EV Incentives in Ontario…

EV Incentives in Ontario

A new Ontario EV Incentive plan’s only goal should be to maximize the reduction of green house gas (GHG) emissions by incentivizing the purchase of zero emission vehicles (ZEVs) thereby drastically reducing the number of new GHG emitting vehicles operating on the roads. Incentives should be allocated proportionately based on a vehicle’s relative benefit in reducing GHG emissions.

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 gasoline hybrids (PHEVs) with well to wheel GHG emissions 3 to 15 times higher than ZEV’s. For the best return on incentive (ROI) The program should focus on ZEV’s 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. The arbitrary cap minimizes any incentive for the long range, large battery ZEV’s which have been the most costly but stand to provide the most GHG emissions reduction benefit for the program as they are the best fit replacement for the equivalent range gasoline vehicle.

Under the current EVIP, incentive amounts do not reflect relative vehicle GHG emissions. The BMW X5 gasoline 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.

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 incentives emphasize higher GHG emitting vehicles. For every $8460 in incentive given for a BMW X5 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.

Some say that the wealthy buy Tesla’s anyways so why give them an incentive if that is the case? 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. 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 electric that fits their driving needs. But a larger incentive would open up a much bigger market of new price conscious buyers. There is nothing stopping wealthy buyers from taking advantage of buying a Chevy Volt PHEV so why not provide the same incentive for buying an even lower emission vehicle at the higher price point? The GHG emissions reduction benefit would be better.

Focusing the incentive program on just lower priced, short range ZEV’s will not maximize ZEV sales and a reduction in GHGs. For example, beyond a certain market share, providing an incentive of $13K for a lower priced but shorter range I3 would likely not be as effective as $13K for a Model S or X because of the Tesla’s comparable utility (range, cargo space) to a gasoline car. The I3 will likely be a niche market city car and no amount of incentive will convert many people to it. It will often have to be a 2nd or 3rd car for the wealthy that can afford them. Whereas the Model S or X incentive would open up the larger, lower price point, sedan market and drive more sales. Sales history has shown very little market share growth for short range ZEV’s getting the current $13K under the current incentive program. It would be most effective to apply incentives to long range electrics with the most cargo and passenger space which are also the more expensive vehicles.

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 battery cost and weight saving materials not because they are strictly luxury items. Providing incentives for only cheaper short range EV’s implies incentivizing less practical, smaller battery, shorter range, EV’s, which again does not maximize return on incentive. Incentives should be applied equitably across all car market segments that demonstrate significant sales volume.

Long range luxury EV’s are more expensive than the equivalent luxury gasoline vehicle and therefore incentives are required temporarily to even the playing field. They are not just for the benefit of the buyer but also for the EV manufacturer to get established.

Wealthy people tend to buy expensive cars that tend to be gas guzzlers with powerful engines. They have bigger houses and generally the demographic uses more energy than less wealthy people. If there are no incentives for them then there is no impetus to quickly change their behaviour. It may happen, but slowly. Established brand loyalty needs to be overcome in the luxury gasoline automobile market where image plays a big role. Arguably they need just as much if not more of a financial incentive than less wealthy people to reduce fossil fuel use because money is not a scarce resource. A meaningful EV incentive will help to motivate wealthy people to switch from gasoline powered vehicles.

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 PHEVs. Incentives should be based on a combination of CO2 emissions and range. Zero emission long range EV’s should be exempt from the $75K restriction.

EV charging infrastructure is lacking and is costly to build out. Any manufacturer who builds charging infrastructure for their vehicles should be given additional incentive dollars to buyers of their cars. This will help reduce the burden on the Ontario government for charging infrastructure development.

The EV incentive is not meant to help people afford a car, it is so people don’t buy a gasoline car by ensuring EV’s are cheaper, or at least cost comparable, in all market segments.

Provide incentives based on emissions and battery size/electric range. ie. ZEVs with longer range get more incentive while PHEV get less incentive.
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.
Provide income tax and/or sales tax rebates for ZEVs
Provide additional ZEV rebates for vehicles from manufacturers that have built out charging infrastructure in Ontario
Eliminate duty on imported ZEVs (federal)
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
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),

[Original Comment ID: 196551]