Plug’n Drive’s Reaction to Federal Budget 2019

March 25, 2019-Plug n Drive

The Canadian Federal budget was published on March 19, 2019 with funding allocated to electric vehicle initiatives. Canada has set a target for all new car sales to be fully electric by 2040, with sales goals of 10 per cent by 2025 and 30 percent by 2030 along the way. To help achieve these targets, a number of programs and initiatives have been proposed.

Making Zero-Emission Vehicles More Affordable

  • Electric Vehicle Incentive Up To $5,000 – $300 Million

“Budget 2019 proposes to provide $300 million over three years, starting in 2019-20, to Transport Canada to introduce a new federal purchase incentive of up to $5,000 for electric battery or hydrogen fuel cell vehicles with a manufacturer’s suggested retail price (MSRP) of less than $45,000. Program details to follow.”

Plug’n Drive Comment: Overall, this is good news. The $45,000 cap is low and does exclude many of the longer range electric vehicles that are available. The following downloadable PDF shows the price of all electric vehicle models available for sale in Canada, demonstrating that there are many models that are excluded: Electric Cars Available for Sale in Canada – March 2019.

Plug’n Drive is a part of a coalition that is having some further discussions with the Government to see if there is an opportunity to raise or remove this cap. 

We have asked whether the incentive applies to plug-in hybrids and we expect to know the answer soon. Right now, indications are that PHEVs will be included.

Our latest intelligence is that this program will be ‘stackable’ with existing provincial incentives in Québec and British Columbia. We have also heard that there is an intention to implement the program as soon as possible. The full program details will be announced soon.

  • Expand Public Charging Infrastructure – $130 Million

“Budget 2019 proposes to build on previous investments by providing Natural Resources Canada with $130 million over five years, starting in 2019-20, to deploy new recharging and refuelling stations in workplaces, public parking spots, commercial and multi-residential buildings, and remote locations.” (Page 82)

Plug’n Drive Comment: We expect the process to be similar to the process NRCan used for alternative fuels infrastructure in 2018, where stakeholders apply to NRCan for funding to install a station. We believe more funding should be allocated to EV charging this round because the previous round allocated most of the funding to natural gas and hydrogen fuel cell.

  • Secure Voluntary Zero-Emission Vehicle Sales Targets with Auto Manufacturers – $5 Million

“Budget 2019 proposes to provide $5 million over five years, starting in 2019-20 to Transport Canada to work with auto manufacturers to secure voluntary zero-emission vehicle sales targets to ensure that vehicle supply meets increased demand.” (Page 82)

Plug’n Drive Comment: The Province of Ontario had a similar voluntary program and they did not provide any funding to OEMs to participate. We believe education and outreach would be a good use of this funding as OEMs move toward increasing the supply of EVs, particularly in jurisdictions that have very few EV dealerships.

  • Attract Investments in Zero Emission Vehicle Manufacturing in Canada

“Automotive manufacturers and parts suppliers can access funding through the Strategic Innovation Fund, which was recently provided $800 million in additional funding through the 2018 Fall Economic Statement.” (Page 82)

Plug’n Drive Comment: This fund is not new. It is the hope of the Federal Government that OEMs might take advantage of this fund to increase the manufacturing of EVs in Canada. 

Supporting Business Investment in Zero-Emission Vehicles

  • Tax Write-Off for Business to Employ Electric Vehicles in Fleets – $300 Million

“Budget 2019 proposes that ‘zero-emission vehicles’ be eligible for a full tax write off in the year they are put to use. Qualifying vehicles will include electric battery, plug-in hybrid (with a battery capacity of at least 15 kWh) or hydrogen fuel cell vehicles… Immediate expensing will apply to eligible vehicles purchased on or after March 19, 2019 and before January 1, 2024. Capital costs for eligible zero-emission passenger vehicles will be deductible up to a limit of $55,000 plus sales tax.”

Plug’n Drive Comment: This will definitely provide a significant advantage to fleets and is likely to encourage EV adoption in fleets. It is unclear how this will apply to leased vehicles. Many large companies lease their entire fleet. However, many municipalities own their fleets and are likely to take advantage of this program. We are being asked if this money will fund fleets that would have converted anyway. We believe it will lead to fleets converting earlier than they would have, which brings real greenhouse gas emissions reduction sooner.