Location: National

Summary of Issue/Background

  • Light-duty vehicle (LDV) emissions account for approximately 50% of Canada's transportation-related greenhouse gas (GHG) emissions, and 12% of the country's total emissions. Decarbonizing these vehicles is critical to reducing overall emissions in Canada.
  • Zero-emission vehicles (ZEVs) are vehicles that can operate without producing tailpipe emissions, such as battery-electric, plug-in hybrid electric, and hydrogen fuel cell vehicles.
  • To move towards the decarbonization of the transportation sector, the federal government has established Canadian LDV ZEV sales targets of 10% by 2025, 30% by 2030 and 100% by 2040. To accelerate progress towards these ambitious targets, a number of federal initiatives are underway, such as investments in charging infrastructure across the country, a business tax write-off for the purchase of ZEVs, voluntary supply agreements with automakers, and an Incentive for Zero-Emission Vehicles (iZEV) Program. Other Government measures are also incenting greater availability and adoption of ZEVs in Canada, including carbon pricing, the Clean Fuel Standard and the LDV GHG regulations.
  • A number of provinces have also implemented programs and other measures to increase the up-take of ZEVs. Both Quebec and British Columbia provide purchase incentives for new ZEVs. Quebec also has a ZEV mandate that requires automakers to meet ZEV sales targets, and BC is in the process of developing a regulation that will require automakers to meet sales targets towards the full phase out of the sale of combustion engine LDVs in the province by 2040.

Federal Incentive for Zero-Emission Vehicles Program

  • The federal iZEV program provides a point-of-sale rebate of up to $5,000 for the purchase or lease of eligible ZEVs, as the higher purchase price of ZEVs is a barrier to ZEV uptake. Under the program there are two levels of incentive:
    • Battery-electric, hydrogen fuel cell, and longer range plug-in hybrid vehicles are eligible for an incentive of $5,000; and,
    • Shorter range plug-in hybrid electric vehicles are eligible for an incentive of $2,500.
  • Eligible vehicles under iZEV are:
    • Vehicles with six seats or fewer, where the base model (trim) Manufacturer's Suggested Retail Price (MSRP) is less than $45,000.
    • Vehicles with seven seats or greater, where the base model MSRP is less than $55,000.
  • Since its launch in May 2019, over 25,000 Canadians and Canadian businesses have benefitted from the point-of-sale incentive. The program has induced more new sales than projected, and total ZEV sales in Canada have increased 32% compared to the same period last year.
  • ZEVs made up 3% of all new LDV sales in the first half of 2019, a significant increase from 2% over the same period in 2018.
  • Budget 2019 allocated $300 million to the iZEV program. [Redacted]