Electric vehicle manufacturing has been heavily subsidized by the federal government, which has contributed to competitive pricing. Demand for the product has diminished over the past year and a half, and some industry analysts forecast that demand has effectively satiated.
BRITISH COLUMBIA – There’s a collision coming when radical government policy concerning the electrification of vehicles meets the marketplace in 2026.
Ultimately, it will be consumers that will suffer from the collateral damage.
Blair Qualey is President and CEO of the New Car Dealers Association of BC
As the B.C. government attempts to race towards a zero emission finish line that would potentially imperil the gas-powered auto industry, B.C. Premier David Eby has rolled out the Zero-Emission Vehicle Act. It includes significant financial penalties on auto makers for not meeting mandated targets requiring 26 percent of light-duty vehicles sold in BC by Zero Emission Vehicles (ZEV) by 2026 – 90 percent by 2030 – and 100 percent by 2035.
The cost is expected to be approximately $20,000 per vehicle.
“While some of these time frames may appear far down the road, the reality is that automakers make investment and business decisions well in advance,” says Blair Qualey, President and CEO of the New Car Dealers Association of BC. Ann Marie Clark, Dealer Principal of Steve Marshall Ford Lincoln in Nanaimo and Family Ford in Parksville, is the NCDA Chair for 2024-25.
“As a result, the prospect of major penalties within a tight window has manufacturers already promising to reduce allocation of all vehicles – including gas powered – by 15-20 percent as early as January, 2025, in order to meet mandate quotas.”
That means a reduction of new stock, which Qualey expects would have similar impact to the Covid-19 supply management issues that resulted in severely reduced inventories, which, combined with demand, drove the price of vehicles skyward.
Ann Marie Clark, NCDA Chair
“Without government adopting a level of flexibility, it can be expected that the majority, if not all automakers, will reduce supply to meet these arbitrary quotas,” he adds. “Consumers will pay in the end, because limiting inventory means a higher price point for all new and used vehicles, as we experienced during the pandemic.”
The NDP government’s ideological drive towards complete electrification of vehicles is perplexing at best, considering BC Hydro recently announced that it has to import 25 percent of its electricity this year. First the NDP played pure politics with its fight against the construction of the Site C Dam before finally approving its completion, and the project is now nearing the point where it will contribute to the provincial power grid. They just announced nine new wind-powered projects in the province.
There isn’t enough electricity being provided now by the province. If Prime Minister Justin Trudeau’s national electrification goals are to be attained, industry experts estimate the equivalent of 13 new Site C Dams would need to be constructed to meet demand.
Notwithstanding the advances that vehicle manufacturers have achieved in reducing gas consumption through technological advances. Vehicles today require significantly less gas to operate than two decades ago.
“The government has had its zero emission mandate in place since 2017, and everybody kind of understood that we needed to look at a transition towards less polluting vehicles,” Qualey observes. “But setting hard and fast arbitrary targets creates a real problem, especially when you get to a point where folks are trying to get their heads around the technology.
“Electric vehicles might not be suitable for everyone, especially if they’re a rural person where they have to drive long distances in colder weather as part of their regular life.”
Electric vehicle manufacturing has been heavily subsidized by the federal government, which has contributed to competitive pricing. Demand for the product has diminished over the past year and a half, and some industry analysts forecast that demand has effectively satiated.
More than just raising objections, the NCDA has put forward solutions to the impending problems, including restoring sustainable electric vehicle incentives to pre-pandemic levels, as well as increasing annual funding for electric vehicle fast-charging infrastructure – which it believes is vital to long-term ZEV adoption.
Increased investments in Post-Secondary Education for the Automotive Sector through the BC Jobs Fund will enable post-secondary programs to focus on automotive technologies and services, to ensure a well-trained workforce capable of meeting the demands of the industry and contribute to the provincial economy.
Raising the BC Luxury Vehicle Tax (PST) Threshold to at least $100,000 is another possible solution.
“The current B.C. luxury tax on vehicles kicks in at a $55,000 purchase price and was set back in 2006, while the average cost of a new vehicle has now reached $66,000 – in large part because of technology based safety features, and we don’t believe individuals or families should be taxed because auto makers are enhancing safety,” Qualey explains. “The current threshold captures many vehicles that are not luxury items – such as family vans or SUVs to transport children to activities, or pickup trucks that may be required for work or as a lifestyle preference, particularly in rural or isolated settings.”
Qualey says the NCDA has reached out to the provincial government to look into the issue, and he’s hopeful that the Premier will listen and be open to alternative solutions to what promises to become a significant added expense to vehicle operators in B.C.
“If the government’s goal is reducing emissions, there are lots of ways to skin that cat. They’ve chosen to force industry to do that,” he observes. “There are other ways to do that. More flexibility needs to be built into government regulations to reduce emissions. The Premier has been talking about how the last election went and says he wants to listen.
“I take him at his word. We hope they’re going to take another look at this, as the challenges it is going to create are coming up pretty quickly.”
By Mark MacDonald, Business Examiner
