Canadian consumers are buying more and more electric vehicles and plug-in hybrids. The shift to electric mobility is well underway. But, in the form of the federal government’s iZEV program, there is a cost to Canadian taxpayers.
In 2023, the discounts handed out by Ottawa under the banner of this program reached $712.6 million, nearly triple the amount in 2022, when $260 million was allocated in subsidies. Clearly, the IZEV (Incentives for Zero Emission Vehicles) program is a success.
The federal government grants up to $5,000 for the purchase of an electric vehicle or a plug-in hybrid with a range of at least 50 km (the subsidy is $2,500 otherwise).
A number of other provinces, led by Quebec and British Columbia, also have programs that allow vehicle buyers to benefit from discounts on purchase or lease of EVs.
In 2023, incentives helped manufacturers sell 146,000 zero-emission vehicles in Canada, which represented an increase of 150 percent over 2022.
Country-wide, the percentage of sales of zero-emissions vehicle currently hovers around 12 or 13 percent. British Columbia and Quebec have passed the 20 percent mark, thanks to their healthy additional discounts.
Of note, the discounts have already been reduced a little, without affecting demand.
Longer term, the program will have to come to an end sooner or later; the state cannot subsidize the auto industry indefinitely.
It’s very likely the government money spent on EV discounts will continue to increase in 2024, if only because sales of electrified models will continue to rise. For one thing, more and more buyers are ready to take the plunge, and for another, more and more new models are reaching the market.
At present, just over 50 vehicles from 25 brands are eligible for EV discounts. Cars priced at over $65,000 and SUVs over $70,000 are not eligible.
Among automakers, it's no surprise that Tesla has benefited the most from the discounts, as reported by Automotive News Canada. Buyers of its vehicles earned $217.8 million in savings. Hyundai, which has five eligible models (including three all-electric), came second with $83.4 million. Toyota and Chevrolet, at $72.6 million and $66.7 million, follow in order.
For the time being, the iZEV program, which came into being in 2019, is scheduled to run until March 2025, or until funds run out. In 2022, it was allocated an additional $1.7 million, until 2025. The government always has the option of adding more funds to the program and/or extending its termination date.