Recent major investments by Stellantis (formally FCA), Ford and GM to build electric vehicles (EVs) in Canada is undoubtedly great news for the auto industry, the economy and Canadians. Not only do these investments provide a boost to the economy after the worst contraction on record, they position Canada to benefit from the transition to an electrified transportation fleet.
The big question now is how to get more Canadians interested in purchasing EVs. In the first half of last year, new EV registrations in Canada were only 3.5 per cent of all new vehicle registrations. This is a far cry from the government’s goal of zero-emission vehicles representing 30 per cent of new light-duty vehicle sales by 2030.
Some argue that a lack of vehicle availability is holding Canadians back from making the move to an EV. But with over 40 models available now and 120 coming to market by 2023, availability is clearly not the problem. FCA, Ford and GM alone have dozens of new models coming to Canada, including electric versions of hugely popular SUVs and pickup trucks. And on the ground, inventories across Canada are comparable to their gas-powered equivalents.
According to Deloitte’s 2021 Global Automotive Consumer Study, the real barrier to getting more Canadians in an EV is mounting concern with driving ranges. Between 2018 and 2021, Deloitte found that concerns with driving range have increased by five per cent, with 27 per cent of respondents noting this as their top concern. Another 23 per cent of respondents chose a lack of vehicle charging infrastructure as their biggest EV anxiety, with the time required to charge the greatest concern for 14 per cent.
None of this should come as a surprise. Canada is a huge country with over 1.1 million kilometres of public roads. Driving range will remain a challenge until battery technology evolves to the point where ranges are on par with a full tank of gas and a driver can be confident that fast-charging stations are readily available.
The federal government deserves credit for investing in charging infrastructure, including $130 million in Budget 2019 to deploy a network of zero-emission vehicle charging and refuelling stations. But with only 971 publicly accessible fast charger stations available to Canadians right now, we have a long way to go to reduce range anxiety.
The second greatest concern Canadians have with electric vehicles is the price premium. Twenty-five per cent of respondents noted this as their top concern. Thanks to billions of dollars being invested in electrification by automakers, EV technology is advancing rapidly. But price parity with gas-powered vehicles remains years off.
Battery pack costs, the biggest contributor to higher EV prices, are not expected to fall below $100 per kilowatt hour (kWh) until around 2030. Once battery costs hit $100 per kWh, we can expect the price of EVs to be comparable to gas-powered vehicles.
While total cost of ownership of EVs can be lower than an equivalent gas-powered vehicle thanks to fuel and maintenance savings, most consumers are primarily concerned about securing the lowest possible monthly car payment. Not only that, one-third of Canadians are unwilling to pay anything extra for an alternative powertrain, raising serious concerns about demand for EVs in the short term.
Until we address consumer concerns with driving range, charging and price, EVs will remain a small segment of the overall new vehicle market. Getting more Canadians behind the wheel of an EV now is going to require support from the federal, provincial and municipal governments.
"Until we address consumer concerns with driving range, charging and price, EVs will remain a small segment of the overall new vehicle market," writes @bkingston, CEO of @cvma_ca #EV #auto #charging #CleanTech
Fortunately for Canada, there is one jurisdiction in the world that has found the solution to boosting EV adoption. Last year, 54 per cent of new vehicle purchases in Norway were of EVs, making it the undisputed global leader in EV adoption.
Consumer incentives are the cornerstone of Norway’s EV policy, with everything from tax exemptions and reductions on purchases and licensing to free toll-road access, free charging and free parking for EV owners. According to the International Energy Agency, measures that reduce the purchase price of electric vehicles have been the main driver of electric vehicle adoption.
We have significant ground to make up to meet the government’s 2030 zero-emission vehicle adoption targets. But with the right mix of incentives in place that address Canadian drivers’ needs, the target is obtainable. Just ask Norway.
Brian Kingston is president and chief executive officer of the Canadian Vehicle Manufacturers’ Association.