The gradual end of the $7,000 subsidy for electric vehicles was expected. Its annual bill is hefty and the government considers that it has given the necessary impetus to this market to enable it to survive on its own.
The decision, however, raises fears of a slowdown in this niche, from 2027, when the subsidy will drop to zero. In this context, Équiterre’s suggestion to finance electric vehicles (EV) deserves attention. I give you details for 25 vehicle models, in a few paragraphs, prices and greenhouse gases (GHG) included.
Essentially, Équiterre proposes to charge a fee to large polluting vehicles and use the fruits to finance rebates for EVs. The cost to taxpayers would ultimately be zero.
This royalty-rebate system, a term equivalent to the European bonus-malus, would operate according to parameters inspired by the French system, according to what Équiterre proposes.
Basically, new vehicles would be charged a fee based on their GHG emissions and their weight. And conversely, low-emitting cars would receive a rebate, which could be similar, in some way, to the $7,000 subsidy.
The system would have the advantage of discouraging the purchase of polluting SUVs and encouraging the purchase of low or no polluting cars.
I took a look at the French model1 and, in my opinion, it is typical of the programs in this country: very commendable, well configured, but extremely complex. In my opinion, such a program must be simple to administer and must therefore avoid incorporating any form of income redistribution, for example by varying the price according to income, number of children or use for work. It is the role of the income tax to see to redistribution.
With this idea in mind, I analyzed 12 electric models, 4 plug-in hybrid models and 9 gasoline models to see how a royalty rebate program could apply in Quebec. My only criterion: GHGs emitted over the lifespan of the vehicles.
According to data from the Équiterre site, the representative gasoline vehicles that I chose emit 80 tons of GHGs during their 15-year life, including manufacturing and energy. Approximately 20% of GHGs are emitted during manufacturing and 80% during use, with the gasoline consumed.
Among my gasoline choices, the champion is the Ford F150, which coughs up 107 tons of GHGs over 15 years and the most frugal, the Totoya Camry Hybrid, at 46 tons. Équiterre assumes a use of 20,000 km per year2.
Electric vehicles emit much less GHG, as one might expect (and despite doubters of all kinds). On average, my 12 models emit 15 tonnes of GHGs over their 15-year lifespan in Quebec, manufacturing and energy included.
That’s 5 times less than the gas models on my list. In total, 88% of GHGs are emitted during manufacturing and 12% during their use, with the energy used3.
The 4 plug-in hybrid vehicles on my list are in between, at 44 tonnes over their lifetime.
It is impossible to quickly estimate the overall amounts that would be collected and remitted. However, according to my analysis grid, we can imagine that cars which emit more than 35 tonnes of GHGs would pay a fee, which would be proportional to the GHGs emitted. Conversely, cars below this threshold would receive compensation.
For example, beyond the threshold of 35 tonnes, we could set a price of $250 per tonne. This price is close to what some economists consider to be the cost of GHGs to society.
The Ford F150 should thus pay approximately $18,000 in royalties at the time of purchase, the Subaru Outback, $10,500 and the Toyota Camry Hybrid, $2,700.
Conversely, buyers of the Tesla Y – the best-selling EV – would receive around $5,600, an amount similar to that of Hyundai’s Kona electric. The F150 Lightning, all electric, but more emitting GHGs, would entitle you to a rebate of approximately $3,600.
We would not be far from the $7,000 in lost subsidies, at least for the most economical models. And rather than making all taxpayers pay, the bill would fall on polluters.
After all, it is their GHGs that require the government to set aside a fortune to repair the damage caused by global warming, such as forest fires.
My suggestion inspired by Équiterre can absolutely be improved, I am well aware of that. We could adjust the formula according to the weight of vehicles, which wear out our roads and increase accidents.
We could also reduce the GHG threshold which is used to calculate fees and rebates, in this case 35 tonnes, which would have the effect of increasing the pressure on large and polluting vehicles. And many more.
The beauty of the formula, however, is that it has the effect of erasing the price gap between gasoline and electric vehicles. For example, the popular Mazda CX-30 would become more expensive ($43,000) than the Tesla 3 ($40,000). The Honda Civic would be in the same waters ($37,000).
Critics will say cars will become too expensive for those on a budget.
They will also say that large engines are already penalized in various ways. For example, their gas tax bill is higher, given their greater consumption. And the ZEV standard requires manufacturers to ensure the availability of electric vehicles – less profitable – otherwise to buy credits on the market, which increases the price of gasoline vehicles.
But isn’t it road transport that is the main cause of global warming? Aren’t there too many cars, as Pierre Fitzgibbon recently said?
And who can now doubt the enormous impacts of warming, which will increase over the coming years? Wasn’t it 62 degrees in Rio a few days ago?
1. Read a note on how the malus tax on polluting vehicles works in France
2. Consult the Équiterre tool to compare the impacts of two vehicles
3. My choices are not scientific, but the difference in GHG emissions between EVs and gasoline cars essentially corresponds to the main studies on the subject, more or less.
Read our column “Useless, electric vehicles?”