Quebec's plan to stop subsidizing electrical vehicle purchases gets mixed reviews

The Quebec government is phasing out subsidies for electric vehicles, claiming sales are strong enough without the incentive.

Moshe Lander, a senior lecturer in economics at Concordia University, says it's about time. The province already has a tool in place to encourage more drivers to go electric fuel taxes.

"If gas starts going for $4 a litre, I think people will quickly start looking for all kinds of alternative means of getting around," Lander said. "EVs would be one of them, but people would also be pushing for an expansion of public transport."

If gas reaches such high prices, companies may revisit the work-from-home model or people may reconsider living so far from work to cut on transportation costs, Lander said.

By putting all the subsidies on one particular product, the playing field is being tilted toward EVs, and people then only have a choice between gas or electric cars rather than all the other means of helping the environment, he said.

Quebec Finance Minister Eric Girard announced in the recent budget that subsidies for electric vehicles and plug-in hybrids would be phased out starting next year, culminating in their complete elimination by 2027.

Currently, Quebec offers rebates up to $7,000 for new fully electric vehicles and up to $5,000 for plug-in hybrids, with used electric vehicles eligible for rebates up to $3,500. However, these subsidies will decrease starting next year before being phased out completely.

Girard cited the program's high cost approximately $400 million between April 2023 and January 2024 juxtaposed with its limited reduction in greenhouse gas emissions.

Benoit Charette, minister of the environment, said by late last year, 23 per cent of vehicles sold in Quebec were electric. He said that was more than forecast, and now the government expects prices to come down, even without the subsidy.

But critics say the subsidies were driving up sales.

Rebates increase sales

Louise Lvesque, senior director of policy for Electric Mobility Canada, said Quebec has ample charging-station infrastructure and that, coupled with the rebates, has encouraged consumers to trade in their gas-powered vehicles for those that run on electricity.

Lvesque suggested the government should increase taxes on gas-powered vehicles and then put that revenue into the electric-vehicle rebate program.

The province aims to ban the sale of new gas-powered cars by 2035, and while EVs are growing in popularity, the adoption rate needs to ramp up quickly in order to achieve that goal, said Lvesque.

"That's why we think we need to keep these rebates," she said.

Smaller, more affordable EVs are expected to be on the market in the coming years, and prices for EVs are coming down, Lvesque said. Subsidies could be phased out as prices drop, she said.

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Simon-Pierre Rioux, founder of the Association des Vhicules lectriques du Qubec, also says gas-powered cars need more taxation because of how much they pollute.

There is a pollution tax worth a couple hundred dollars, but that's much lower than other countries where taxes on new gas cars are in the thousands of dollars, he said.

"That is an incentive for people to switch to a less-polluting vehicle, whether it's a smaller car or an electric vehicle," said Rioux.

However, Charles Bernard, lead economist with the Canadian Automobile Dealers Association, is among those who says the incentive program has proven effective in both Quebec and British Columbia, he said.

He said the incentives help draw those who are on the fence. Prices for EVs are going down, but price parity with gas-powered cars is still a long way off, he added.

No investment in public transit

Patrick Bonin, a climate and energy campaigner with Greenpeace Canada, said the subsidies cater to the wealthy who can afford to buy a new EV which costs tens of thousands of dollars.

Only a small number of people can use the rebates, he said. If the government had increased the tax on gas and used that money to fund the EV subsidies, the cost would have been neutral, he explained.

Then the money that was otherwise funding the EV incentive program could instead be invested in public transit, he said.

But the government opted to not increase funding for public transit, according to Marc-Andr Varin, director general of Association du transport urbain du Qubec (ATUQ).

"We were hoping that there would be at least some indications as to a new financing model or some provision next year some funds available to make sure we can maintain the budget," he said. "But for the regular service, there was nothing that has been announced."