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What's stopping Canadians from buying electric vehicles?
By James Glave
Aug. 8 2017

Bloomberg New Energy Finance recently released its Electric Vehicle Outlook 2017 - its "long-term forecast of global electric vehicle (EV) adoption" - and lifted eyebrows across the global energy sector.

Electric vehicles will reach price-parity with internal combustion engine models by 2025, the company found, and battery manufacturing capacity will triple in the next four years. Further, electric cars will comprise 35 percent of new light duty vehicle sales globally by 2040. The shift to electric mobility is happening far faster than previously believed.

Meanwhile, in early June, at the Clean Energy Ministerial in China, Canada signed on to EV30@30. Under that program, participating nations will work to collectively reach a 30 percent sales share for electric vehicles by 2030.

I was curious how Canada is - or isn’t - tracking along that adoption curve, so I pinged Colin McKerracher - the Canadian-born head of advanced transport with BNEF, in London, U.K. and co-author with Salim Morsy of the recent report.

Here’s our conversation, condensed and edited for clarity.

Do you have a sense of whether Canada will track along a similar adoption curve to the one you detail in the Electric Vehicle Outlook? Why or why not?

EV adoption in Canada is rising, but it is still well behind leading markets. Charging infrastructure outside of a few key areas - most notably Quebec - is still limited, and the number of models that consumers can buy is far lower than in some of the more advanced markets.

Canada is developing a National Zero Emission Vehicle Strategy. What should it include if we are to see that kind of quick adoption rate you see globally, and meet the EV30@30 target?

If Canada wants to be a leader in EV adoption, the national ZEV strategy should include specific provisions to build more public fast-charging infrastructure, and incentives for automakers to make EVs available in the country. A Zero Emissions Vehicle Mandate is one option, and the analysis we have done shows that electric-vehicle model availability is one of the most important drivers of EV adoption. Simply put, consumers can't buy a car that they can't find. More leading EV markets are heading in this direction. For example, China will introduce a quota system next year and the European Commission may move to a similar mandate.

In Canada, despite all the excitement around electric vehicles, sales remain a slim percentage of overall sales. But we also hear a lot of anecdotal stories of would-be EV customers signing on to four-month waiting lists. To what extend is this due to limited availability, and limited range of models in the market here?

At BNEF, we’ve found that increased model availability shows up in the sales numbers pretty quickly. In France, you had all the purchase-incentive subsidies in place, but it wasn’t until you had a certain number of models in the market that sales started to go anywhere. There is a strong argument that having vehicles available can create demand. In short, people can’t buy cars that they can’t see.

You certainly see that in the data. In the U.K. the Renault ZOE is the leading EV by a large sales margin, because it came in and hit a segment that wasn’t being served and at an attractive price point. In Canada, there are very few models consumers can choose from.

Is there any characteristic of the Canadian market that would make a strong suite of ZEV supply-side policies, such as a ZEV mandate, an easier sell politically speaking?

Two things come to mind. First, Canada has strong reserves of a lot of the things that go into a batteries - such as copper, cobalt, nickel, and manganese. Our projections show that nickel and aluminum will both see demand from EVs rise to about 327,000 tons a year from just 5,000 tons in 2015. For Canada that’s a net benefit. The other thing is that with respect to emissions, you have one of the cleanest power sectors around. So you have a natural advantage on both the materials going into the cars, and the cleanliness of the power used to run them - especially in hydro-rich provinces like B.C., Manitoba, and Quebec.

With battery costs falling, will the shift to electric mobility just happen anyway?

The battery cost declines we are seeing are driven by policy. If the policy is not there, then the cost declines slow down, and the adoption takes much longer. That’s because the policies give certainty to the market, to help mature the supply chain, and that certainty is what gives rise to the competitive economics - particularly when we look out to the 2020s and beyond. It’s not the right call to say “Let’s just sit back, it will happen anyway.”

Last week Bollinger Motors revealed the first all-electric all-terrain sport-utility truck. How important is it to have a variety of different kinds of vehicles?

If you want the EV market to grow, you need a steady stream of additional models coming online in various vehicle classes. People don’t generally start vehicle shopping with the drivetrain in mind; they start with a demand for a certain class of vehicle. Consumers don’t generally go to an auto dealer to buy an electric vehicle, they go to buy a truck or a van and then they would need to happen to see an electric vehicle there in those classes.

At the moment, Quebec has Canada’s only ZEV mandate, which will require dealers to stock electric cars. While advocates cheer this on, they also privately worry that it could serve to make already limited access to EVs even worse elsewhere in Canada.

That could happen, yes. The manufacturers might send most of their already-limited supply to Quebec. That really highlights the problem with a patchwork approach to ZEV policy, and points to the need for the National ZEV Strategy that is now underway. I’m from British Columbia, and I’m always surprised that there is so little movement on the EV front out there.

What's the most important policy tool or investment that Canada can use to increase adoption of these vehicles? Awareness? Mandate? Infrastructure?

The big moving pieces are things like fuel economy standards and a potential ZEV mandate, but don't underestimate some of the smaller things as well. Countries like Norway - where 42 percent of vehicles sold in June were electric - also include a raft of non-financial incentives. These are things like reduced ferry fares, free public parking, and road- and bridge-toll exemptions. These incentives won’t last forever, but can help kickstart the market.