Welcome, everyone, to the eighth meeting of the Standing Committee on Environment and Sustainable Development, and our fourth and last meeting with witnesses for our study of zero-emission vehicles.
Today we have four witnesses. Each witness will have five minutes to give their opening remarks. That will be followed, of course, by the standard question-and-answer session.
Witnesses, you can speak in either official language. If you're not speaking at a particular moment, please put your mike on mute. Also, in order to allow members to get the most information out of their questioning of you, if you could be as succinct as possible in providing answers and getting to the core of the subject matter of the questions as directly as possible, that will allow members to ask more questions and the committee to get more information for its report.
Without further ado, I believe we're ready to go. I would ask—
Thank you very much, Mr. Chair.
Good afternoon to all, and thank you very much to the committee for the invitation to appear today.
The Canadian Taxpayers Federation, for those who are not familiar with us, is a national, non-profit, non-partisan group founded in 1990. We have approximately 235,000 supporters across the country. We focus really on three broad areas; lower taxes, less government waste and accountability and transparency in government.
With respect to the committee's study, the reason for our appearance today is our submission with regard to the second point on government waste, specifically, what we see as a well-intentioned but ultimately wasteful program intended to encourage the purchase of ZEVs.
In October, our group released some access to information documents we obtained regarding the cost of a program launched by the federal government last year entitled “Incentives for Zero Emission Vehicles”. This was a program that provided a taxpayer subsidy of up to $5,000 off the purchase price of electric vehicles if the base model was listed for less than $45,000. If that base model was under $45,000, higher price versions of the same model up to $55,000 would then also qualify.
The way it works is that dealerships apply this to the price of eligible vehicles when they are purchased, and then they apply to Transport Canada in order to be reimbursed for the subsidy afterwards.
This program was launched in May 2019. It was expected to run for three years and had a budget of $300 million. As of January of this year, $134 million in rebates had been issued, with the rest of the funds expected to be entirely gone by the end of 2020.
Tesla has received the most subsidies from this program, taking in more than $60 million just between May 2019 and the end of March, a little bit under a year. Notably, Tesla's Model 3 did not qualify for this subsidy initially because the base model was priced too high. It was priced at $53,700, well above the $45,000 price cap.
To solve this, Tesla introduced a Canada-only version of the Model 3, which they called “standard”, with a non-negotiable reduced range of 150 kilometres per charge. Tesla priced this at $44,999, one dollar below the program cut-off rate, to be eligible for the subsidy.
Interestingly, they only sold 126 of this base model, but they did sell 12,000 of the higher-priced “standard plus”, which is now eligible for the subsidy because of the existence of this base model.
I would suggest that this is a problem. Presumably the purpose of setting a cut-off price was precisely to avoid having these subsidies go to more expensive vehicles, and yet that's exactly what happened here. Perhaps even more importantly, if the purpose of these subsidies is to encourage the uptake of zero-emission vehicles, it seems that a relevant question is whether they are actually leading to a higher uptake or simply providing subsidies to people who were going to buy ZEVs anyway. It's especially fair to ask that question given the price points we're talking about here.
Even a $45,000 vehicle, I would suggest—never mind a $55,000 vehicle—would be considered a luxury vehicle by most Canadians, and I think it's a fair question to ask whether regular Canadian taxpayers should be subsidizing the purchase of luxury vehicles for people who are fully prepared to pay full price for them. I would suggest that the answer is no, and for that reason our organization believes this program should be scrapped or, at the very least, revised.
I will close by observing that this government has in the past demonstrated an awareness of this windfall effect, where subsidizing the cost of something simply gives extra benefit to people who would be happy to incur the full cost anyway. The current government eliminated tax credits for transit, children's sports and arts using this exact argument since there was little evidence that they were leading to increased uptake of these things. They were simply providing a windfall to people who were going to buy transit passes or enrol their kids in sports anyway.
Taxpayer dollars, of course, are valuable for every use they have. There are many other potential alternative uses, and I would urge this committee to explore some of those uses to ensure that taxpayers are getting good value for their money.
Good afternoon, ladies and gentlemen.
Thank you for the opportunity to address your committee as part of your study on zero-emission vehicles in Canada.
Founded in 2006, Electric Mobility Canada is one of the very first organizations in the world dedicated to electric mobility. We are a national non-profit organization and are considered the Canadian experts in electric mobility.
EMC has more than 220 member organizations, including utilities, vehicle manufacturers, infrastructure providers, tech companies, research centres, cities, universities, fleet managers, etc.
