The Politics and Facts of Electric Vehicles

Geoff Currier and Evelyn Jacks

The government has mandated that by 2026, 20% of the new vehicles sold in Canada must be ZEV’s and that number will rise to 100% by 2035.  This is going to be costly for government, as they invest Billions of dollars in change management. But for Canadian households, this could be devastating in two ways: first late payments on auto loans have hit a new high across North America in early 2025. Second, each Canadian is now responsible for between $40,949 and $68,861 in provincial and federal debt; which is deferred taxation.

The Backdrop: Much of the world has fallen in thrall with electric vehicles, including Canada. The most recent numbers Statistics Canada has for global sales come from 2022 when 14% of all vehicles sold were either Battery Electric Vehicles (BEV’s) or hybrids. China and Europe led the way. StatsCan reports that in 2024 one of every 7 vehicles sold in Canada was zero emission vehicle (ZEV) More than half were sold in Quebec.

Meanwhile, auto loans issued by non-bank institutions rose 13.6 cent compared to a year ago while banks saw a 2.7 per cent increase, according to a report by Equifax. More than 1.4 million consumers (1 in 22) missed at least one credit payment during the first quarter of 2025 and younger in the 18–25 age group, often first car buyers, experienced a 15.1 per cent increase in delinquency rates. Specifically for auto loans, the delinquency rate with younger people rose 30%.

Canadian Government Policy: Telling people what they must buy is tricky business and these targets are ambitious. One way to coax consumers into buying a vehicle which is more expensive than one powered by fossil fuels is to offer an incentive. The federal government did just that, offering buyers thousands of dollars in rebates to purchase a ZEV. That program has been officially paused. The current government says it will return but hasn’t said when.

There are also provincial rebate programs. However, both Ontario and B.C. have also paused their programs. The rebate programs in the maritime provinces and Manitoba, while generous, have not produced the hoped for results in sales. 

Canada’s largest three provinces account for almost all of the ZEV sales: B.C., Ontario, and Quebec lead the way. From 2018 to 2022 those three accounted for more than 92% of all ZEV purchases. With Ontario and B.C. halting their incentive programs this year, we’ll need to see if sales in those provinces are impacted.

Saving the Environment? While moving away from fossil fuels is a generally agreed upon goal in Canada and Europe at least, it’s still something of an open question as to whether or not ZEV’s are actually better for the environment. earth.org has examined the issue. Based on this research the case for ZEV’s being better for the environment is shaky.

Drivers in Europe may feel good about their clean energy vehicles but that’s because they don’t see the environmental damage being done by lithium mining in Chile, China or Australia. Lithium is one of the essential elements in the production of EV batteries.

Mining lithium requires enormous amounts of water and the cost to the environment is often glossed over by the political advocates of ZEV’s. If Canada plans to get into mining of lithium or other necessary minerals for ZEV’s, we’ll need to consider the environmental impact.

The Real Costs of Driving a ZEV.  There are a number of other issues which have not been fully addressed when it comes to ZEV’s. The cold prairie winters make frequent charging necessary and thus less convenient. That means, Canadian consumers must budget to use more electricity: cold temperatures reduce battery range by 20%-30%, and heating systems increase energy consumption. Planning for increased charging frequency during winter months is essential. Be sure to plan for other extra costs:

At home charging:  A Level 2 home charger typically costs between $1,000 and $2,500.

Public charging stations:  Level 2 chargers may cost $1-$3/hour, Level 3 fast chargers can cost $0.20-$0.50 per kWh, translating to about $15-$20 for an 80% charge on most EVs. That’s still cheaper than gasoline, however.

Repairs:  No more oil changes, brake repairs or exhaust system failures, but after 8 to 10 years, battery failures could cost between $10K and $20K. 

Insurance:  Because replacement costs are higher, insurance rates can be higher too.

Weight and Tires:  The extra weight of these vehicles because of their battery size means more wear and tear on our highways as well as shortening the lifespan of the tires. There may be long term unseen environmental damage. We may not yet be prepared for what to do with the batteries from these vehicles when their life comes to an end. Recycling them will require energy that has yet to be accounted for.

And, finally, will the grid be able to handle the demand of tens of millions of vehicles which require charging? 

It’s understood that the world must wean itself off fossil fuels although not all of the world is buying into the idea as enthusiastically as might be hoped. Canada is prepared to do its part but if Alberta oil is left in the ground, there will be a massive impact on our economy. It must also be considered that the minerals required for manufacture ZEV’s, while currently plentiful, are finite resources.

The Money and the Politics: The notion of offering incentives creates a philosophical debate. The basic question of who is providing the money for these incentives needs to be asked. In other words, is it reasonable that your neighbours tell you that you must give them some of your money so they can buy a ZEV? 

There are legitimate concerns with the move towards ZEV’s. For individuals who may be struggling under burgeoning debt, doing the math is important before any large purchase, but in particular before the upcoming requirement to switch to potentially an unaffordable ZEV.

Stay tuned weekly to Knowledge Bureau Report for continuing coverage of breaking tax and economic news and tune in to Season 1 of a new podcast- Real Tax News You Can Use with Evelyn Jacks: podcast@knowledgebureaureport.com

To understand how to write off an ZEV, take the DMA Personal Tax Specialist Designation Program.