The BYD Changzhou car carrier docked at Terminal Zarate in Argentina on Jan. 20.Victor R. Caivano/The Associated Press
When trying to solve a problem, the simplest route is often best. That applies as well to encouraging Canadians to buy electric vehicles, and to convincing domestic manufacturers to dive into this market.
To date, Ottawa has relied on a mandate that would gradually restrict the sale of non-electric vehicles, until eventually they become unavailable. The heavy hand of regulation.
However, EV sales remain anemic and auto makers who don’t hit federal targets this year face substantial penalties. The federal mandate was put under a 60-day review in September. British Columbia pledged in November to overhaul its own mandate, saying the province’s targets were not realistic.
The results of the federal review have not been made public but the mandate should be scrapped. The trade deal Prime Minister Mark Carney recently struck with China is the better way.
Lowering tariffs on Chinese-built EVs offers a simpler approach to encouraging electric vehicles: competition.
What Carney’s China trade deal means for EVs in Canada
The cost of vehicles has climbed sharply in Canada, for both new and used models. That should create demand for cheap, Chinese-built electric vehicles, which by all accounts have become much better in the last number of years.
Their growing popularity in Canada should in turn spur the domestic industry to move more aggressively into the electric-vehicle market, leading to a greater variety on offer.
The customer can then decide.
The trade deal, signed earlier this month, will lower tariffs from 100 to 6.1 per cent on the first 49,000 vehicles imported from China each year. This comes into effect on March 1. Mr. Carney told reporters that he expects the number of vehicles allowable under the low tariff to rise about six per cent annually – reaching 70,000 in half a decade.
The irony is that Canadian auto makers insisted that the EV mandate couldn’t work because there wasn’t a market for these vehicles. Now the argument is allowing even small numbers of Chinese-built EVs into Canada will devastate domestic manufacturers.
Which is it?
If it turns out that there is no demand for these vehicles, that will mean that Canada scored a big win by reducing Chinese tariffs on canola in return for nothing – allowing access for a product no one will buy anyway.
But that seems unlikely. China did not come to dominate the world’s electric-vehicle market by making products no one wanted. Whether they will work adequately in the Canadian winter is an open question, though there are many cold-weather countries in the world and battery engineers at the Chinese companies are surely aware of this problem.
Canada’s expansive geography is also cited often as a reason why EVs are a hard sell here. It’s true that most auto trips are short, but one of the benefits of having a car is that a person can go long distances when necessary. Encouraging the development of a national network of fast-charging stations is something governments can do.
Instead we get kneejerk criticism from Ontario Premier Doug Ford, who complains about “spy vehicles.”
The real worry is more likely the security of jobs than security of data. It’s understandable that Mr. Ford, the politician, would instinctively want to protect the Ontario auto sector. But he was once a businessman and should remember that giving consumers more choice is always a good thing.
Choice is good for the person buying the vehicle and it’s good as well, in the long term, for manufacturers that will adapt to serve emerging customer preferences. In the case of EVs, it’s also good for the environment.
There are legitimate concerns about the amount of state support for Chinese auto makers. Opening the doors wide to these vehicles could, in fact, do serious damage to domestic manufacturers. However, the trade deal does not do that. The door is open only a crack: 49,000 vehicles would amount to less than three per cent of domestic auto sales.
North American auto makers have been accustomed to focusing much of their production on big, gas-powered vehicles, arguing that sales of these showed they were what customers wanted. These were also the most profitable vehicles.
Reducing the tariffs keeping out Chinese-built cars will allow the Canadian consumer to demonstrate what they really do want. A choice not restricted by either government regulation or industry myopia.
Greater choice and more competition can only be a good thing. The simple route is best.