We work on electric mobility from bikes to cars, from buses to boats, from trucks to trains, from mining to research to assembly to infrastructure to recycling and in all parts of Canada.
I personally have been working on electric mobility for almost 20 years and have written many books on the subject. At home, we drive electric cars, and by the way, we live in a rural area.
EMC supports incentives for the purchase of light and heavy-duty electric vehicles from buses to school buses to trucks, incentives for the purchase of used EVs and PHEVs, financial support for the purchase and installation of charging infrastructure, a federal ZEV standard, innovation programs related to the EV industry, education for consumers, the electrification of government fleets, and training and retraining programs for workers across Canada.
In the first half of 2020, ZEV sales were at 3.5% of all light-duty vehicle sales in Canada.
Unless a ZEV standard is adopted, Canada won't be able to meet its EV adoption targets. It still is very hard to find an EV, since only 33% of dealers in Canada have at least one EV in stock. Outside of Quebec, B.C., and Ontario, fewer than 20% of dealerships have at least one EV on their lot, so even though dealers want to sell EVs, they don't have enough supply to meet consumer demand.
According to a 2019 report by Clean Energy Canada, 560,000 clean technology jobs are expected to be created in Canada by 2030, with 50% of them in the clean transportation sector.
Between 2021 and 2030, if Canada follows the examples of California, B.C., Quebec and other jurisdictions around the world and adopts a ZEV standard, expected sales revenues, according to our calculations, are projected to exceed $190 billion.
Canada's goal is to reduce emissions of greenhouse gas, or GHGs, by at least 30% of 2005 levels by 2030. Between 2005 and 2018, GHG emissions from cars and light trucks rose 9%. GHG emissions from the transportation sector may soon be the number one source of GHG emissions in Canada, ahead of the oil and gas sectors.
According to the International Energy Agency, Canada is the number one country in the world for GHG emissions per kilometer driven by its light duty vehicle fleet, ahead of the United States' light vehicle fleet.
Over that same period, GHG emissions from the electricity sector have decreased by 46%, making Canada's electrical system one of the cleanest in the world, with 82% of electricity in Canada coming from non-GHG-emitting sources.
According to the National Research Council of Canada, light and heavy electric vehicles are cleaner than gas and diesel vehicles across Canada. By 2025, new battery technologies will drive battery prices down more than 50% while range will increase by more than 50%.
Air pollution in Canada has caused 14,600 deaths, which is 7.5 times the death toll of motor vehicle accidents.
In 2017, transport was responsible for the majority of total nitrogen oxide emissions and carbon monoxide emissions in Canada.
According to the 2019 Health Canada report, the total annual economic value associated with air pollution is $114 billion.
In conclusion, EVs, from light to heavy-duty, can help Canada meet its goals on climate change, lower air pollution and help Canadian citizens' health as well.
My name is Nicolas Pocard. I am the director of marketing and strategy at Ballard Power Systems.
Ballard is a technology company based out of Vancouver, British Columbia, that has been developing fuel-cell and hydrogen technology for the past 40 years.
Today, I would like to highlight the key role that hydrogen will play in the decarbonization of the economy in Canada, especially when it comes to heavy-duty transportation. We believe that if you want to meet the objective of carbon neutrality by 2050, we are going to need hydrogen heavy-duty mobility to achieve those targets. By that, I refer to the trucking, rail and marine industries, where hydrogen fuel cells provide a path to decarbonization. In addition to that, we believe that the maturity and the leadership that Canada has in hydrogen fuel-cell technology represents a unique economic opportunity, but we need to maintain that leadership. We need to invest in the deployment and in the R and D of fuel cells in Canada. We need to keep that.
We have started to see outside of Canada countries in Europe making major investments in hydrogen, and we see the same thing in the U.S., China, Japan and Korea. We are looking forward to the soon-to-be-announced hydrogen strategy that the B.C. Ministry of Energy, Mines and Low Carbon Innovation should be announcing very soon, but we want to make sure that this strategy is backed up by support in order to deploy technology in Canada, as well as supporting R and D to maintain that technological leadership.
We strongly believe that Canada must join the other countries that have recognized the fundamental role of hydrogen fuel-cell technology in the decarbonization of heavy-duty transportation, as it represents a unique economic and job opportunity in Canada. We believe it's possible to achieve a target of 10,000 fuel-cell buses and trucks in operation across Canada by 2030. This also represents a really important investment in the value chain. Energy—hydrogen in this case—is being produced from the natural resources of Canada, from wind, solar, hydro or, in the Prairies, using natural gas converted to blue hydrogen and carbon sequestration to ensure the local production in Canada of low-carbon hydrogen. As well, it goes through the entire value chain. A fuel-cell vehicle is an electric vehicle and includes all the equipment we produce here in the value chain, from the fuel-cell system, the power train and the different integration. This represents a unique economic opportunity, as well as a way of achieving those targets of decarbonization.
