EVs in Canada: Are Mandates a Good Idea?
This week Daniel Breton, President and CEO of Electric Mobility Canada (EMC) joins as our guest. Prior to joining EMC, Daniel was an environmental activist and politician in Quebec.
Here are some of the questions that Peter and Jackie asked Daniel: What percent of new cars in Canada are EVs now? Are you concerned about cost inflation and the lack of cars? Which Canadian provinces are EV leaders and laggards? The Liberal government wants EVs to make-up 60% of new car sales by 2030 and 100% by 2035 – are mandates a good idea? Is the Canadian government spending enough to build out EV charging infrastructure? California had a power shortage in early September and some people said this is a sign they cannot add more EVs, is that a fair criticism?
Content referenced in this podcast:
- EMC Canadian Provincial and Territorial Zero-Emission Vehicle Scorecard
- Link to Daniel Breton’s past books
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Episode 180 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian and welcome back. Well, we’re solidly into December and I must say, I’m reflecting back to December of 2015 because I think it was December 29th when I received my first electric vehicle, which was a Tesla Model X. It arrived at my house on a trailer truck, and it was a snowy day and it rolled off.
You know, back then, Jackie, it was definitely an issue of range anxiety, so I had to figure out where you were going and so on and so forth. But certainly, around town, it was a no-brainer. But still, a recent experience I know that you had, it’s not a given six years later that it’s easy to find charging stations and locations that are popular.
Jackie Forrest:
Right. Well, I know it varies across Canada, but here in western Canada, I think infrastructure is a real barrier. An example of something that just happened to me is I drove out to Calgary to Lake Louise in the winter, and it took most of my battery to get there because during the winter, you do go through more battery than you would in the summer.
But when I got there, the hotel I was staying at advertised they had Tesla chargers, but there were two and this is a very big hotel, and of course there’s-
Peter Tertzakian:
Two chargers for the Chateau Lake Louise. That’s it?
Jackie Forrest:
Yeah, two chargers. And of course, there were cars on them already and I needed to get going the next day, so I was told to come back at six in the morning or seven in the morning and see if they could get one of the cars off, but they weren’t sure, which creates a bit of anxiety because if I can’t get on that charger, then I can’t get home. And that’s a level two charger, so it would take make about, I figured, at least four hours I needed to be on that charger to be able to get enough charge to get back home. And there isn’t another fast charger in the area.
So, we ended up getting a valet car off there at one in the morning so I could get on, so I’d have enough charge to get home. But we’re still at a situation where we just don’t have enough charging infrastructure, in my view, to feel like you always want to take the car.
Peter Tertzakian:
Yeah. I mean, anywhere within the urban perimeter, electric vehicles are a no-brainer, but the minute you want to get into some of the more rural areas, you have to think about how you’re going to do it. Now, there’s all sorts of software aids that allow you to do that, but it’s still shocking to me that popular resort destinations are not equipped, given the rate of adoption of these vehicles. And if these sorts of destinations don’t improve, I think, potentially, it’s a bit of a barrier to sales.
But anyway, I think that that’s an observation. Let’s get an expert in, shall we?
Jackie Forrest:
Yeah. We’re very excited today to introduce Daniel Breton, President and CEO of Electric Mobility Canada, also called EMC. Welcome to the show.
Daniel Breton:
Hi. It’s a pleasure to be here.
Jackie Forrest:
Great. Well, first Daniel, maybe tell us a bit about yourself. The internet describes you as an environmental activist and politician in Québec, so tell us about that and what led you to head up an industry association focused on electric mobility.
Daniel Breton:
Well, I grew up besides refineries in Montreal East. When I was a kid, there were eight refineries, so I was witness to fires, explosions, spills. Right when I was a kid, I mean, that happened in my neighborhood. So, I said, “There has to be a different way for us to move around using oil.” And people in my family were working at GM in the U.S. and in Canada, so I worked on the assembly line when I was a student. In Sainte-Thérèse, I was assembling Monte Carlos and Malibus and vehicles like that, so I was having conversations about the future of mobility from the ’70s.
