Charting electric vehicle popularity

[Summitric]

January 15, 2025

EV World: Charting electric vehicle popularity​

Adam Malik

(PART 1)
How is Canada seeing continued growing EV adoption?​

To read the news, one wouldn’t be faulted to think that battery electric vehicles and plug-in hybrid electric vehicles are falling out of favour with Canadians and the vehicle-buying public around the world.

In November, Ford announced it was pausing production of its electric F-150 Lightning model due to declining demand for electric vehicles from the motoring public.

In September, Swedish automaker Volvo scaled back on its pledge to be fully electric by 2030. Instead, it will aim for about 90 per cent of its vehicles to be electric or plug-in, with 10 per cent being mild hybrid.

Consumers cite a lack of affordable models, not enough charging points and concern over performance in cold weather.

The U.S. has seen stalling EV buying rates, sitting at about 10 per cent or so for the last several quarters. European countries are seeing bumpy performance — Germany dropped year-over-year as subsidy programs ended while France and the U.K. both saw modest growth.

Canada has been writing its own story. In the third quarter of 2024, 16.5 per cent of new vehicle sales were BEV or PHEV — collectively called zero-emission vehicles. That was up from 13.4 per cent in the second quarter, which itself was an increase from the 12.5 per cent to open the year.

“If you go back to April time when the [first] quarter numbers came out, there were so many articles saying that the wheels have dropped off,” said automotive aftermarket industry expert Martyn Johns. “I think there’s a lot of misunderstanding, actually, and Canadians are a little bit smarter in the whole picture.”

Todd Campau, aftermarket practice lead at S&P Global Mobility, agreed. He thinks the negative press revolves around the fact that there wasn’t a huge upshot in consumer adoption.

“I think we’re just seeing more pragmatism, personally. That’s the way I turned my approach to EVs — being pragmatic,” Campau said. “So I think the news cycle has kind of gone more pessimistic, and that’s because it’s not doing hockey stick growth. I mean, we had hockey stick growth for years, and everybody loves that … But now we’re seeing more just measured, slow growth [and] we’re seeing, actually, maturity.”

So every recent quarter has seen higher numbers of ZEVs added to the Canadian vehicle fleet. Quebec led the way with 28.4 per cent of its new vehicle registrations being ZEVs and British Columbia coming in second at 21.8 per cent. These two provinces offer purchase incentives but have separately announced they are changing the rules or phasing them out.

“I do think coast-to-coast Canada has more friendly policies and incentives for EVs both nationally and at the provincial level,” Campau noted.

From there, it’s a drop off, but Yukon remained third with 12 per cent of its vehicle sold being zero emissions. Prince Edward Island (8.7 per cent) and Ontario (7.8 per cent) round out the top five.

Campau also credited Canada’s economic picture as playing a role. “Canada’s economy seems to have gotten to better footing more quickly, with much lower inflation more quickly than the U.S.,” he said. “This may be contributing to a bump from a more confident and less stressed consumer.”

He also credited a third factor for concern in the U.S.: The election that ultimately saw Donald Trump return for a second term and Republicans also taking the House of Representatives and the Senate.

“I think [this gave] consumers additional pause. Trump and [Kamala] Harris seem so different, I think the U.S. consumer is concerned one side will mandate EVs, but the other might remove all federal support/incentives, if not worse,” Campau said. “They are portrayed as so different, I think consumers are concerned the future is very different depending on who gets elected.”

The politicization doesn’t exist nearly as much in Canada as far as Johns can tell.

“Which gives us an advantage in Canada. And so people don’t have to talk about it on the political spectrum. They can just talk about it whether they believe in it or not,” he said.

Just because someone doesn’t like a battery electric vehicle, they’re not seen as siding with one political party.

“OK, well, that’s fine, but at least it’s not because you’re a Liberal or you’re a Conservative or whatever like that,” Johns observed. “Because then that just gets nasty and it puts people in positions where they don’t really belong.”

There are also legal differences in Canada compared to the U.S. — automakers can’t sell directly to consumers. They have to sell through a dealership in the U.S., meaning another step for EV makers to reach that market, one they don’t have to worry about in Canada.


While Canada is a geographically big country, much of the population lives in larger urban centres — Statistics Canada reported in 2021 that nearly three in four Canadians (73.7 per cent) lived in one of Canada’s large urban centres.

With many people living in larger areas where much transportation isn’t needed on a regular basis, electric vehicles make sense, compared to those living in rural areas where long commutes are part of the lifestyle.

“It makes a lot more sense — shorter trips overall,” Campau said in an interview. “You’re not putting on 70 or 80 kilometres a day like you might in the Prairies. If you’re in Toronto, you’re in a lot of rush hour traffic, same with Montreal. You’re not putting the overall kilometres on the vehicle in a day, and then you’re going home and you can charge it.”

There isn’t enough of a roadblock for Johns to see the end of the road for electric vehicles.

“There’s still a huge percentage of the population that still consider it as a viable option or plan to in the not-too-distant future,” he said in an interview with EV World.

And growth is still there even though just two provinces offer incentives on top of the federal one.

He pointed to Ontario specifically, noting that even though there are lower percentage numbers there, the province’s population means that there is still a relatively large number of these vehicles out there. In other words, a small percentage of a big number is still a big number when compared to the rest of Canada.

