The automobile market and forces beyond the province's control are rattling the EV mandate
Electric vehicle mandates in British Columbia are intended to cut down on emissions.
However, the province’s aggressive approach risks muddying and distorting the market. Provincial regulations will require that 90 per cent of all new vehicles sold across BC must be electric by 2030, and this will rise to 100 per cent by 2035, meaning no newly manufactured gas-powered vehicles will be permitted to be sold in dealerships.
Perhaps unsurprisingly, this is not what consumers here actually want.
The story of mismatched government targets and market demands is nothing new, and automakers have been put in a tough position. They can cap the number of gas-powered cars they market and sell to customers in BC, or face a stiff financial penalty of up to $20,000 per non-compliant vehicle.
Obviously, the costs borne from these regulations will be passed down to the everyday person looking to buy an automobile. When automakers reduce the number of conventional, gas-powered vehicles produced in their factories to meet EV quotas, consumers will pay the price of the resulting supply shortage.
Compliance credits, however well-intentioned, add another layer of complex paperwork and red tape. They may sound like a good idea, but these credits, which are tradable permits allowing companies to meet regulatory targets by purchasing credits from others who exceed them, end up rewarding companies like Tesla that exclusively produce EVs, which blunts the competitiveness of traditional manufacturers.
Consequently, the government is effectively overseeing a wealth transfer from older auto manufacturers into the hands of specialized rivals, resulting in market imbalances and inefficiency, to say nothing of fairness.
Consumer appetite for EVs is heavily dependent on government incentives. For example, EV sales in Germany fell by 27 per cent when its government removed subsidies for their purchase.
Similar outcomes are more than likely in the United States and Canada. In BC alone, reducing eligibility for EV subsidies caused a decline in sales within a few months.
Charging infrastructure presents another problem. While it may have been true in the past that rural areas were unsuitable for EVs due to a lack of charging stations, many urban residents also face unequal costs for charging their EVs.
In a city like Vancouver, where many people live in apartments and condos, there are rarely enough charging options. Public charging stations are expensive to maintain and can cost as much as five times the cost of an overnight charge at home, assuming residents even have access to such charging.
In effect, this disparity shortchanges residents and renters, compounding the economic inequality of our times.
Foreign jurisdictions like Germany and the US have begun to roll back their once-aggressive EV incentives and mandates, realizing that those policies must be more in tune with both the market and the capacity of existing infrastructure.
There is no shame in BC taking a page out of a fresh book and pivoting away from sales quotas to more flexible, technology-neutral emissions targets. Giving automakers the freedom to be innovative while allowing consumers the choice to adopt new technologies at their own pace would be a welcome and just change.
EVs have an important role to play in a cleaner future for both BC and Canada, no question. That can happen without forcing the market to adopt them prematurely and causing economic backfires.
In this era especially, politicians must prioritize affordability and flexibility, both of which will make the lives of British Columbians easier, especially younger residents.
Setting realistic emissions standards without dictating every detail of how manufacturers and automobile dealers should meet them is a balanced, fair approach in the pursuit of sustainability.
BC’s energy transition must align with economic realities, or it will not succeed as the government hopes it will. While political timeliness has its place, consumer needs do too.
Jerome Gessaroli is a senior fellow with Resource Works. His writings have appeared in several major publications, with a focus on economic and environmental matters from a market-based principles perspective. He leads the Sound Economic Policy Project at the B.C. Institute of Technology and is lead Canadian co-author of Financial Management: Theory and Practice, a widely used textbook.