And I remember, when I was in high school, we were talking about electric cars back then and hydrogen cars and where we should be heading, and what new technologies could be interesting. And actually, my cousin worked on the, believe it or not, Arnold Schwarzenegger’s Hydrogen Hummer H2. So, this is a conversation I’ve been having for decades.
I studied in climate change and life cycle analysis when I was in university and at one point, I went into politics to see if anything could be done regarding on dependence on fossil fuel and new ways of moving around. I was Environment Minister, but I was also in charge of the first electric mobility strategy for a government in Canada 10 years ago. I wrote books on the subject, five actually. I have another one coming out in a few months in English and in French because I think that electric vehicles, whether we’re talking cars, trucks, buses, boats even, they’re not the solution, but they are certainly a very important part of the solution if you want to reduce our GHG emissions and our air pollution emissions.
That’s basically where I’m coming from. People know me in Québec. They’ve known me for more than 20 years. I’ve been in the media for more than 20 years. Worked with CBC, Radio de Canada, Journal de Montreal, Le Devoir, wrote articles.
Peter Tertzakian:
So, talk for a minute about Electric Mobility Canada. You’re the CEO of EMC. When was that first formed and what companies does EMC represent?
Daniel Breton:
EMC was founded in 2006, so it’s been around for a while. Because we are an EV industry organization, our members range from car manufacturers to bus manufacturers, truck manufacturers, off-road vehicle manufacturers, to universities across Canada, cities, research centers, government departments, infrastructure providers, utilities, unions.
Peter Tertzakian:
So broadly, it also is Canadian, but because the auto industry has dominantly been in Central, Eastern Canada, Ontario, Québec, et cetera, that it’s historically mostly been represented there, but now it’s expanding much more across Canada. Is that fair to say?
Daniel Breton:
Yep, absolutely. We have members ranging from Atlantic Canada to B.C., and more and more, actually, new members coming from Western Canada.
Jackie Forrest:
Well, let’s talk a little bit about where we are with electric cars in Canada today. Can you give us an update on the sales right now and how that’s changed, maybe relative to a year ago?
Daniel Breton:
If we look at light-duty vehicle sales, for Q3 of 2022, we were at 9.5% ZEV sales, a ZEV being either a battery electric or a plug-in hybrid electric vehicle. I mean, there’s also hydrogen can be considered a ZEV, but there’s so few of them that basically, it’s battery electric or plug-in hybrids.
Compared to Q3 of 2021, we’ve seen a 68% increase in percentage of sales, which is significant. And as time goes by, we see growth going up exponentially, whether we are in Canada, but we can see that in Europe, in China, in California. In B.C., for instance, if you look at the ZEV sales for Q3 2022, they were at 19.9%. I mean, 20% basically, which is really impressive.
Peter Tertzakian:
Mm-hmm. So, just to be clear, light-duty vehicles are vehicles that are … I think the definition’s under 6,500 pounds or 3,000 kilograms or something like that. And it’s basically-
Daniel Breton:
3,800 kilograms, yeah.
Peter Tertzakian:
3,800. And basically, your big SUVs on down. Is that-
Daniel Breton:
Yeah, exactly. Big SUVs, pickup trucks. I mean, light-duty pickup trucks, not the 2,500 and the 3,500, but the F-150, for instance, is a light-duty pickup truck.
Peter Tertzakian:
Okay. So, the rate of sales of light-duty vehicles in Canada is 9.5%, so 90.5% are still combustion vehicles.
Can you talk about the geographic distribution, not by province or anything, but I’m more interested further to the introduction that Jackie and I had, sort of urban, big city adoption must be, on average, higher than 9.5% but adoption in rural areas must be lower. Is that fair to say or not?
Daniel Breton:
No, it’s not, actually. Most of the people who will buy an electric vehicle either have a garage or a driveway. When you live in a downtown area, it gets more complicated. But that’s why, more often than not, you’ll have people who live in the suburbs or even in rural areas, will buy an electric car because it’s easier for them to plug the car.