Thanks to the three witnesses for taking part in this exercise. We'll thank the fourth witness later if he manages to reconnect. Hurray for technology! This is what we elected members go through every day.
My questions will first be for a representative of Quebec, Mr. Breton, who was environment minister in 2012.
Mr. Breton, as you mentioned, you're very consistent in your statements on the environment. You're very sensitive to the environment issue, but I'm not sure your successor shares that concern. It was the leader of the Bloc Québécois in the House of Commons, Mr. Blanchet, who took your place when you left your position in that department.
The greenhouse gases produced by oil consumption are one aspect, but the composition of an electric vehicle has a significant impact on production. It also emits greenhouse gases. If you reduce GHGs on the one hand, but increase them on the other, I'm not sure we can be carbon neutral by 2050.
Mr. Breton, can you provide us with information on the impact of electric vehicle production on greenhouse gas emissions?
That's an excellent question. You're ultimately talking about the entire vehicle lifecycle, that is, production of the vehicle, including its battery, use and disposal.
On pages 8 and 9 of the brief I sent you on Monday, we discuss an analysis that was conducted by the National Research Council of Canada. That analysis shows that, in Quebec, for the entire lifecycle, including battery production, the greenhouse gas emissions of partial and fully electric vehicles are 35% to 55% lower than those of an equivalent gas vehicle. Even in Alberta, where electricity production is not as clean, an electric vehicle is still cleaner than a gas vehicle. Regardless of the sources used for electrical generation or battery production, a partial or full electric vehicle is still cleaner than a gas vehicle.
In addition, since 2013, battery production has vastly improved from an environmental standpoint, as a result of which its environmental impact has declined by 60%. Emissions from battery production and battery lifecycle will decline by a factor of 8 by 2030. I can send you documents on that subject later. Batteries pollute less and less because we're discovering increasingly efficient manufacturing methods that make electric vehicles cleaner and cleaner over time.
Thank you very much. It's a good question.
Today's technology is available for all types of vehicles from light duty to heavy duty vehicles. I think what is important is trying to identify what is the best case—the use case. Which application.... At the end of the day, it's electrification. Whether it's a fuel cell or a battery, both are electric vehicles. It's a matter of how you bring the energy to the vehicle, how you store the energy on board the vehicle.
Each use case will differ. When you look at heavy duty, the bigger the vehicle is and the larger the payload that you have to carry, then hydrogen makes more sense because you don't have to compete with a very large battery weight against the goods you want to transport. Duty cycles are very important. If you have a taxi, which operates multiple shifts with little time to recharge, hydrogen makes sense. It's a mixture of the use case, the payload and the duty cycle that you want to have.
The technology itself is available. You can have fuel-cell engines, ranging from powering a car all the way to a train. It's just a matter of finding ways of best application based on the use case.
Thank you very much, Mr. Chair and honourable members, for the opportunity to appear in front of you today.
I apologize for the technical difficulties getting connected to the meeting, but I do appreciate the opportunity to be here.
I want to start off by saying that Global Automakers of Canada represents 15 international automakers and their Canadian operations in the country here, which represent 20-odd models.
Our affiliates and their members employ more than 77,000 Canadians in vehicle manufacturing, sales, distribution, parts, service, finance and head office operations. In 2019, the member companies with the GAC sold 1,146,000 vehicles, which represent about 60% of the auto market and over 60% of Canada's 3,300 new vehicle dealerships.
Our members are committed to the decarbonization of the products they are producing. However, it is clear the goal of decarbonization of the light-duty transportation sector cannot be achieved by focusing on new vehicle sales alone, which represent approximately 8% of all vehicles on the road. It is also clear that we will not achieve our GHG reduction goals for the overall light-duty fleet by focusing on driving the update of ZEV technology alone, as opposed to focusing on the real goal, which is GHG emission reductions in the transportation sector.
Currently in Canada there are about 168,000 zero-emission vehicles on the road out of a total light-duty vehicle population of approximately 23.5 million vehicles. This equates to ZEVs comprising less than 1% of all light-duty vehicles currently on the road.
