Canada Can’t Meet Goal of 100% EV Sales by 2035, Automakers Say

Article content

(Bloomberg) — Automakers in Canada say it’s doubtful there will be enough consumer demand for electric vehicles to reach the government’s target of phasing out new gasoline-powered vehicles by 2035.

Executives at Toyota Motor Corp. and Honda Motor Co. expect that consumers will switch to EVs if they are more affordable, can meet their range needs and if there is sufficient charging infrastructure. But those conditions haven’t been met.

Article content

“We need to make sure that we’re revisiting targets to align targets with reality,” Frank Voss, president of Toyota Motor Manufacturing Canada, said in an interview with Bloomberg. “The government can only do so much to entice consumers to purchase vehicles that they would like to see implemented. Consumers will choose what they need.”

EVs are still a small part of the market. Just 11% of new vehicles registered in Canada in 2023 were battery electric, plug-in hybrid electric or hydrogen fuel cell. BloombergNEF recently lowered its estimates for EV sales in Canada, estimating that by 2035, they will make up around 70% of new passenger vehicle sales.

The average price of a new vehicle in Canada is C$66,000 (about $48,000), while the average price of a new battery electric vehicle is C$73,000, according to Canadian Black Book. The government says its incentive program, which provides as much as C$5,000 to buyers of zero-emissions vehicles, has helped make EVs more affordable and increase sales. 

Yet many potential EV buyers are hesitant. In below freezing temperatures, lithium-ion batteries can lose over 20% of their range, according to Recurrent, a Seattle-based startup that assesses EV batteries. But automakers like Toyota say range is an issue they are trying to address, while balancing weight and size concerns. 

Article content

Article content

Then there’s range anxiety in a huge country where there’s often long distances between major cities. Canada aims to have 84,500 chargers and 45 hydrogen stations by 2029, funded in part through the government’s Zero Emission Vehicle Infrastructure Program. Natural Resources Canada estimates the nation will need around 200,000 public chargers by 2035, but is hopeful the private sector will fund chargers as well.

Members of the auto parts industry have been calling on the Canadian government to more closely align its emissions targets with the US, which has a less aggressive emissions target that may imply more than 50% of new vehicle sales being battery electric by 2032.

But Prime Minister Justin Trudeau’s government is sticking with its environmental goals. “The Government of Canada will continually assess progress towards its ambitious zero-emission vehicle sales targets to meet our climate change commitments,” Hicham Ayoun, a Transport Canada spokesperson, said in an email.

Despite Honda’s concerns about the pace of consumer adoption, it is still planning to invest billions on EV manufacturing in Canada, from which it will also serve parts of the US market. 

Article content

“There’s a lot of things that need to fall into place to give people the confidence to make the transition,” Jean Marc Leclerc, chief executive officer of Honda Canada, said in an interview. “It may not be fully there today to support the rate of adoption that we’re asked to deliver, but we know it’s going to be there.”

The plan is expand the carmaker’s operation in Alliston, Ontario, to make hybrid and electric vehicles to respond to changing consumer needs, Leclerc said. Hybrid vehicles can be an easier sell for consumers who have hesitations about going all-electric. But if they don’t plug in, they don’t count toward the government’s zero-emission vehicle targets because they still use internal combustion engines.

Leclerc said Honda aims to lower battery costs by 20% and manufacturing costs by 35% for cars manufactured in Ontario by using a local supply chain for raw materials, which will reduce transportation costs. 

Toyota, however, is holding off on building EVs in Canada for now. The company is cautious as the demand and support for electrification aren’t there yet, Voss said. It’s focusing on the transition to hybrid vehicles in the meantime.

“Even with my plug-in hybrid, last week I was in Toronto, I went to two different locations, all five chargers didn’t work,” Voss said. “Infrastructure, as it becomes more capable and catches up, it’ll be a great support to that.”

Article content