To give you an example, in Québec, 75% of EV owners live outside of Montreal in Québec. A lot of people think that you need to be living downtown or in Montreal to own an EV, but actually, it’s the other way around. It’s more and more people living in the suburbs because downtown charging is more of an issue when you live in a condo building or an apartment building.
Jackie Forrest:
Those sales numbers are impressive, 68% increase. And it’s interesting, we’ll get to the mandates that the Government of Canada’s put forward, but they’re talking about 20% of new car sales by 2026 and it’s interesting. B.C.’s already getting there.
But I think the sales could have even been higher. We hear that there’s long waits for EVs now. The prices have gone up. I was just looking at the Model Y. Since early 2021, it’s increased about 20% in terms of the cost, a lot of that to do with the increase of batteries and steel and copper. So, are you concerned about the shortage of cars and the price, in terms of what the adoption rate will be going forward?
Daniel Breton:
I’m concerned about the shortage of cars, and that’s one of the reasons why we are supporting the federal government in its will to adopt a federal ZEV mandate, meaning the obligation for more and more car manufacturers to supply and sell more and more electric vehicles. There’s a ZEV mandate in B.C., there’s one in Québec, and P.E.I. is now talking about this.
So, the issue right now, people are talking about the price of cars being more and more expensive, but actually, it’s not just electric cars. If you look at a 2017 F-150, for instance, versus a 2022, gas, F-150 mind you, the price went up 30% in five years. If you look at the Grand Caravan, the price went up 48%, and a Honda Civic, the price went up 57%.
So, it’s not only electric cars who have seen the price go up, but while you have the Tesla Model Y or Tesla Model 3 or many Tesla vehicles who have seen their price go up in a very short period of time. At the same time, we are seeing car manufacturers like GM, for instance, coming up with a vehicle like the Equinox, which is going to be on sale next year at $37,000. So, when you compare that to a Honda product for instance, which is a gas vehicle like the CR-V, starting price at $35,000, well, it becomes very competitive without the rebate.
I think this is a discussion that is more nuanced than we would think. Yes, we have seen electric car vehicle prices go up, but some companies, and I would say mainly GM, is coming up with very competitive vehicles. The issue now is how many of them can they make? Because that’s the other issue because they can’t keep up with the demand. I know some dealers who have orders for electric GM vehicles. One dealer, 800 to 900 orders for one dealer. That’s a lot of cars.
That’s why we think that the ZEV mandate is absolutely crucial for us to be able to get access to more and more electric vehicles at the dealerships, whether it’s in Ontario or in Western Canada, the prairies, because more and more jurisdiction and countries have regulation that forces car manufacturers to sell more and more electric vehicles. We are seeing that in Europe, we are seeing that in China, and because of that, car manufacturers will send those vehicles first and foremost to those countries. We get left with the leftovers, basically.
I mentioned it to you before we went on the air. In three years, between 2019 and 2022, in Germany, EV sales went from 3% to 26%. In the UK, it went from 2.2% to 24%. In France from 2.8% to 21%. So, regulation is absolutely necessary.
Peter Tertzakian:
Well, yeah. I agree regulation is part of it, but frankly, ultimately, products, whatever they are, have to stand on their own providing superior utility to the customer at a lower price, and I believe electric vehicles are getting there and that’s ultimately going to be the driver.
But I want to slice and dice this 9.5% number, which is the percentage of sales of new vehicles in Canada, a little bit further. I want to slice it by province now because your organization, EMC, commissioned a scorecard that rated each Canadian province and territory for the ability to go electric. Talk about what that study found.
Daniel Breton:
Well, it found that there are some leaders and some laggers. Let’s put it that way. When we’re talking about the leaders, obviously B.C. and Québec are Canadian leaders. I mean, B.C. at 20% is even starting to become one of the world leaders in EV adoption because of regulation, of rebates, of infrastructure, of different programs that help people adopt electric vehicles and have a good experience.
Another province that is having good success in EV manufacturing in Ontario, but they have no policy whatsoever on EV adoption. So, they had a rebate, they took it out. They had an infrastructure program; they took it out. So, they’ve gone from being a leader to going behind the Canadian average for EV sales.
