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Electric vehicles and you: Lower fuel costs, higher up-front price and taxes?

EVs are mandated to make up 100 per cent of new car sales by 2035—what could that look like?
Electric vehicles are coming.

Electric vehicles are coming.

At least, if both the B.C. and federal governments get their way, by 2035, every light-duty vehicle sold from dealerships near you will be electric.

Victoria announced its plans to mandate the sale of electric vehicles in British Columbia in October of last year, with the feds following suit in December with a nationwide adoption timeline that leads to the same goal.

The main push behind the legislation on both levels of government is to reduce greenhouse gas emissions: “Canadians have been clear: they want clean air, good jobs, and a strong economy,” reads the first line of the federal government’s information package on its legislation, while the province’s release is all “cleaner vehicles,” “cleaner transportation,” and “cleaner British Columbia.”

So they’re both on the same page.

Another aspect they’re on the same page about is the cost—both levels of government offer rebates that can be stacked to reduce the sticker price hit of an electric vehicle.

Despite their growing popularity, electric vehicles remain at a premium over their petrol- and diesel-powered counterparts, though this is changing, according to their proponents, who say EVs will achieve parity in short order with higher adoption.

‘We’re all on the same page’

Following the province’s announced plans last year (but prior to the Canadian government mandates), Pique spoke to Blair Qualey, president and CEO of the New Car Dealers Association of BC.

Qualey said the 100-per-cent adoption rate by 2035 is aggressive, but car makers and governments are pulling in the same direction with their intentions.

“We’re all on the same page recognizing the urgent need to reduce greenhouse gasses, and we understand their desire to put some targets in place to get industry moving,” he said.

“Most of the manufacturers have put billions and billions of dollars on research and development and are electrifying most of everything in their fleets.”

But the government targets are aggressive, and unlikely to be met, he said, pointing to consumer concerns.

“All you have to do is go on social media or listen to radio programs and hear comments by consumers with a litany of questions and issues around everything from the price of electric vehicles … charging of vehicles … the cost of the charge is an issue … and on and on and on,” he said.

“I think everybody recognizes that it’s great to be trying to make a transition, but the way things are is fraught with all sorts of challenges, and quite frankly it’s a little too far, too fast.”

Charging infrastructure and range anxiety aside, Qualey said price is a major sticking point, highlighting penalties in the province’s legislation that target manufacturers who don’t hit the sales percentage requirements.

“Right now manufacturers can face … up to $20,000 of penalty per vehicle that they sell that’s outside of these arbitrary ratios the government has set,” he said, pointing out those penalties could be passed along to consumers.

“The average price of a [new] car in Canada now is $66,000. That’s any vehicle, gas or otherwise. You add $20,000 to it, it’s really expensive.”

Qualey also said an unintended consequence could be a reduction in vehicle availability that would in turn increase prices—something British Columbians and Canadians saw during the pandemic, when car makers had near-empty lots and vehicle prices spiked in both the new and used sector.

“If they can’t make these targets, then in order to make the target and not face these penalties they’re going to have to basically shrink the volume of vehicles they’re making available for sale in the province,” Qualey said.

Looking beyond just consumers, the new mandates will affect governments as well: government fleets can include hundreds of vehicles of all manner of configurations, including trucks, and they’ll also need to be updated, with the funds for budgets coming from taxpayers at one point or another.

“All of this is going to make it expensive for everyone, and absolutely for municipal governments and anybody that’s got a fleet of vehicles that needs trucks and medium- to heavy-duty vehicles,” Qualey said.

“It’s going to plague consumers, both for their own vehicles plus in their taxes they’re going to have to pay, because municipal governments will have fleets that are going to be incredibly expensive.”

Electric city

Digging down on the municipal fleet cost angle, it’s an expense that gets folded into budgets, so represents a cost that isn’t obvious to most people, as they pay for government fleets through their taxes.

Pique reached out to the Resort Municipality of Whistler (RMOW), the District of Squamish and the Squamish-Lillooet Regional District (SLRD) for some facts and figures about their fleets, and asked some questions about expenses.

