Canada Moving to Mandate Electric Vehicle Sales

March 22, 2023


Under new regulations that Environment Minister Steven Guilbeault proposed in late December 2022, one-fifth of all passenger vehicles, trucks, and SUVs that are sold in Canada in the year 2026 must be capable of running on electricity. As of 2030, that mandate will require 60% of all passenger vehicles sold in Canada to be electric.

Manufacturers and importers could even face penalties under the Canadian Environmental Protection Act if they do not meet sales targets. Although EVs and hybrid car purchases are steadily going up, rising from 5.2% in 2021 to 7.2% of vehicles in 2022, we’re still not at a point yet where we can safely say that our climate change fight is being improved by the volume of electric vehicles on the roads.

Read on for more information on this mandate, what it means, and what driving an electric vehicle on the roads in the next few decades might mean for the average policyholder.

What’s the hype about electric vehicles in Canada?

Electric cars, cars powered entirely by electricity rather than fossil fuels, are more affordable to operate and drive than their gas-powered alternatives in the long-run. The burning of fossil fuels can produce a lot of hazardous chemicals in the form of greenhouse gas, or “GHG” emissions. These cause conditions of climate change to worsen.

One of the biggest contributors to fossil fuel burning is gas-powered vehicles. Swapping traditional vehicles out for electric cars can significantly reduce the amount of fossil fuels burned, and therefore greenhouse gasses produced. The only greenhouse gas that an electric car produces is from electricity being generated. Although environments and communities which depend more heavily on coal have less benefit from electric vehicles, fighting climate change is best done with a reduced reliance on fossil fuel-burning vehicles.

Did you know that the Canadian Federal Government is currently offering an incentive of $5,000 for each electric vehicle purchase? In Quebec, electric vehicles can qualify for up to $8,000 in incentives, but in most other provinces and territories, their incentive is $5,000.

Before incentives, most electric vehicles start at around $30,000. The average model may fall between $35,000 and $45,000. There’s a variety of models from an array of different manufacturers, with some 40+ makes and models that are available in Canada today.

Why this mandate?

There’s a significant demand in Canada for electric vehicles, even if the sales aren’t reflecting that. There are still a lot of long waiting lists for electric vehicles, which is discouraging customers who may already be prepared to make the switch from gas-powered vehicles over to their electric variations.

There’s no doubt about it: Canada is in the middle of a climate emergency, just as much of the rest of the world is. It’s affecting the frequency of natural disasters, which in turn is causing tremendous property losses, record-high insured losses, and turning many people’s lives upside-down.

As such, it’s critical that the federal government create the necessary regulations to push the sales of electric vehicles. Canada’s overall plan is to hit its own goal of reducing GHG emissions by 2030 to a level roughly around 40 to 45% lower than emissions in the year 2005.

Currently, about half of the vehicles on the road are passenger vehicles, and they account for roughly 10% of Canada’s total GHG emissions.

Unfortunately, some of the concern surrounding this mandate is that there are still shortages causing the long waitlists for electric vehicles, and the government can’t exactly place regulations down and just wish away the shortages. There’s a global supply chain issue, and that can’t be solved overnight.

Is Canada ready?

It’s tough to say for sure. Some might call the mandate on electric vehicles in Canada “aggressive,” especially seeing as 2026 is only 3 years away. A lot of drivers worry because the average price of EVs is a bit more expensive than gas vehicles. Not to mention the fact that there’s hardly a tenth as many used electric vehicles on the market as there is gas-powered, making it difficult for drivers to obtain electric vehicles – even if they want to go the used route to save costs.

In addition, there’s a price to producing a lot of electric vehicles, and these vehicles oftentimes use different metals and materials than regular gas-powered vehicles.

In Canada, there is roughly 11,000 retail fuel stations. By comparison, there are roughly 5,000 electric charging stations across the country. Some cars can go upwards of 600km on a full tank of gas. Oppositely, your standard electric vehicle can go 300km-450km.

It’s a bold mandate with a lot of assumptions, and perhaps a few holes. With currently minimal inventory on the ground at dealerships around the country, it’s tough to say if this goal will become a reality.

What does this mean for policyholders?

Insurance for electric vehicles isn’t very different from insurance for gas-powered vehicles. If the electric vehicle is valued more, then your insurance should reflect that. One small difference is that some insurers encourage the green movement and may offer a small discount for choosing an electric vehicle. Usually, this discount is between 5-10%.

Of course, it varies by insurer. Ask your Excalibur Defender for more information on electric vehicles and the best ways to get an affordable price if you drive an EV!