Peter Tertzakian:
Wouldn’t you say that price of electricity is also a factor? I mean, B.C. and Québec have a very cheap price of electricity from hydro, and Ontario, the price of electricity is much higher.
Daniel Breton:
Actually, they have put together a new system where you can charge a vehicle for quite a competitive price when it’s off-peak. That’s a new program in Ontario, so I wouldn’t say that it’s a big issue, electricity prices in Ontario now. It’s below 10 cents a kilowatt hour off-peak, which is very competitive.
No, I would say that, to me, the main challenge is first and foremost, it’s supply because people have to wait, depending on the model, between six months to even three years, which is a very big issue because first of all, it’s an issue for the customer, but it’s also an issue for the salesperson. Because keep in mind that most people who work at selling vehicles, they get paid when they deliver the vehicles. So, if they’re being told, “Well, you’re going to sell only electric cars, but you’re only going to get paid when you deliver the car in a year or two years,” so for them, it’s a disincentive for them to sell electric cars. They’d rather sell the vehicle that’s on the lot or that’s going to be available in a month or two, and that’s understandable. It’s a real dilemma for them. So supply is a big issue.
Price of vehicles, it is an issue for some models, but less and less because as I said, gas vehicles are really becoming more and more expensive.
The other one is infrastructure. You mentioned that. You’re in Western Canada. I mean, when you live in B.C. and Québec, it’s not an issue because there are many chargers everywhere, whether you live in urban areas or rural areas. You can travel pretty much anywhere you want. The issue becomes one of having the province or the city where you live in being interested in investing in EV infrastructure. The federal government has announced almost $1 billion to install EV chargers across the country, but you’d be surprised how little most cities and municipalities are interested or even know how to apply to those programs and what to do with them.
That’s why the private sector’s coming in more and more ambitiously. We have Parkland, which is a very important gas station company, who’s investing in a big way in EV chargers across the country. We have Circle K Couche-Tard, which has decided to invest in EV chargers across the country as well. And keep in mind that when you go to Norway, which is basically the mecca of EVs in the world … I mean, keep in mind that in Norway, while we were at 9.5%, they were at 90% EV sales over there. And the most important EV network there is Circle K, which is a Canadian company.
We have other private companies who are investing more and more, so that means that the infrastructure, I would say that the infrastructure subject is an important one and this is one that should be taken seriously, especially when you get on the highway in rural areas, in Western Canada in particular.
This example that you mentioned about the Chateau Lake Louise, keep in mind that those Tesla chargers were paid by Tesla. The Chateau Lake Louis did not invest a penny in this. It’s because Tesla paid to install those chargers. So, at this point, I think that they should be doing a lot better than this.
Jackie Forrest:
Yeah. So Daniel, I think the infrastructure, and maybe because I live in Western Canada, not one of these leading provinces here, like it’s great to hear that people in Québec and B.C. can go anywhere and not worry about it. When I look at that money the government committed, $1 billion, and I compare that to what countries like Germany are spending, for example, our $1 billion we think will go towards about 100,000 new charge points. Germany, which is two times Canada’s population, has a goal of a million charge points by 2030.
Now, I know that you’re hoping there’ll be some private capital add to that, but it just seems like, considering the size of this country, we need to do a lot more for the government to get the adoption rates that they’re hoping to get in their emissions reduction plan.
Daniel Breton:
The $1 billion is between now and 2027, so I’m expecting more and more funding to go up to 2030, 2035, but I’m seeing that since more and more private entities are interested in installing chargers, that more and more of the private capital is going to be invested in there. That’s the first thing.
The other thing you have to keep in mind that 80 to 90% of charging happens at home. Public EV charges, basically, are for highways, rural areas, and downtown dwellings. Level two and level three chargers or fast chargers are installed in condominiums and close to apartment buildings. But the truth of the matter is that, for now, most charging happens at home and will keep happening at home. So, I’m not seeing that the government will be investing in private or residential chargers.
Where I would like the government to invest though, all governments, whether it’s municipal, provincial or federal, would be in upgrading the electric panels for those older houses that are 40 years old or older where you want to install an EV charger and you can’t because your panel can’t take it. It’s just too old. To me, that’s somewhere where the government should invest.
