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Canada Sets 2035 Zero Emissions Mandate For New Cars

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Just over 10 percent of Canadian new car buyers this year chose to buy a battery electric or plug-in hybrid electric vehicle. According to CTV, the exact number is 10.3 percent. The Canadian market is relatively small, as the massive frigid country is expected to purchase around 1.63 million new cars, trucks, and SUVs in 2023, meaning EVs will account for just 167,890 units sold to our northern neighbors. The Canadian government is mandating that automobile manufacturers increase their electric vehicle production and import for the country on a sliding scale beginning in 2026 and ending with a zero emissions vehicle mandate for the 2035 calendar year. For the purposes of this mandate, the Canada considers PHEVs with 80 kilometers (50 miles) of range to be functionally zero emissions vehicles.

In a good pre-pandemic year, the Canadian market purchased closer to two million new vehicles annually, and it seems the market is trending toward that number again. Expectations for the market rebound are slow, but should hit 1.71 million for 2024, and grow beyond that. That means that Canadians are going to have to get used to buying electric, and quickly. The government has mandated that 20 percent of new car sales in the country be zero emissions vehicles for 2026, just two years away.

The Canadian market for electric vehicles has grown steadily since 2020, when EVs accounted for just 3.3 percent. EV sales hit five percent of the market in 2021, and grew to 7.7 percent in 2022. Even at this growth rate, the country will fall short of the government’s 2026 20 percent sales mandate. From there the rate of growth will have to expand exponentially, as the Canadian government has also mandated that 60 percent of new vehicle sales in the country be zero emissions by 2030, before hitting 100 percent in 2035. Strong growth goals from Canada here, but I expect as European nations and California get closer to their own EV mandates, this will become much easier for the Canadian market.

In order to achieve these ambitious goals, the Canadians have rolled out a ZEV credit system for automakers. Each company will earn a credit for having a zero emissions vehicle for sale in the Canadian market across the 2024 and 2025 model years. Companies will also be able to earn a credit by investing in the country’s charging infrastructure, and each project must be a fast-charging station in operation for at least five years. These credits can be traded or banked, making it possible for companies without an EV in their lineup to continue selling in Canada.

The folks behind the credit system say it’s important to put the onus on the manufacturers, because they want to ensure fairness for Canada. This mandate system requires companies to focus on the Canadian market instead of sending their cars to the U.S. or Europe as other countries begin zeroing in on their own EV mandates. I don’t know for sure that this will be a concern, as economies of scale will surely mean that automakers will build the cars they can sell to the most consumers most efficiently. Actually, maybe Canada is right on this one.


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