be prioritized when it comes to securing ZEV vehicles from manufacturers? After all, the ones you represent are still going to want to sell vehicles in these markets as well, no?

[Brian Kingston]

No, because if you look at the four leading ZEV jurisdictions in the world, you see that none of them has a ZEV mandate and none of them has had issues accessing the vehicles that their consumers demand.

[Vance Badawey, Liberal, Niagara Centre, ON]

I'll go in a different direction with respect to the commissioning of a study by Transport Canada. Is it not the case that a February 2020 study commissioned by Transport Canada found that nearly 70% of dealerships in Canada do not have a single EV available to purchase or test drive, and that wait times of three to six months were common?

[Brian Kingston]

Yes, I'm familiar with that study. It actually found a significant increase in ZEV inventories across Canada. ZEV inventories are prioritized where there is ZEV demand, so a dealership that sells one ZEV every year will not carry 10 ZEVs on its lot, because there's no one there to purchase them. Dealerships where there's a lot of demand and a lot of interest will stock those vehicles.

Looking at country-wide inventory levels and dealerships in rural areas, for example, where you see no demand, that's not an issue until the demand increases for those goods.

I would also note, given everything we've outlined here, that there are real supply chain challenges with respect to all vehicles. Regulating sales in a supply-constrained world doesn't solve that challenge.

[Vance Badawey, Liberal, Niagara Centre, ON]

While the overall availability of ZEVs has improved compared to previous reports, is it not the case that currently the majority of dealerships in Canada still have zero ZEVs in inventory?

[Brian Kingston]

The current situation is that most dealerships have very little inventory of all vehicles.