That said, as others who have appeared before you have noted, hundreds of billions of dollars have been invested in zero-emission vehicle technology globally by automakers. While COVID-19 has in some cases delayed the introduction of models, it has by no means deterred automakers from the pursuit of the development and introduction of ZEVs. In fact, and importantly, I think, for those who have suggested that there are supply issues, GAC members alone will have more than 125 BEV and ZEV models brought to the market between 2021 and 2025.
In this regard, it's important to understand and underscore that the only real difference between the perspectives of governments, ENGOs and the automotive industry with respect to zero-emission vehicles is the issue of timing. We share the same goal.
The automotive industry is going through an unprecedented transition, the likes of which it has not experienced for more than 100 in its more than 100-year history. That transition is moving quickly, but it will time. It takes three to five years to bring a new vehicle model to market and roughly $1 billion to $2 billion. Auto companies must continue to earn profits on their current vehicle mixes to support the development of these vehicles.
Additionally, new suppliers and supply chain partners must be developed and cultivated to secure long-term contracts for batteries and other components that are completely new for the production of ZEVS.
As noted, the industry is changing, but it does take time, and the change is also responsive to demand and supply and will likely lag demand for the immediate further. However, we must underscore in no uncertain terms that short-term regulatory intervention in the form of ZEV mandates is out of step with the medium and longer-term time horizon of this industry transition.
We have a series of recommendations in our submission, but I think it's more important to hear questions from committee members.
I see. So it really is due to transportation.
My next question is for Mr. Wudrick from the Canadian Taxpayers Federation.
You said at the outset that government incentives were not a good thing. I don't share that view at all. Electric vehicle numbers rose in British Columbia and Quebec after provincial and federal incentives were offered. In addition, electric vehicle sales in Ontario fell 55% in the first quarter of 2019, relative to 2018, after Doug Ford cut financial incentives. Here's another example. In Georgia, in the United States, electric vehicle sales dropped 80% after financial incentives were eliminated. As you'll understand, that's not a question but rather a comment intended to show you how much I disagree with your statement.
That being said, many measures are possible. In the United States, for example, the federal incentive takes into account purchasers' incomes, and an incentive is offered in the form of a non-refundable income tax credit.
Furthermore, it's been said that these incentives concern luxury vehicles, but the prices of RAM, Dodge and Ford F-150 light trucks, which are big sellers, range from $43,000 to $74,500. However, those trucks are big polluters and, as noted earlier, have a harmful impact on people's health.
Getting back to measures, would you be in favour of a regulatory no-cost measure for taxpayers that would have the effect of putting more zero-emission vehicles on the market?
Thank you to all the witnesses for being here today.
I want to start with Mr. Wudrick and carry on with this theme a little bit, just to recap what you were telling us.
It was interesting to hear the story of Tesla, which essentially gamed the system to get the Model S in under that price point so that it could qualify for the program.
I share your view that a $55,000 vehicle would be a luxury vehicle for most Canadians. Just comment a bit on this. Essentially what we're doing is subsidizing a vehicle that a wealthy person is going to buy, but at the same time we are not really helping out the person struggling to get by who is buying the $25,000 vehicle.
Is there a policy rationale for this that you can figure out?
Yes. Thank you, Chair. I had some Wi-Fi issues earlier.
I want to first pick up on this idea that was exchanged in the last round, that somehow incentives support vehicle purchases of $55,000 but not $25,000. They absolutely would. This notion is absolutely ridiculous. There is an upset limit. I want to clarify that for the record.
The other point that I think is important is the incentives to ensure that manufacturers are in fact investing in Canada. I come from Durham region. GM is here. Manufacturers across this country were on the verge of closing. All those workers would have been laid off if it weren't for electric vehicles and retooling in our country. I find it a bit rich, especially from the Conservatives, that they talk about taxpayers and protections but they don't seem to care about the workers who are actually making these vehicles in our community and in our country. I wanted to start off with that point. They forget that it's actually taxpayers receiving the benefits of these incentives, not to mention the environmental benefits as well.
On this point, I want to ask a question that perhaps you can answer, Mr. Adams. In some of our briefing documents, we have information that manufacturers could lose approximately $12,000 U.S. per vehicle just from retooling, resetting or re-establishing these vehicles within their fleet. One, is that a figure you would agree with? Two, do you or the industry have an idea of when that loss could over time be incorporated into the normal course of business, which would reduce costs overall and then reduce some of the need for these incentives to encourage manufacturers to move to electric vehicles?
I would start by saying that I don't believe at this point there's any manufacturer that is making money on a zero-emission vehicle. The quantum of that inherent loss is debatable, but there have been public figures out there in the neighbourhood of $9,000 to $15,000 or something like that. Again, it would depend on the vehicle.
