INCENTIVES FOR ZERO-EMISSION VEHICLES PROGRAM
LOCATION: NATIONAL
Issue/Source: Incentives for Zero-Emission Vehicles Program
Date: May 10, 2022
Suggested Responses
- Zero-emission vehicles have the potential to significantly reduce Canada’s greenhouse emissions and support Canada’s transition to a low-carbon transportation system.
- The federal Incentives for Zero-Emission Vehicles (iZEV) Program provides a point-of-sale incentive of up to $5,000 for the purchase or lease of eligible zero-emission vehicles.
- Through Budget 2022, the iZEV Program has received an additional $1.7 billion to continue until March 2025, and to expand the types of vehicle models eligible under the Program to include larger vehicles (i.e., vans, SUVs, pick-up trucks).
- Since its launch in May 2019, the Program has shown strong results, as over 144,000 Canadians and Canadian businesses have benefited from the point-of-sale incentive.
On ZEV sales mandate
- The Government is developing a sales mandate that will ensure at least 20% of new electric light-duty vehicle sales will be zero-emission vehicles by 2026, at least 60% by 2030, and 100% by 2035. Environment and Climate Change Canada is leading the development of these regulations.
On zev safety regulations
- Vehicle safety remains a key Transport Canada priority, including supporting the safe use of electric, hybrid and alternative fuels. Notably, we continue to work through the World Forum for Harmonization of Vehicle Regulations (WP.29) to develop globally aligned technical regulations on battery, hydrogen and fuel cell safety.
IF PRESSED
The manufacturer’s suggested retail price (MSRP) cap for larger ZEVs will not capture many pick-up trucks coming to the market in the near term, will the Government make further adjustments to this cap?
- Through Budget 2022, the iZEV Program has expanded MSRP caps to make more vehicles eligible for the purchase incentive.
- Given the dynamic nature of the ZEV market, Transport Canada will continue to monitor iZEV results and assess the need for adjustments to the program to ensure it is meeting its objectives.
What is the Government doing to address used ZEVs?
- At this time, the Government’s iZEV program’s focus is on the new ZEV market; by continuing to increase the number of new zero-emission vehicles on the road, this will, over time, bolster the used vehicle market, which is where about 60 percent of Canadians acquire their vehicles.
- Used zero-emission vehicles are eligible for the business tax-write off administered by the Canada Revenue Agency.
BACKGROUND INFORMATION
- Light-duty vehicle emissions account for approximately 50% of Canada's transportation-related greenhouse gas emissions, and 12% of the country's total emissions.
- Under Canada’s 2030 Emissions Reduction Plan, the Government of Canada will develop a light duty vehicles ZEV sales mandate, which will set annually increasing requirements towards achieving 100% LDV ZEV sales by 2035, including mandatory interim targets of at least 20% of all new LDVs offered for sale by 2026 and at least 60% by 2030.
- Since its launch in 2019, the Government of Canada has invested over $2.3 billion to support the iZEV Program. Most recently, the program received an additional $1.7 billion through Budget 2022.
- In April 2022, the iZEV Program’s MSRP caps were increased to accommodate more vehicles. To be eligible:
- Base model passenger cars must have an MSRP under $55,000, with higher trims eligible up to a maximum of $65,000.
- Station wagons, pickup trucks, SUVs, minivans, vans and special purpose vehicles must have a base model MSRP under $60,000, with higher trims eligiblity up to a maximum of $70,000.
- Through Budget 2022, the Government of Canada is investing more than $2.6 billion in measures to support accelerating light-duty zero-emission vehicle adoption including $900 million to build zero-emission vehicle charging infrastructure.
- In April 2022, the Government published a draft regulation in Canada Gazette Part I, for minimum noise requirements for electric and hybrid vehicles based on UN standards followed by the EU as well as US performance standards for minimum noise requirements.