Subsidies for electric cars: green or gold?

People buy EVs in Quebec, take advantage of the big subsidy, and then sell them in Ontario. This file from diary it reminds us that there is a limit to the artificial economy that a government can create with subsidies. We end up causing distortions.

• Read also: Quebec subsidized electric cars sold in Ontario

Quebec pays by far the most generous subsidies in Canada for the purchase of an electric or plug-in hybrid vehicle. To the federal subsidy of $5,000, Quebec adds $7,000 for an all-electric vehicle and $5,000 for a plug-in hybrid. The sum of the two provides an enormous level of subsidy! Too huge

For an all-electric vehicle, the $7,000 offered in Quebec far exceeds $5,000 in New Brunswick or Prince Edward Island, $4,000 in British Columbia, and $3,000 in Nova Scotia or $2,500 from Newfoundland.

Note that Ontario, Alberta, Manitoba and Saskatchewan do not offer any financial assistance for the purchase of an electric vehicle. In the specific case of Ontario, Doug Ford withdrew the subsidy in 2018.

Note that there is an impact on the market when it is subsidized in this way. Forty-two percent of all electric vehicles in Canada are in Quebec. However, a grant is not everything. Thousands of electric cars continue to be sold in Ontario despite the withdrawal of the subsidy.

Help the rich?

My discomfort comes from the fact that the level of subsidies seems quite excessive for the current state of the market. In the name of good environmental conscience, we help wealthy people to get luxury vehicles at great cost.

At least our governments have now implemented caps on the value of eligible models to avoid subsidizing luxury vehicles. Still, you have to have some financial means to buy a new vehicle for around $60,000 these years.

Many workers or retirees on modest incomes stretch their Toyota Corolla as long as it lasts. The electric car of the year, they will take it if you give it to them, otherwise it is beyond their means. Is it really fair and logical to take gas tax money to help someone wealthier pay for their new BMW i4 or Lexus RZ?

Really necessary?

This is even more difficult to justify when it is not clear that subsidies are necessary to change behaviour. Electric cars are magnificent, technologically advanced, they have something to seduce. They are still expensive, but the gap is closing. Tesla has radically lowered its prices and other manufacturers must follow. Maybe it would sell almost as much with half the subsidies.

What’s worse is that there is a lack of electric vehicles at dealerships. For most models, the customer waits for months. Since when do we subsidize a product that sells so well that there isn’t enough inventory?