As you know, the chief source of cost in the vehicle is the battery, so when the battery cost comes down significantly, which it is doing rapidly, then we'll get to a situation where we're coming into cost parity, where—to Mr. Wudrick's point—we wouldn't need a subsidy or an incentive anymore because the vehicles would cost the same amount.
I haven't. I can't. All of them have included....
To us, what we see as the best pattern is to have rebates—subsidies—for the purchase of electric vehicles, as well as regulation. They go hand in hand.
With regard to the last question you asked, I remember when Toyota came out with the Prius 23 years ago. It was said, “You'll never make money out of this.” The former VP of GM said it was a joke, a PR stunt. Now, there are over 10 million hybrid vehicles sold. They're making a lot of money, and they're saying that they're making money with them.
Someone from Ford said that the first Mustang Mach-E that will be out on the market in a few months will make money, so it's not 10 years from now; it's right now.
It's quite simple. When you look at electric vehicle sales, you tend to focus on cars, but they also include trucks, transit buses and school buses. There are various types of vehicles, including electric and hydrogen vehicles.
The Quebec government has announced that it wants to have 1.5 million electric vehicles on the market by 2030. Quebec represents roughly 50% of the electric vehicle market in Canada and 23% of the market for light vehicles sold in 2019. We should multiply that figure by 4, but I've multiplied it by 2.5 to be more conservative. I have assumed that the rest of Canada will catch up to Quebec, but not necessarily reach the same level as Quebec or British Columbia. We multiply 1.5 million vehicles by 2.5 in Canada, which takes into account light vehicle and bus sales. The Canada Infrastructure Bank has a program for bus, school bus and charging infrastructure acquisition.
Then there are electricity sales. We did the calculation with Hydro-Québec on the weekend. We're talking about nearly $3.8 billion by 2030 in Quebec alone. If you add electricity sales across Canada, that amounts to approximately $9 billion.
All these costs and sales together represent roughly $190 billion by 2030. That's a lot of money, investment and employees.
I have a question for Mr. Adams.
We have the ZEV mandate, which is on the supply side, and we have the ZEV incentives on the demand side, and those are driving sales. I think that's something you recognized in your remarks.
At the same time, we know that 80% of electric vehicles are produced in the jurisdictions where they're sold. Right now, there's $300 billion being invested in EV manufacturing. Why wouldn't Canada want a piece of that? Why wouldn't we want the jobs, the prosperity and the community well-being that comes with those excellent jobs?
Following back, don't these policies contribute to that goal of getting that economic development in our country?
I have to say that you're wise to look for those jobs and for that economic activity. I guess I would just counter what you said. Your statistics may be right, but in Canada, 85% of what we build goes somewhere else, and that somewhere else is the United States. Really, only about 15% of what the five companies that manufacture in Canada produce stays in Canada.
For the recent announcements, for instance, that Ford and DaimlerChrysler made about electric vehicles, they're counting on those vehicles being able to be sold in the United States. I think it might have been a different story under the previous administration, and we'll see what happens under this administration.
I would say to your first point that what has been driving sales in Canada to date has been incentives, not mandates. People will say, well, B.C. has a mandate. Well, that regulation was just passed in July, as you know from where you live, so the mandate has had no effect yet. It's all been incentives that have been driving demand to date.
Thank you, Mr. Chair, and thank you to the witnesses for joining us here today.
Before I get to my questions here, just to make a counterpoint to the Liberal member who said that taxpayers are the people who are receiving these incentives, look at who the taxpayers are who are receiving these incentives, and particularly at the ones who are not spending $50,000 for a car. I think that's essentially what we're trying to get at with this study. There are some of these cars, such as the Tesla Model 3, as was indicated by Mr. Wudrick, that are just completely out of the price range of many families, at least in my riding here in Edmonton, Alberta. It's a challenge to be able to afford those cars.
Again, I think this is well intentioned. To echo the comments of the Canadian Taxpayers Federation, this is a well-intentioned program. I do believe that having more electric vehicles on the road is a good intention. However, what we're seeing is that with the way this was set up.... Then it was amended, and it was even more ridiculous to get those models that are out of the price range of the average family.
For an average Dodge Caravan, a simple Google search puts you at $30,000. Are we getting these vehicles off the road? Are we getting the F-150s—the vehicles that may be the high emitters—off the road with this incentive? I would argue likely not. It's looking at those taxpayers who can afford those higher-model vehicles. I think this program has completely missed the mark in that regard.