Peter Tertzakian:
Well, and that’s a major challenge because a lot of homes just have 100 amps coming into their-
Daniel Breton:
My home did have only 100 amps. I had to change the whole panel because we have two electric cars at home, so I understand.
Peter Tertzakian:
Yeah, you have to change the panel, and in some instances, you have to trench out to the distribution box and rewire the neighborhood, which is very expensive.
Daniel Breton:
On that topic in particular, we will have a report coming out in the beginning of January from our utilities working group on upgrading the grid as more and more EVs are adopted across the country.
Peter Tertzakian:
Yeah. I think the other challenge is many homes have their basements are already finished, so you have to do a lot of renovation to pull the wire to the garage and so on. Depending on the level of complexity, every home is different. But these are all sorts of micro-barriers to further adoption.
Do you think there’s some limit coming up in terms of the rate of adoption where, at some point, it’s going to be harder to get this sort of thing done? Like okay, we went from a couple percent to 9.5% and it’s going, but at some point, it just gets harder and harder for people to wrap their minds around adopting the technology.
Daniel Breton:
Well, honestly, I think one of the barriers is, I would say, an education barrier because a lot of people have so many misconceptions about EVs. They just don’t know how they work. And naively, I thought 10 years ago that by now, people would have understood. But as more and more EVs get on the road, I’m seeing more and more misinformation out there in the media, social media, about EVs, how they work, where you can go and what not. I think education has a lot to do with it.
And training. I mean, I’ve been going to different dealers, mystery shopping for decades to talk to them about EVs, and I’m stunned, in 2022, to hear some people working at dealerships say ludicrous things about EVs. It’s still a problem, it’s still a challenge.
Peter Tertzakian:
Yeah. This is what I’m thinking is these sorts of anecdotes and the increasing potential costs because it’s not just buying a car, it’s rewiring a house. Who’s going to pay for that? At some point, the adoption rate slows down, which leads to the question, okay, so I think getting to the government emission reduction plan for light-duty vehicles, a rate of sales of 20% by 2026 is probably realistic.
Daniel Breton:
That’s an easy one.
Peter Tertzakian:
That’s an easy one. But getting to 60% by 2030 and 100% by 2035? What are you thinking about that? It’s not very far away, 2030.
Daniel Breton:
No, but I mean, look at all the western countries like Europe or even China or the U.S. People are aiming towards 100% EV sales by 2035 or 2040 or 2030. It’s all in that range, basically. There’s nothing revolutionary about that. The technology’s evolving really quickly.
Keep in mind, 10 years ago, the average electric car had 120 kilometers of range. Now we’re at 450, 10 years after. Keep in mind that when you had a charger five years ago, the average fast charger was a 50-kilowatt charger. Now we’re talking 100, 150, 200, 250 and even 350 kilowatts. So, things are evolving really quickly, so it’s hard to predict, but as time goes by, we’re seeing, as I mentioned, the growth in EV sales is exponential.
I think that there is going to be a difficult point where for some people, it’s not going to be technological. The barrier will be cultural. Let me explain.
For some people, to drive an electric car is almost blasphemous. Some people, they’re really in love with their gas vehicle, whether it’s a pickup truck or an SUV for reasons that have to do more with culture than it has to do with technology. I mean, if you’re in the U.S. and you’re a conservative or a Republican, you will very often associate an electric car with a Democrat. It becomes a cultural phenomenon. It has nothing to do with the technology.
I mean, roll culling has nothing to do with the technology. It’s cultural. So, to me, some people will never want to get behind a wheel of an electric car because it’s an electric car, no matter how good the car is.
Jackie Forrest:
But Daniel, I want to just clarify. So, the government has put out these goals. Are they formal mandates on the automakers to have that many vehicles available? And if so, how are the automakers viewing that target?
Daniel Breton:
Yeah. Well, the federal ZEV mandate’s not out yet, so we’re in the middle of consultations right now. We’re expecting draft regulation to be out in the next couple of weeks, and we will have a bit of time to comment on them.
