To prevent the worst climate change, we must increasingly buy zero-emissions vehicles (ZEVs). Transportation is responsible for one-quarter of Canada’s greenhouse gas emissions, and so our cars, SUVs, pick-ups and vans must be battery electric, plug-in hybrid electric or hydrogen fuel cells.
Fortunately, the auto industry already sells ZEVS. Unfortunately, the auto industry continues to assure governments that an ambitious transformation for ZEVs is impossible. This sad situation in Canada may change, but only if our politicians are as honest about the climate as they claimed in the recent federal election. During the campaign, all major parties, including the Conservatives, made ambitious ZEV sales commitments.
The most obvious policy is the ZEV mandate, a requirement that automakers achieve a minimum percentage of ZEV sales in specific years. Quebec and British Columbia already have ZEV mandates. But the minority Liberal government will have to adopt it nationwide to fulfill its election promise of 50 percent sales by 2030 and 100 percent by 2035.
The ZEV mandate has great potential as a transformative climate policy, but only if the government implements it fully. Too often, I have heard industry representatives and even government employees describe the ZEV mandate as a market-following policy that consolidates the gradual shift in consumer preferences toward ZEV.
In fact, the ZEV mandate can and should be driving market change. It does this by requiring a minimum percentage of ZEV sales and incurring financial penalties from auto vendors who do not comply. With this policy in place, there’s no reason Canada can’t achieve 50 percent or 75 percent of ZEV sales by 2030 – a goal Norway reached this year.
What luxury car buyers can help pay for ZEVs
I’ve heard auto industry representatives claim that an aggressive ZEV mandate is impossible in Canada because consumers don’t demand enough ZEVs and even if they don’t the automaker can’t move production fast enough. But if the fines are substantial — say $20,000 for each gasoline vehicle sale that puts the seller in non-compliance — auto sellers will be encouraged to adopt a marketing strategy that accelerates the growth in ZEV sales. How could they do that?
They could reduce the higher purchase price of the ZEV with subsidies from their more expensive vehicles. Auto sellers charge higher mark-ups on vehicles for which a price increase will not have as big an impact on sales – that is, consumers of expensive vehicles are less price sensitive.
For example, under the ZEV mandate, the buyer of a $75,000 gasoline-fueled Porsche could pay an additional $3,000 to help lower the price of the ZEV. They probably won’t notice because all sellers of expensive vehicles have to do this.
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Auto industry representatives say that the government subsidy for ZEV buyers needs to be increased to reach the ZEV target. this is wrong. The ZEV mandate can function without any government subsidy.
In fact, it seems reasonable that subsidies to reduce the purchase price of ZEVs come from buyers of expensive vehicles, most of which burn climate-disrupting gasoline. Why should regular taxpayers, some of whom may not own a car, be tagged with most of the cost of accelerating ZEV sales?
Encourage marketing of ZEVs
A strong ZEV mandate encourages vehicle vendors to aggressively market ZEVs – this should have started a decade ago. Watch a sports event on TV today and commercials abound that feature young adults enjoying nature in their nature-destroying gasoline vehicle.
If auto sellers lose money when selling a gasoline car, you’ll quickly notice a change in advertising that only promotes the ZEV. Does it make sense in a climate emergency?
Yet another industry argument is that we should not be too far ahead of other jurisdictions. They have done so well with this argument that I have heard a public servant claim that an aggressive ZEV mandate will increase the price of electric vehicles.
It is backwards. If we are in front of other jurisdictions with a stronger ZEV mandate, it will prompt manufacturers to rapidly shift production to ZEVs. And it will have policy implications, as citizens of other jurisdictions ask why their politicians have not yet implemented the ZEV mandate.
If our strong ZEV mandate shows the auto industry where the brew is going, just watch how quickly production and marketing strategies change. To make the climate-honesty promise he made during the election, our union-selected politicians must act immediately.