Mr. Wudrick, we had somebody before our committee—I think from the Pembina Institute—who actually said that more incentives would be the answer to this particular program, to make it more attractive to Canadians. Could you perhaps comment on their comments that providing more money for this program would be the answer?
I'll take his 10 seconds.
Thank you, Chair; and thank you, everyone, for coming today.
Mr. Breton, I want to follow up with you, because it seems that Mr. Adams has a different opinion on ZEV mandates, and your organization has a different opinion on ZEV mandates.
Whatever reading I've done, the jurisdictions that have ZEV mandates tend to have more sales, and where the cars are made or deployed, the uptake is higher in that jurisdiction. We see China with mandates, and that's why the investment there has been growing, companies are going there because they know that they will have a market. If you look at the European Union, they're thinking of having mandates; they're voluntary right now, but they're thinking of going in a more concerted direction.
We heard Mr. Adams' opinion. I just want to hear why you think ZEV mandates work.
It's because manufacturers send the vehicles where there are mandates. It's as simple as that.
I can give you two examples. Right now, if you want to purchase a Toyota RAV4 Prime, you'll be able to get it in Quebec because there's a ZEV mandate. You won't be able to get it elsewhere in Canada.
I can give you an even better example than that. In 2011, the federal government and the Ontario government financed the assembly of the Toyota RAV4 EV. It was built in Woodstock, Ontario. Because there was no mandate in Canada but there was a mandate in California, all these vehicles were shipped to California and no one in Canada had access to these vehicles.
I think it's really interesting now that the Governments of Canada and Ontario are investing in the assembly of electric vehicles, but as Mr. Adams said, these are made to be shipped to the U.S. With a Biden government that intends to be more and more aggressive regarding EVs, I think there's a chance that if we don't have a mandate at the federal level, these vehicles will be sent to the U.S., Quebec or B.C., and the dealers in Ontario, Manitoba, Saskatchewan or Alberta won't be able to get these vehicles, and it's a real issue.
That's a very good question.
I think we need to separate the vehicle from the energy source, that is, the the vehicle from the fuel cell. It is all about manufacturing. Volume will bring down the price and all of a sudden, the price of a fuel-cell engine will be comparable to manufacturing, or cheaper than manufacturing, a diesel engine.
Your question addresses the energy. With electric, you directly use electricity to recharge a battery. In a fuel-cell electric vehicle, you use energy carrier hydrogen to store the energy on board the vehicle.
Hydrogen can be produced two ways. Today I would say 95% of the hydrogen produced worldwide comes from a derivative of natural gas, and there are production plants in Canada here. This way, you don't reduce those emissions, so you have a carbon-intense hydrogen. The challenge is to be able to reduce that intensity by doing carbon sequestration. In Canada today, you have companies—and it's already done in Alberta—where you can take a natural gas stream, remove the carbon component during the production of hydrogen and store that or use it in the industrial feed.
I have another question.
If I wanted to order a car in Quebec or British Columbia tomorrow morning, I'd have to put my name on a waiting list. The waiting time is approximately two, three, four or six months. There's a market for that. I think consumers have taken a big step.
What troubles me in this process is that the automobile industry is asking for help. You have to invest in order to do business. The industry has done that in the past, but I'm convinced it did so because it anticipated a business opportunity. Consequently, instead of assisting consumers or car manufacturers, perhaps we should invest in an awareness campaign to inform people about the environmental impact of automobile production instead of giving money to those producers.
Would that be a feasible suggestion?
How would members of your organization perceive that?
Thank you for your question.
The Strategic Innovation Fund is an extremely promising program that's already in place. The came to our annual conference two weeks ago to discuss what interest there might be in creating a national transportation electrification industry.
It's important that the various provinces cooperate. There are strengths in Quebec, Ontario, Nova Scotia, Manitoba, Alberta and British Columbia. If we coordinate our strengths rather than compete with each other, we can achieve very good results.
I think it's extremely important to have an innovation assistance program. The Canada Infrastructure Bank program to assist in the acquisition of school buses and recharging stations is important too. Ultimately, we have to accelerate innovation by promoting electric vehicle purchases.
It's very simple. The discount provided on the purchase of an electric vehicle is an incentive to innovation. Its purpose is to increase the number of electric vehicles on the road. People from General Motors and Tesla recently said we could achieve virtual parity between electric vehicles and gas equivalents around 2025. Supporting innovation with a discount on the purchase of an electric car is like supporting innovation in the pharmaceutical, health and even oil and gas industries to reduce pollution.
