Issue/Source: Incentives for Zero-Emission Vehicles Program
Date: JANUARY 13, 2021
- The federal Incentives for Zero-Emission Vehicles Program provides a point-of-sale rebate of up to $5,000 for the purchase or lease of eligible Zero Emission Vehicles, as the higher purchase price of those vehicles is a barrier to their uptake.
- Zero-Emission Vehicles have the potential to significantly reduce Canada’s greenhouse emissions. One Zero-Emission Vehicle on the road can prevent up to four metric tonnes of greenhouse emissions per year.
- From the outset, the Program has showed strong results. Since its launch in May 2019, over 70,000 Canadians and Canadian businesses have benefited from the point-of-sale incentive.
- The Program exhausted its Budget 2019 funding over a year earlier than planned and additional funding of $287 million, over the 2020-21 and 2021-22 fiscal years, was announced by the Prime Minister on December 11, 2020.
- Transport Canada is also exploring options to expand the Incentive Zero-Emission Vehicles Program to include incentives for used Zero-Emission Vehicles, as committed to in mandate letters.
- Light-duty vehicle emissions account for approximately 50% of Canada's transportation-related greenhouse gas emissions, and 12% of the country's total emissions. Decarbonizing these vehicles is critical to reducing overall emissions in Canada.
- To that end, the Government of Canada announced Zero-Emission Vehicle sales targets of: 10% of new light duty vehicles sold in Canada are to be Zero-Emissions Vehicles by 2025, 30% by 2030 and 100% by 2040.
- Those vehicles that can operate without producing tailpipe emissions, such as battery‑electric, plug-in hybrid electric, and hydrogen fuel cell vehicles.
- To accelerate progress towards these targets, Budget 2019 provided $700 million for a suite of federal measures to encourage the adoption of Zero-Emissions Vehicles, including $300 million over three years to Transport Canada to launch the Incentive Zero-Emissions Program. Additional measures include investments in charging infrastructure across the country, a business tax write-off for the purchase of Zero-Emissions Vehicles, and voluntary supply agreements with automakers. Other Government of Canada measures are also incenting greater availability and adoption of Zero-Emissions Vehicles in Canada, including carbon pricing, the Clean Fuel Standard and the light-duty vehicle greenhouse gas regulations.
- To receive an incentive, the vehicle purchased must be included on Transport Canada’s list of eligible vehicles. For a vehicle to be eligible for the Program, an automaker must submit an application to Transport Canada for approval.
- Eligible vehicles under Program are:
- Vehicles with six seats or fewer, where the base model Manufacturer's Suggested Retail Price is less than $45,000, up to a maximum of $55,000 for higher models; and
- Vehicles with seven seats or greater, where the base model Manufacturer’s Suggested Retail Price is less than $55,000, up to a maximum of $60,000 for higher models.
- Under the Program there are two levels of incentive:
- Battery-electric, hydrogen fuel cell, and longer range plug-in hybrid vehicles (battery capacity at or above 15 kWh) are eligible for an incentive of $5,000; and,
- Shorter range plug-in hybrid electric vehicles (battery capacity less than 15 kWh) are eligible for an incentive of $2,500.
- A number of provinces have also implemented programs and other measures to increase the up-take of Zero-Emissions Vehicles. Specifically, both Québec and British Columbia provide purchase incentives for new Zero-Emissions Vehicles.
- Transport Canada is also exploring options to expand the Incentive Zero-Emissions Vehicles Program to include incentives for used Zero-Emissions Vehicles , as committed to in mandate letters.
- Furthermore, Transport Canada is working with Environment and Climate Change Canada, Innovation, Science and Economic Development Canada and Natural Resources Canada on the Government’s commitment in the recent Strengthened Climate Plan to explore Zero-Emissions Vehicles supply-side policy options to accelerate and expand consumer availability of those vehicles.