Developed countries around the world are literally throwing money at trying to electrify the transportation sector (passenger cars and light trucks). Canada is no exception as at both the Federal and Provincial levels many announcements and articles have displayed how they have handed out grants to manufacturers of the vehicles, batteries to power them as well as charging stations. Depending on where you are around the world EV buyers receive a variety of incentives, including direct grants, tax breaks (no sales or VAT taxes), low-cost charging stations, etc. all with taxpayer dollars.
Surprisingly despite all the billions of our tax dollars being handed out Canadians are not buying those EV at the same pace as the rest of the world as an article a few days ago noted: “Statistics Canada data show EVs made up one in 14 new vehicles registered in the first half of this year, compared with one in 20 a year earlier.“ The article went on to state China was responsible for 56% of global sales and for Canada to achieve the 60% sales target for 2030 they would have to grow from 55,600 to about 480,000 over six months to hit that target. Perhaps it has something to do with the fact the Canadian Automobile Association lists 80 EV models with an average sales price of $82,000 and, EV lose considerable range in our cold winters?
Two of Canada’s taxpayers smaller handouts
Lion Electric Company: Back onMarch 15, 2021 a joint announcement made by PM Trudeau and Quebec Premier Legault handed Lion Electric $100 million of our tax dollars and labelled it as an “investment”! The grant they handed out was 54% of the cost ($185 million) of building a “battery assembly plant” in the Laurentians but labelling it as an investment seems a stretch as, if, and when, Lion Electric generate a profit we taxpayers will not be recipients of dividend payments or appreciating shareholdings. On the latter note it is an interesting exercise to see how the shares have performed since the grant announcement. Shares in the entity appear to have had an initial value on the NYSE of US$16.31/share on March 1, 2021, and as of November 18,2022 were valued at US$3.01 a drop of 81.54%! Interestingly Lion recently announced their third quarter 2022 results and stated their revenue was up 244% but losses increased by 316%! Quite the investment!
Taiga Motors Corporation: On July 12, 2021, the Mayor of Shawinigan and the Federal and Quebec Governments announced forgivable loans and grants to Taiga which would allow them to manufacture electrically powered “personal watercraft, snowmobiles, electric motorization systems and battery packs.“ The collective amount was $50 million (40%) towards the $125.17 million cost of the new plant. Car and Driver tested one of the Taiga snowmobile models in March 2022 and while they didn’t disparage it, they suggested you better not stray too far from your base due to their limited miles range (62 miles for the one tested). The price was also rather startling with the “Nomad” priced at US$19,490 whereas a Ski-Doo or Polaris model would be in the US$10/12,000 range with much higher mileage. Taiga’s initial share price after their launch in April 2021 was $13.25 and it now sits at $4.00 meaning it has dropped 70% and if one looks at their year over year results their losses as of the 9 months ended September 30th were down from $88.8 million to $35.9 million. Can we really trust politicians to create wealth using our tax dollars to electrify our transportation and other sectors?
As noted, the foregoing handouts were small ones, but we Ontarians have been subjected to handouts by the Ford and Trudeau led governments totalling in the billions aimed at the same goal of electrifying the transportation sector (automobiles and light trucks). They handed out $1 billion to Stellantis, $590 million to Ford $518 million to GM and $260 million to Honda meaning $2.368 billion of our tax dollars were committed to ensure we retain some of the jobs we have had for decades in the auto sector. The province and the feds have also been trying to attract battery manufacturers and will supply LG Energy with $1 billion of our tax dollars as well as an unknown amount to Umicore, a Belgian global metals refiner who will build a battery materials facility.
In addition to the foregoing taxpayer grants, the Federal Government also have the ”Zero Emission Vehicle Infrastructure Program aimed at handing out $680 million to entice people and companies to build “charging and refueling stations”. They apparently see this as “one of the key barriers to ZEV adoption“ but we taxpayers should suspect its related to the average sale price of those EV as noted above and our concern about them losing range during our cold winter days.
What’s happening elsewhere?
Norway: A recent article; “Norway Became an EV Paradise, Now It’s Imposing a Weight Tax and Bringing Back the VAT“ noted upcoming legislation in Norway will rescind most of the favourable benefits that have made it the country with the highest EV sales per capita. The new legislation will remove the many perks granted to EV buyers displayed in a graft posted in an article a few months ago. The VAT in Norway alone will add 25% to the purchase price of an EV and the weight tax another 2/3%. As that occurs, we would expect, the 78 % EV sales have so far represented in 2022, will fall, as they will cost considerably more than a new ICE vehicle once those new taxes become legislated.
United Kingdom: It appears the UK has recently become concerned the net zero target may well lead to “five fuel taxes: fuel duty, vehicle excise duty, landfill tax, the carbon price floor and the emission trading scheme” drying up according to an article in the Financial Times! As a result of that concern a “tax vacuum” will be created during a time when the country is running significant deficits so, as a start, they plan to charge EV owners with the vehicle excise duty. Grants being handed out are also on a downward trail as purchase grants for new EV have been reduced from £5,000. to £1,500.
Targeted EV sales in Canada
The 2022 Federal budget expanded the push to electrify the transportation sector in Canada requiring 20% of all vehicles sold in Canada to be EV by 2026, 60% by 2030 and 100% by 2035. In addition, the budget extended the $5,000 per vehicle grant to help achieve those targets. Annual new auto sales in Canada vary between 1.5 million to 2 million so by 2035 at the low end $7.5 billion of our tax dollars will possibly wind up supporting those “mandated” sales. The other issue relates to lost sales taxes etc. from ICE vehicles as outlined in a January 17, 2022 article, published by the CPA (Canadian Professional Accountants), noting: “The federal government collects nearly $6 billion per year in gas and diesel excise taxes, not including the GST or HST on those purchases. Add in provincial fuel taxes and over $16 billion in annual government revenue that will disappear once Canadian drivers are weaned off the gas pump. It’s enough to rip a large hole in public finances.“ It is worth pointing out the CPA article was using 2021 data and the price of both diesel and gasoline have climbed considerably since then meaning the revenue lost added to government grants will increase taxpayer costs to over $30 billion annually.
Looking only at the Trudeau led government’s plan to electrify the transportation sector in Canada demonstrates their inept ability to govern the country responsibly due to their insane belief Canada’s emissions reduction from the transportation sector will impact the climate. Not a chance!