Big news for the auto industry from Quebec yesterday as the province’s government unveiled its 2024 budget. Finance Minister Éric Girard announced the gradual end of subsidies for the purchase of electric vehicles.
Remember that in Quebec, buyers are entitled to a $7,000 rebate on the purchase of an all-electric model, or $5,000 for a plug-in hybrid with a battery of more than 15 kWh and $2,500 if it's smaller. That discount comes on top of the $5,000 offered by the federal government, and it applies to vehicles with a base-model starting price under $65,000.
The discount applies after taxes have been added to the selling price.
As per the government’s announcement, in 2024, buyers will still be entitled to the $7,000 or $5,000 subsidies. Next year, the discount decreases to $4,000 and $2,000 respectively. In 2026, it dropw again to $2000 and $1000. And in 2027, the Roulez vert program will be a thing of the past as far as discounts for the purchase of electric vehicles are concerned.
"You have to realize that the incentive was based on the difference between the price of electric cars and gasoline-powered cars; this difference has dropped significantly over time and a federal tax credit has been added," said Éric Girard.
We knew that the program would not be renewed forever. The same goes for the federal government, which has allocated a certain amount of money to its iZEV program and in principal will end the program when that money runs out. To date, some $400 million have been handed over to Quebec buyers of electric vehicles.
It should be noted that the $600 Quebec discount offered on the purchase of a home charging station will continue to be available. That discount is $5,000 for workplaces and large apartment buildings.
The Roulez vert program was created in 2012 to encourage the purchase of electric vehicles by Quebec consumers.
According to the government, the electric vehicle market is now capable of maintaining its pace without the help of subsidies. Last year, just over one in five new vehicles sold in Quebec was electric.
Currently, there are some 240,000 electric vehicles on the road in Quebec. The provincial government has a longstanding target of reaching two million EVs in service by 2030.
With that 2030 target in mind, eyes will turn now to the sales curve for EVs in the province. In the short term, we should see a surge as looking to make the purchase in the near-future will act before January 1, 2025. But after that?
At the same time, we recently reported an analysis which explained that the cost of manufacturing electric vehicles would reach parity with that of gasoline-powered models by 2027. If electric vehicle prices fall to parity with those of gasoline-powered models, the disappearance of subsidies will have no effect.
To be continued.