If I'm not mistaken, the government stated in the throne speech that we want to make Canada the most attractive country in the world for businesses that use clean technologies. I'm entirely in favour of that.
Mr. Wudrick, you say in your brief that taxpayer dollars are valuable. Once again, I'm going to ask you the question I asked at the start.
The Canadian fossil fuel sector received $600 million from the federal government in the 2019-20 fiscal year. Earlier you only discussed subsidies for the Trans Mountain system, but subsidies are also granted for fossil fuels, and they're bigger than the subsidies for electric vehicles..
Don't you see that as a contradiction? On the one hand, electric vehicles will help us achieve our greenhouse gas reduction targets, which will be beneficial for health, and, on the other hand, subsidies are being granted to make people sick.
Mr. Breton, I want to ask you about economies of scale and how they play into this whole picture.
We've heard a lot about the price of electric vehicles. I agree that price is one of the barriers that might prevent people from buying a new electric vehicle, although I think if you look at it from a full-cost accounting perspective and count in the maintenance costs and the low operating costs of using these vehicles, the price is at least a wash, if not in favour, of EVs.
This seems to me like a change that's going to happen inevitably. These vehicles are cheaper to run and they're more fun to drive, especially the light-duty category. Are we simply just talking about priming the pump with these incentives?
To what degree could the incentives actually be temporary once the market size gets big enough to drive down price by itself because we have that economy of scale?
Could you speak to that?
Yes. I see you know what you're talking about because you have an EV and you drive an EV.
Total cost of ownership is really important. Very often people think about the purchase price, but they forget the energy price, the insurance price, the maintenance price and the resale value. When you start adding these numbers, I'm surprised that Mr. Wudrick would say that people can't afford it.
When you start to add all the calculations, in the end an EV can be just as affordable as a Honda Civic. It's really surprising to hear that.
When we talk about taxpayers, I want to mention one thing because this is very important. If we create jobs with electric vehicles—from light to heavy-duty, from infrastructure, to research, to mining—that's people with good-paying jobs who will pay taxes.
In the end we have to look beyond just the subsidy for the purchase of electric vehicles. It's the whole ecosystem that we're thinking of because we're looking at a new industry altogether. We have to think beyond just the price of the vehicle. We have to look at, as you said, the total cost of ownership. We think that is very important.
I don't know if you know this, but in 2012, Barack Obama, when he was President of the United States, said that there have been subsidies in the U.S. for oil and gas companies for a hundred years. If we can get subsidies for just 10 years, I think we'll be okay because by then the price will be at par, at least.
I've been listening with interest. I appreciate all of the people who presented here today.
Mr. Breton, I had an opportunity to drive a hybrid vehicle. I test drove it in the town of Inuvik, which is quite far north, in in the northern part of the Northwest Territories. It was -32 when I got the vehicle. That night when I parked it at the hotel it went down to -37. The next morning, the vehicle was no different from when I parked it. It started up, no problem. It was a half-ton truck. It was no different from a regular vehicle, except it was a hybrid. It was quieter. It had quicker response. I really enjoyed the vehicle. I live in the north, where most contractors in industry be it oil and gas or mining, drive the larger one-ton trucks or half-ton trucks. They start them in October and let them run until March. They don't shut them off. Usually they're diesel trucks.
A lot of people would like to see that idling time reduced. That includes governments. The cost of the batteries is so significant. The batteries are lasting longer; they can last eight years plus. They cost up to 25% of what the vehicle costs. I understand there are lots of different batteries on the market and more coming all the time. We probably have more battery scientists then we have ever had in our history.
With your knowledge, do you see something down the road: a graphene battery, a mechanical battery?
Can we look into the future and say something can be purchased for the electric vehicles?
First, I took a trip at about -25 when I went to Saguenay from Berthierville where I live. We had no problem whatsoever. When it's really cold, it's a lot easier to start an electric vehicle than a gas vehicle. We had to boost a few gas vehicles when we did some tests in past winters. I understand absolutely what you're saying.
To your point, yes, General Motors, Tesla and others are working on third-generation batteries that will have 50% more energy density, thus a lot more range. It will be 50% to 60% cheaper by 2024-25. That is very close to now. After that, by 2026-27 we're thinking about solid state batteries, the next generation batteries that will have even more range. We're talking about 800 to a 1,000 kilometres with five to 15 minutes to recharge. Things are evolving really quickly. With the likes of Professor Jeff Dahn at Dalhousie University who works with Tesla, Karim Zaghib who works for IREQ at Hydro-Québec, and others in Canada, huge progress is being made with battery technology nowadays, and battery manufacturing as well.