But I would say that most traditional car manufacturers don’t agree with this. They’re fighting this like they fought in California, like they fought in Québec, like they fought in B.C. But this is nothing new. Many car manufacturers have been fighting regulation for decades. I mean, they fought regulations against seat belts back in the ’50s and ’60s, and they fought regulation against any pollution system in the ’70s and ’80s, and they fought regulation against airbags back in the ’80s and ’90s. Most of the car manufacturers, they fight regulation, whatever the regulation is. So, this is nothing new.
Some leaders don’t have so much of an issue because they’re on their way towards making the transition for manufacturing EVs, some others, and I would mention in particular, Japanese car manufacturers, I feel that the … Not all Japanese car manufacturers, but many Japanese car manufacturers are lagging way behind. The way I look at them, to me, now they look like the American car manufacturers looked 40 years ago when they were on top of the world and they were saying, “We’re the best. We’re having most of the market in North America,” and they got their butts kicked by the Japanese manufacturers 40 years ago.
Now the Koreans are really coming in strong, and I think that they’re really hurting the Japanese car manufacturers because they’re fighting this. They’re fighting this transition.
Jackie Forrest:
Okay. Well, so that’s one. One objection is from the automakers, and that’s great context that, depending on where you sit, you may be for it or against it. Another objection comes from the power supply, the generation, and how’s that going to supply all these cars?
And a good example happened in California in September where they were low on power, and they had to ask people to voluntarily not charge cars or use electricity during the peak hours. It did work. I think they sent text messages out to people, and it resulted in less demand, but a lot of critics said, “Here’s an example of why California’s not ready for EVs. They can’t even keep the lights on now.” Do you think that’s a fair criticism and do you think that’s going to be a barrier to getting more EVs, as these mandates are asking for?
Daniel Breton:
No because people in North America look at California, they don’t look at Québec. But Québec, that stuff’s exactly the same thing last winter because it was really cold. They said, “Could you please not charge between four and eight in the afternoon and six and nine in the morning?” And peak demand is an issue everywhere in the world. It has been an issue way before electric cars came to market. They’re being asked, they’re not being ordered not to charge. They’re being asked not to charge, if possible, during peak hours. That’s where you have differentiated rates everywhere in the world, whatever you do, whether you have an electric car or not.
There’s nothing easier to preprogram than an electric car. I mean, I just took my smartphone, and I preprogrammed my car to start charging at eight, and at six in the morning, charging was finished. This is a way, actually, to make the grid smarter and we can use the electricity more efficiently instead of having to import electricity or import dirty electricity during peak demand. At one point, when we have bidirectional charging, what will happen is that the electric cars and trucks and buses will become part of the grid and will help manage the grid demand, the electricity demand, in a much more intelligent way.
But keep in mind, in Canada, 1% of the fleet is EVs now in Canada. In Norway, going back to Norway, they’re at 24%. Well, at 24% of the whole fleet being electric in Norway, it increased electricity demand by 1.4%. So, it’s a lot less than people thought. That’s why we have to keep in mind that it’s not electric vehicles that’s going to make such a huge difference in electricity demand.
Peter Tertzakian:
Well, it’s been a fascinating discussion, and I could talk a lot more. I mean, I would suggest that Canada’s not Norway and Norway’s Europe and we have other types of challenges, which you highlighted, including supply issues, cultural issues, issues of cost, educational literacy issues that lead to resistance. But balancing against that, I continue to believe the technology will get better, the utility of these vehicles will continue to impress, and the infrastructure will continue to grow and be more pervasive across the country.
So, I’m of the belief we’ll get to 20% penetration of sales relatively easily, but after that, it’s going to be interesting to see how all these issues balance out. So maybe at that point, we can have you back, Daniel.
Daniel Breton:
Okay.
Peter Tertzakian:
So, Daniel Breton, the President and CEO of EMC, which is Electric Mobility Canada. Thank you for joining us.
Daniel Breton:
It was my pleasure.
Jackie Forrest:
Yes, thanks Daniel, and thank you to our listeners. If you enjoyed this podcast, please rate us on the app that you listen to and tell someone else about us.
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