(please disregard a similar…

(please disregard a similar previous draft post that was submitted in error)

Ontario EV Incentive Policy Change Proposal

The only goal of a new Ontario EV Incentive plan should be to maximize the reduction of green house gas (GHG) emissions by incentivizing the purchase of zero emission vehicles (ZEVs) over internal combustion (ICE) vehicles, thereby drastically reducing the number of new GHG emitting vehicles operating on the roads. The criteria for determining incentives should be allocated proportionately based on a vehicle’s relative benefit in reducing GHG emissions, not on the arbitrary basis of MSRP of the vehicle.

The current Ontario Electric Vehicle Incentive Program (EVIP) falls severely short of the goal of reducing emissions in the quickest and most cost effective way. Currently maximum EV incentives are given to short range electrics (driving range below 200 km) with much of the incentive money going to plug-in hybrids (PHEVs) with well to wheel GHG emissions 3 to 15 times higher than ZEVs. For the best return on incentive the program should focus on ZEVs rather than PHEVs that have tailpipe GHG emissions.

The recently introduced luxury vehicle, $75,000 MSRP incentive cap, is very detrimental to the success of the program and should be removed. The arbitrary cap minimizes any incentive for current long range, large battery ZEVs which provide the most GHG emissions reduction benefit for the program as they are the best fit replacement for the equivalent range ICE vehicle. The cap also further incentivizes companies to produce cheaper cars with smaller batteries in lower range or that are PHEV in order to maintain the incentive rather than long range ZEV replacement vehicles.

Under the current EVIP, incentive amounts do not reflect relative vehicle GHG emissions. Incentives should not be solely based on the size of the battery in an EV, as battery size does not guarantee low emissions or great efficiency especially in some PHEVs.
For example, the BMW X5 ICE plug-in hybrid and Hyundai Sonata plug-in hybrid with equivalent small 9 kWh batteries receive the same incentive of $8460, yet the BMW well to wheels GHG emissions are twice that of the Sonata. This is contrary to providing incentives proportionately based on a vehicles GHG reduction benefit and does not incentivize the best environmental outcome. Incentives should be based on a combination of well to wheels CO2 emissions and range.

The following chart *** shows the current EVIP incentive given for every gram of carbon dioxide (gCO2) per km saved, compared to a vehicle with the US fleet average fuel economy of 9 L/100 km. It shows that the incentives target higher GHG emitting vehicles. For every $8460 in incentive given for a BMW X5 40e PHEV purchased, it is costing the government $130 per gCO2/km saved compared to the average vehicle. On the other hand, Tesla vehicles provide the longest range, greatest cargo space, practicality, and low emissions yet they get very little incentive. Under the current program the taxpayer and government are not getting efficient carbon emissions reductions for the money spent.

Long range luxury EVs are more expensive than the equivalent luxury ICE vehicle and therefore incentives are required temporarily to even the playing field. They are not just to entice the buyer but also to entice other manufacturers to enter the market and produce longer range ZEVs. In addition, EV charging infrastructure is lacking and is costly to build out. Manufacturers need to be incentivized to build charging infrastructure for their vehicles through the incentive dollars provided to buyers of their cars. This will help reduce the burden on the Ontario government for charging infrastructure development.

Focusing the incentive program on just lower priced, short range ZEVs will not maximize ZEV sales and a reduction in GHGs. The market will likely continue to be small for short range ZEVs as they are not comparable in range to ICE vehicles. It would be most effective to apply incentives to long range ZEVs with the most cargo and passenger space which are also the significantly more expensive vehicles. Incentives should be applied equitably across all market segments that demonstrate significant sales volume.

Some detractors argue that Tesla vehicles are toys for the rich and why should the government subsidize purchases of the wealthy? Large battery EV’s are more expensive because of the cost of increased battery capacity and vehicular weight saving materials not because they are strictly luxury items. As a Tesla owner and member of the Tesla Southern Ontario Owners Club I know many Tesla buyers are early adopters and are stretching their budgets to own a Tesla because it is the only long range practical EV that fits their driving needs and achieves the environmental protection goals that are important to them. Eliminating the incentive may in fact mean that those consumers choose to purchase a greater GHG producer rather than having the lower GHG producing car within their budget. A larger incentive would also open up a much bigger market of new price conscious non-early adopters. There is nothing stopping wealthy buyers from taking advantage of buying a Chevy Volt PHEV so why not provide at least the same incentive for anyone regardless of income to buy an even lower emission vehicle at the higher price point? The environmental benefit would be greater.

Some say that the wealthy will buy expensive EV’s regardless of incentive. Common sense says there will always be a percentage of buyers who would buy an EV without an incentive at any of the price points. But the vast majority will be reluctant to switch to totally foreign EV technology even if they have the money to do so. Wealthy people tend to buy expensive cars that tend to be gas guzzlers with powerful engines. They often have bigger houses and generally use more energy than less wealthy people. If there are no incentives for them to buy more environmentally friendly vehicles that will still fit their needs, there will be no impetus to change their behaviour. Also, established brand loyalty needs to be overcome in the luxury ICE automobile market where status and image play a big role. The EV incentive is not meant to help people afford a car, it is to entice people to switch from ICE cars by ensuring EV’s are cost competitive with their ICE counterparts in all market segments. A meaningful EV incentive is needed to motivate wealthy people to switch from ICE powered vehicles.

Summarized below are suggestions on changes the government could make to the incentive program in order to incentivize the best environmental outcome and reduction of GHG emissions:

1. Provide incentives based on well to wheels GHG emissions and battery size/electric range. ie. ZEVs with longer range get more incentive while PHEV with greater emissions but less electric range get less incentive.
2. Apply incentives equitably based on emissions reduction benefit across all market segments with significant market share. ie. Remove the $75K MSRP cap affecting the luxury sedan segment, keep the $150K cap.
3. Provide a point of sale sales tax exemption for EVs
4. Provide additional ZEV rebates for vehicles from manufacturers that have built out charging infrastructure in Ontario
5. Eliminate duty on imported ZEVs
6. Provide a cash for clunkers program to remove heavily emitting vehicles in return for a credit which may only be used to purchase a plug-in vehicle
7. Add emissions surcharges to the purchase price of vehicles based on the expected lifetime GHG emissions of the vehicle (e.g., $50, $100 to $200 per Tonne of expected lifetime emissions, e.g., 100 Tonnes)
8. Continue to provide home charging station incentives
9. Continue to provide HOT lane access for green vehicles

*** chart could not be included in comment box

[Original Comment ID: 196573]