Despite the federal government handing out billions in subsidies to aid the transition of making electric vehicles the dominant mode of transportation, sales continue to drop.
The Trudeau government has a mandate to require all new passenger vehicles and light trucks sold in Canada to be zero-emission by 2035, however, consumer interest has been steadily in decline this year.
While EVs sold relatively well last year, so far in 2024, they’re now selling at half the rate of 2023, lagging behind gas-powered vehicles
According to Fraser Institute’s director of natural resource studies Elmira Aliakbari and policy analyst Julio Mejia, this should be cause for concern.
“The sluggish demand for EVs and the response from automakers should raise red flags for both the Trudeau government and Biden administration, given the massive subsidies (a.k.a. corporate welfare) injected into the EV and battery production industry,” wrote Aliakbari and Mejia in a recent op-ed.
“The EV transition faces major obstacles, and the recent scaling back or delays in EV production by automakers should serve as a warning to governments about the feasibility of their forced transition policies, which clearly put Canadian taxpayers at risk.”
The same trend is happening south of the border, despite the Biden administration sharing similar EV targets with Canada and heavily subsidizing the industry as well.
Tesla had to lay off 10% of its global workforce last month due to declining sales and Ford has pushed back its EV production at its EV plant in Oakville, Ont. for the next two years.
General Motors had initially set a target to build 400,000 EVs by the middle of this year, however, they have since abandoned the project, due to lower-than-expected sales.
Car rental companies are making similar decisions, with Hertz announcing it would be selling off one-third of its EV fleet in the U.S. and begin reinvesting in gas-powered vehicles.
The Trudeau government and the Ontario government have now given $28.2 billion to the Stellantis EV battery plant in Windsor and the Volkswagen plant in St. Thomas in corporate welfare.
According to Parliamentary Budget Officer Yves Giroux, it will take the government 20 years to break even on the invested subsidies. That’s not including an additional $5 billion in taxpayer subsidies that was given to construct a new Honda EV manufacturing plant.
Quebec has also pledged $2.7 billion in subsidies along with help from the federal government to build a new EV manufacturing plant with another $644 million going to Ford to build a plant that will produce EV battery materials.
However, a recent study conducted by the Fraser Institute revealed that Canada currently does not have an adequate power grid infrastructure in place to meet the demands of how many EVs it would need to be on the road to meet the 2035 target.
Meeting the EV mandate would mean a 15.3% increase in demand for electricity across Canada, which would require significant investments in new electricity generation and transmission capacity.
“Canadians need to know just how much additional electricity is going to be required in order to meet Ottawa’s electric vehicle mandate, because its impact on the provinces — and taxpayers and ratepayers — will be significant,” said G. Cornelis van Kooten, the study’s author and a Fraser Institute senior fellow.
The shift to “green” power would also mean the installation of 5,000 new wind turbines, however, each turbine would still be required to be backed up by natural gas for days when the wind is not blowing.
“Requiring all new vehicle sales in Canada to be electric in just 11 years means the provinces need to substantially increase their power generation capabilities, and adding the equivalent of 10 new mega-dams or 13 new gas plants in such a short timeline isn’t realistic or feasible,” said van Kooten.
There is also the issue of the mineral supply shortage required for EV batteries.
A study from last year called Can Metal Mining Match the Speed of the Planned Electric Vehicle Transition? found that acquiring and maintaining the resources to meet the EV target by 2030 is highly unlikely.
For those targets, the world would need “50 new lithium mines, 60 new nickel mines, 17 new cobalt mines, 50 new mines for cathode production, 40 new mines for anode materials, 90 new mines for battery cells, and 81 new mines for EV bodies and motors,” reads the study.
That would make for a total of 388 new mines worldwide, for comparison, there are only 340 mines total in operation between Canada and the U.S. and mine development is a slow process.
Lithium mines take anywhere from six to nine years to get up and running and that timeline increases from 13 to 18 years for nickel.
Two elements which are critical in producing EV batteries, meaning even if the government-subsidized EV production plants remain on schedule, they will likely still face material shortages.
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