Politics
Politics, Policy and Regulation of green tech in Canada

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Stock Market

The Montreal Economic Institute says the Quebec government’s electric vehicle (EV) sales quotas, which go into effect in 2018, are nothing more than a tax on all vehicle buyers in the province and will only serve to increase the cost of conventional vehicles.

 

Electric Vehicle Sales Quotas: A Tax in Disguise, released on July 25, explains that because the sales quotas are too high (3.5% for 2018 and rising to 22% in 2025), which results in automakers having to purchase credits to meet the target, either from other manufacturers with excess credits or from the government at $5,000 per credit, this will simply increase the overall cost of conventional vehicles. In essence, these quotas are a tax, says the viewpoint’s author Germain Belzile, senior associate researcher of current affairs at the MEI.

MEI image August 2017

According to the MEI, the marginal per vehicle cost of the Quebec government’s sales quota will be $175 in 2018 and will rise to $1,100 in 2025, meaning that Quebecers will end up paying more for conventional vehicles.

But there are additional perverse impacts from the Quebec EV sales quota policy. Lower income Quebecers will be more adversely affected than those in a higher income tax bracket because the increased vehicle costs aren’t likely to be spread evenly in the market, says MEI.

“It will represent a larger share of the total cost of a lower-end vehicle than a higher-end one. This means that poor households wanting to buy cheaper vehicles will face a steeper price increase than households with higher incomes acquiring more luxurious vehicles,” states the paper.

The province could also see higher emissions in the light duty vehicle sector because the policy would favour the purchase of trucks rather than passenger vehicles, adds Electric Vehicles Sales Quotas.

“This means that although there will be fewer conventional car sales,a greater share of these will be light trucks. Since the latter pollute more than the former, the quota policy is likely to encourage consumer responses that will mitigate the environmental benefits the government is trying to achieve by encouraging the electrification of Quebec’s fleet of vehicles,” states the viewpoint.

In a nutshell, the MEI says the Quebec government’s sales quotas are counterproductive to its environmental goals and will only reward auto manufacturers that exclusively sell hybrid and electric vehicles. Moreover, these automakers are essentially subsidized to sell their hybrids and EVs because they will be able sell their surplus credits to manufacturers that need them.

The MEI has criticized the Quebec government’s approach to electric vehicles in the past. Most recently, it argued that the province’s purchase subsidies weren’t worth the investment. More is HERE.