By cutting funding from its Roulez vert program by 2027, Quebec will stop encouraging the sale of Elon Musk’s Tesla vehicles and favor the arrival of Chinese manufacturers, such as BYD, largely owned by the Berkshire firm. Hathaway by Warren Buffett.
Ironically, in both cases, opponents of transportation electrification will be able to repeat the same thing: with or without help, governments encourage the sale of Chinese vehicles.
The United States avoided this pitfall by omitting models produced in China from its own incentives for the purchase of an electric vehicle. Ottawa has been criticized for several months since its purchasing assistance, which can reach $5,000, does not do the same.
Quebec does not make the distinction either.
The problem with us is Tesla. Currently, one in three light electric vehicles sold in Quebec is a Tesla. Its Model 3 and Model Y are by far the most popular. They comply with the purchasing assistance of Quebec and Ottawa. Since December, according to Reuters, Tesla has been selling vehicles assembled at its Shanghai factory here.
The Canadian industry is fuming. The Automotive Parts Manufacturers’ Association (which only exists in English, sorry) deplores that government assistance favors a company that has no facilities in Canada other than service points. Quebec and Canada are helping China strengthen its electric transportation industry, says the APMA, and are putting manufacturers who manufacture, or at least source their supplies, at a disadvantage in Canada.
Victims of their popularity
Behind the scenes of Quebec industry, it was anticipated that the Roulez vert program would not be eliminated before 2029. Specialists calculated that the price of new electric vehicles would fall to be equivalent to that of comparable gasoline vehicles at the end of the decade. . At the same price, the financial incentive is no longer necessary: electric vehicles already cost much less to drive and maintain.
All of this is consensus. So much so that sales of electric vehicles in Quebec are currently surpassing the CAQ government’s most optimistic forecasts. They represented 21.4% of new vehicle sales during the last three months of 2023, according to Statistics Canada. Quebec hoped to reach this proportion in 2025.
This perhaps explains the hasty end of this measure. Consumers will pay more from 2025, which will cool their enthusiasm. In the absence of a substantial alternative offer in active or collective transportation, this will at the same time delay the reduction of polluting emissions in the province.
Unless.
One scenario that could happen is that the price of vehicles will also fall faster. The fall in the price of battery materials observed over the past year may continue as their production outside China increases. The same calculation applies to North American production of electric vehicles: the factories that will open in the coming months in the United States and Mexico will help lower prices.
Hecho in Mexico
When renegotiating the North American Free Trade Agreement, the United States then led by Donald Trump had one goal in mind: to protect its economy from its foreign rivals, including China. They had to water their wine in particular because the automobile industry of Canada, Mexico and the United States is essentially the same industry.
Result: The Canada-United States Mexico Agreement (CUSMA) considers parts and vehicles produced in Canada and Mexico as domestic parts and vehicles in the United States. This concession was not made for all other industries.
In Mexico, the boom did not take long: new electric vehicle factories began to spring up from the ground. And some are owned by Chinese manufacturers, or will soon be. Last month, Japanese media Nikkei reported that the next in line is BYD.
BYD (for “Build Your Dream”) is not only the largest Chinese manufacturer of electric vehicles, it became the world number one in the last quarter of 2023, ahead of Tesla. Its largest institutional shareholder is the Berkshire Hathaway firm, owned by American billionaire Warren Buffett.
In Mexico, BYD has just put its Dolphin Mini on sale, a small electric car whose range can reach 405 kilometers, according to the manufacturer – probably closer to 200 to 250 km, in reality. BYD already produces electric buses in Ontario. In 2019, he adapted two dozen examples of his small e6 family car, purchased by a Montreal taxi company, to Canadian safety standards.
In short, BYD knows the North American automotive market, including Canada. Its vehicles are already popular elsewhere in the world and cost half as much as Teslas.
By withdrawing its assistance for the purchase of new vehicles, Quebec joins the other North American provinces and states which have set sales quotas for zero-emission vehicles that manufacturers present in their territory fear — many do not think they will get there in time .
In other words, Quebec is suddenly very attractive for brands like BYD.