“The interesting part about Ontario is they’ve always been that juggernaut. They’ve always been that sleeping juggernaut at times, because that’s with no subsidies, with no real attention to Ontario. Because Quebec is doing their own thing and B.C.’s spending all the money as well — Ontario just chugged along and supported the whole growth of EVs without any subsidies.”

Indeed, S&P Global Mobility reported that while Quebec has 305,300 ZEVs on its road in 2024, Ontario is second with 185,200. B.C. is third at 173,900.

It turns out that converting a continent of more than 300 million vehicles from combustion engines to batteries is an incredible undertaking, one that automakers were seemingly too ambitious to take on.

“They’re companies that have no way, no chance to adapt. The only reason Tesla’s so competitive is because of the structural model,” Johns said. Even though they have dealerships to sell through, it’s still a Tesla-owned network. “They don’t have the same legacy contracts, the same structural craziness.”

Imagine Stellantis, which has more than a dozen brands like Chrysler, Dodge, Jeep and Ram, trying to organize a shift to electrification and the headaches that must be taking place, Johns used as an example.

“You have [95 per cent) that are making money off all of this [ICE] and then you’ve got 5 per cent of it trying to move this massive ship — they’ll be chipping away at that elephant for the next 50 years,” Johns said. “And I think, at the end of the day, we’re more accepting in Canada of change. I don’t think the Americans in general like change. So everything takes longer down there. But again, when they decide to move, boy, you can’t stop the machine.”
(CONT'D)

 

[Summitric]

(PART 2)



Incentives are being reduced in both Quebec and B.C.

Quebec said it will no longer need to incentivize buyers to buy zero-emission vehicles. Incentives for new EVs and fuel cell vehicles will drop from $7,000 this year to $4,000 next year and $2,000 in 2026 and unavailable in 2027. Plug-in hybrids will see incentives go from $5,000 to $2,000 to $1,000 before being eliminated. Used fully electrics will drop from $3,500 now to $2,000 next year and $1,000 in 2026 before no longer being available the following year.

The CleanBC Go Electric rebate provides up to $4,000 to qualifying zero-emission vehicles. The province dropped the maximum cost of qualifying vehicles earlier this year to $50,000 — from the previous $55,000.

“We are astonished and extremely disappointed by the announced changes to BC’s ZEV rebate program,” said Tim Reuss, president and CEO of the Canadian Automobile Dealers Association, in a statement.

So the boost in EV sales numbers this year could be attributed to the fact that consumers are trying to get their hands on a ZEV before it becomes more expensive.

“This is in the U.S., Canada, and everywhere else: When we’ve seen incentives go away, you see a bit of a pullback in the adoption of EVs. I think we’re at a point, though, in Canada where it’s kind of like ‘taking your hands off the patient,’ so to speak, and let’s see if it runs by itself,” Campau said, adding that taking money away can have an effect. “I think people probably are trying to take advantage of it right now.”

The real interest for Campau is: Once we get into 2025, is Canada still growing its percentage of new vehicles that are ZEV or do numbers plateau like what was seen in the U.S. and stick at 11, 12 or 13 per cent.

“I think that will tell us a lot more about if the maturation of the electric vehicle has come to a point where it can support itself,” Campau said.

“And I think, at the end of the day, we’re more accepting in Canada of change. I don’t think the Americans in general like change. So everything takes longer down there.”​

What’s next?

S&P Global Mobility is expecting ZEVs to account for 15.2 per cent of light duty vehicle sales in 2024, reaching nearly 267,000 units. Campau has often said he feels his own group is overly ambitious at times, but he agreed with their line of thinking. He doesn’t expect the annual number to come in less than 13 per cent.

At the end of the day, it’s about affordability. New vehicle affordability is already hard on consumers and ZEVs are at a higher price point, Campau noted. But that is starting to change as ICE prices rise at a faster pace than ZEVs.

“So ICE vehicles are coming up to a level closer to EVs because we’ve seen an increase in ICE vehicle prices over the past few years,” Campau observed “And so I think affordability is relative. They’re not that much more expensive than an ICE, but it’s not because their prices have come down by any means.”

This year, Ontario announced Honda is building a $15 billion electric vehicle battery plant next to its Alliston, Ontario, plant, which it will retool to produce EVs. Last year, Volkswagen announced plans to build a $7 billion battery plant in St. Thomas, Ontario. A year before that, Stellantis and South Korean battery maker LG Energy Solution announced they were building a large-scale electric vehicle battery plant in Windsor, Ontario.

In Quebec, Swedish manufacturer Northvolt AB announced it was going to build a $7 billion gigafactory for electric vehicle batteries near Montreal by the end of 2026. Ford announced it was partnering with South Korean companies to a $1.2 billion manufacturing plant for electric vehicle battery material in the province.

Those are just some examples of EV production happening in Canada. But to support that work, it made sense to put 100 per cent of tariffs on Chinese-made electric vehicles, Johns said. The investment in those plants could go to waste if cheaper Chinese brands flood the Canadian market and Canadians buy those vehicles instead.

“They’ve got to give us time. At the end of the day, we’re managing between a rock and a hard place. Because the U.S. market is moving so slowly out, it’s crazy,” Johns said. “You see the domestic manufacturers, the CEOs, are all scrambling because their quarterly earnings are down, their profits are down. There’s a massive structural transition happening.”