New net-zero rules for automakers will boost companies who build elsewhere, says expert

Zero-emission vehicles must by 60 per cent of new sales by 2030, 100 per cent by 2035

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OTTAWA – New rules for zero-emission vehicle sales in Canada will give big bonuses to foreign automakers at the expense of companies that make cars here, said one industry expert on Tuesday.

Environment Minister Steven Guilbeault released the new rules on Tuesday at a press conference in Toronto. The rules set targets for carmakers, mandating that 20 per cent of their sales are electric or plug-in-hybrid vehicles by 2026, 60 per cent by 2030 and 100 per cent by 2035. The rules apply to light-duty vehicles like cars and SUVs, as well as some pickup trucks.

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Automakers who miss their targets will face financial penalties, but can avoid them by buying credits from other automakers. They can also receive credits for building electric vehicle chargers and can earn credits for sales that come in advance of the new rules coming into place in 2026.

Flavio Volpe, President of the Automotive Parts Manufacturers’ Association, said the rules will undercut the domestic industry after the federal government spent billions to attract new battery plants and other facilities.

“The environment minister is creating an overly aggressive adoption scheme that can only be met by importing vehicles from China and Vietnam at the moment,” he said.

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The latest numbers from Statistics Canada show that electric vehicles or hybrids made up about 10 per cent of sales so far this year. Quebec and British Columbia, where there are significant provincial rebates, are above the 20 per cent threshold.

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Volpe said the challenge is that the only automakers that currently meet the target are companies like Tesla, which makes its cars in the U.S. or China, and VinFast a company based in Vietnam.

“For the life of me, I can’t find the Tesla manufacturing plant in Canada, but we’re going to bonus them because they sell us EVs,” he said. “They’re going to hand them credits for nothing. They didn’t invest a dollar in Canada.”

For every $20,000 companies spend on charging infrastructure they will get a credit equal to a vehicle that should have been part of their EV sales target. Volpe said for major automakers that could amount to millions of dollars in spending.

Guilbeault announced the draft rules a year ago. He said by getting out ahead with final regulations Canada will get more electric vehicles, eliminating some of the long delays consumers have faced.

“We will do this by ensuring more electric cars come to the Canadian market, instead of the U.S. or other markets that have similar targets,” he said. “The new electric vehicle availability standard now includes an early credit system to help automakers comply by encouraging them to get more EVs on the market as early as possible and even next year, and to build more charging infrastructure.”

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Even with rebates currently in place, electric vehicles are more expensive than gas-powered vehicles. Guilbeault said he expects them to reach price parity with gas vehicles by the end of this decade or early in the 2030s. He said even now, when maintenance and fuel costs are factored in, there is a cost savings to electric vehicles.

“The electricity you buy to power your electric vehicle is much cheaper than gasoline and not subject to the volatility of international oil prices, and the maintenance cost of EVs are a fraction of internal combustion cars,” he said.

Volpe said Canadian automakers will likely have to bring in cars from other places around the world to meet these targets.

“Those companies that make those cars here in Canada also make electric vehicles and other places they’ll likely just import vehicles made somewhere else to meet the targets. If you do that, you’re undercutting your local value proposition,” he said. “We absolutely need to decarbonize the transportation sector, but we shouldn’t do it by driving business to our biggest competitors.”

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David Adams, president and CEO of Global Automakers of Canada, said his members, which include major companies like Toyota, BMW, Mazda and Honda, want to reach these goals, but many factors outside their control will make it difficult.

“Our members are fully committed to the decarbonization of their products and support the global consensus of net zero by 2050. However, the current economic and geopolitical headwinds mean that this transition to zero emission vehicles will be both challenging and uneven — with automakers ultimately dealing with the consequences of factors outside of their control,” he said in a news release.

Adams said the federal government has to be at the table to work through the issues that will arise.

“We need a dedicated forum for the federal government to come together with key stakeholders to ensure that we are focused on the objective of the greenhouse gas emissions reductions expected.”

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