The RMOW has 150 items in its fleet, of which “approximately” 100 are vehicles including medium- and heavy-duty trucks, according to a communications official from the municipality.

As of October 2023, the RMOW fleet included six battery electric vehicles, two plug-in hybrids and nine hybrids, with plans for more to be added in the next year.

Atop the municipality’s standard fleet-replacement policy, the RMOW also has its Big Moves suite of policies to reduce greenhouse gas emissions by developing the community as EV-friendly. The RMOW has a budget of $2.14 million for its vehicle-replacement program in 2024, though most of that will go towards a new fire truck.

The District of Squamish (DOS) is a smaller fish than Whistler, with 80 vehicles in its fleet, of which eight are electric, along with an electric ice machine and one hybrid truck. A DOS communications official told Pique the district is in the process of creating a detailed fleet assessment to understand what vehicles it has which can be replaced by EVs (the RMOW did something similar in 2022).

The next layer of government, the SLRD, is significantly smaller than both the RMOW and DOS, with only four vehicles in its fleet—but two of them are hybrids. The district has electric vehicle considerations baked into its replacement policy, which states that purchasing a hybrid or other fuel-efficient passenger vehicle “will be preferred wherever possible,” while cost is also factored in.

Pique asked all three whether the new electric vehicle adoption timeline could have an impact on their bottom line.

“While EVs are currently often more expensive to purchase than a gas- or diesel-powered equivalent, we know through modelling as part the 2022 Zero Emission Vehicle Fleet Assessment that fuel cost savings and reduced maintenance will balance out a portion of those additional initial costs,” said the communications official from the RMOW, who added the preferance is to replace any vehicles up for consideration with a zero-emissions option.

“The RMOW has set some ambitious targets to mitigate climate change and reduce Whistler’s climate impact and has many actions underway, including the move toward electrification of our fleet,” they said. “The community has made it known that reaching these targets is a priority. Taking the steps needed to get to this point is therefore part of the budgeting process.”

The DOS communications official said, “yes, more money will be spent on vehicle purchases,” given their higher cost.

“However, less will be spent on operations due to the lower costs of fuel and maintenance. It is projected that EVs will be cheaper than Internal Combustion Engine vehicles within the next three to five years.”

Asked whether there would be flow-on increases in taxes for residents, the DOS said there could be a taxpayer impact, “however, there are also significant opportunities for cost savings as it relates to fleet operations and maintenance.”

For the SLRD, officials said they do not expect a faster electric-vehicle adoption timeline to have a large impact on their budget, which makes sense given the SLRD’s much smaller fleet, which is already 50-per-cent hybrid.

So it’s a mixed bag when it comes to the cost of electric vehicles and local government. Yes, they are likely going to cost more to purchase for the time being, but ongoing expenses are probably going to go down.

Practical costs

In the end, it appears any rising costs of vehicles will be folded into overarching budget considerations and analysis of a vehicle’s cost over its lifetime, and therefore more difficult to pull apart and point to.

For the New Car Dealers Association of BC, Qualey said they remain supportive of mechanisms that encourage uptake of electric vehicles, and tools that encourage carmakers and sellers to get on board, but he believes it should be more mindful of cost to consumers.

“We can all want to get this transition underway, but there’s real practical cost-related issues for both consumers and companies and governments with fleets that they’re going to have to have a very close look at … and it seems we’ve gone a little too far a little too fast in making these kinds of requirements,” he said.

“There’s an opportunity for government to work with industry when it comes to the actual regulations that tie to this legislation to make sure we’re building in flexibility to take into account some of these unintended consequences to allow manufacturers to continue to work towards the target of a transition, but not to make it totally unaffordable for British Columbians to buy a vehicle.

“At this stage, we remain hopeful the government is willing to have those conversations.”

Could the provincial targets be walked back, given how aggressive they are?

“I don’t think they’re going to take the targets away,” Qualey said. “I don’t see there would be any appetite for that, particularly with an election coming, but who knows.”