I think the pickup trucks are going to be a lot more affordable than people think when you calculate the total cost of ownership. They are coming to market in 2021-22. It's tomorrow. I know that a lot of people who work in construction are interested in buying electric pickup trucks because they know how expensive gas is for trucks.
Thank you, Mr. Chair, and I thank all of you again for coming here today.
I have more of a philosophical question, and it's for Mr. Adams and Mr. Breton. I don't need a long answer.
If we look at what it takes to manufacture an electric vehicle, whether it is with lithium, cobalt, nickel or copper.... These are all precious minerals. We have the mining capacity to do this in an environmentally sustainable way, yet we're importing these products.
For our own defence capacity and national security, could this not be a way of incentivizing other industries, to make sure we protect our national security?
I have a question for Mr. Wudrick.
Mr. Wudrick, you were saying earlier that you represent an organization that's concerned about taxpayers and the costs they bear. Health Canada estimates that air pollution, especially in urban areas, causes 14,600 premature deaths every year and that the social, economic and public welfare consequences cost taxpayers $114 billion a year.
If we're talking about incentives for electric vehicles that reduce air pollution, as well as climate pollution, shouldn't we be considering those health benefits of improving air quality when we're looking at the impact on taxpaying citizens?
No, but no manufacturer could meet demand in the following three months.
That will all happen gradually. More and more stations are being installed across North America every week. Infrastructure is extremely important; you're entirely right about that.
People tend to think the problem's related to highway infrastructure. In fact, it occurs more frequently in downtown areas. Many people can charge their electric cars at home. That's where more than 80% of recharging is done. However, people living in condo towers who can't plug in their cars need quick-charging level 2 street chargers. The Canadian government and provincial governments will have to look into that.
Incidentally, just a few days ago, calls were made in Edmonton for more recharging stations to be installed in that city.
You're correct in saying that infrastructure has to follow. Natural Resources Canada has established a recharging station installation program. As it's all rolled out in exponential fashion—we're already seeing this—more and more stations will be required. The British Columbia example is indicative of this. Ontario and Manitoba will have to go with the flow.
I feel compelled to perhaps correct the record of what we heard today for those who may not have understood. The demand and the access is an issue, because the EVs are being sent to jurisdictions where there are incentives or regulations. Therefore, incentives and regulations equal demand, which is ultimately helping consumers and the environment, if this is what is called an honourable goal. We've heard testimony stating that without the incentives, demand has dropped in the case of Ontario. Where there are incentives, there is demand. I just felt that this point has to be clarified.
My question is for Mr. Pocard. I'm sorry you haven't been able to get on, but I did actually have a question for you. I'm not as familiar with your industry, so forgive me.
You spoke about support for R and D, which is always great. Canada tends to be a leader in research and development, but where we tend to fall short is the commercialization of it. How, as a Canadian government, can we make investments that would ultimately also help commercialization, and then ensure that the costs are passed on to Canadian consumers? I ask because we've talked a lot about this industry and the jurisdictions that are building or manufacturing vehicles that are more affordable in those same jurisdictions.
If we make this investment, how do we commercialize it here, so that Canadians ultimately reap that benefit from that investment—outside of the environmental goals obviously—in terms of commercialization and economic goals for the average Canadian?
Today Canada is uniquely placed, with companies like Ballard and others. In Canada, we really have leadership in technology development and then we are providing.... Today at Ballard, we are exporting 100% of our fuel-cell systems outside of Canada. We sell our engines to U.S., China, as well as Europe.
One way to help would be to create demand here in Canada, as we discussed...everything requesting ZEV mandates. Especially for heavy-duty mobility buses and trucks, as long as it's technology neutral, I would actually invest in that. As long it meets the objective of having zero-emissions, regardless of whether it's battery-electric or fuel-cell electric, it doesn't really matter. Canada has a chance to be able to locally produce fuel-cell technology using Canadian IP and workers here. It doesn't require a lot of minerals, imports or anything. It's just standard construction material.
We have an opportunity to build on this industry here, but we need to create the demand for vehicles. Whenever we have opportunity with those 5,000 zero-emission buses, we need to make sure that both technologies—battery-electric and fuel-cell electric—have a chance to be deployed. It's up to the user to define what technology fits the best for the use case. It's for heavy-duty trucks, long-haul transportation and longer route coaches where hydrogen provides that path to decarbonization and zero-emission mobility.