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Proposals have previously been put forth by the Commission.

Electrical vehicle manufacturers express concerns about potential multi-billion-dollar expenses from credits if the Canadian electric vehicle requirement is enforced without substantial sales growth.

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Proposals have already been put forth by the Commission.
Proposals have already been put forth by the Commission.

Proposals have previously been put forth by the Commission.

In the rapidly evolving landscape of the automotive industry, a significant challenge is emerging for manufacturers in Canada as they strive to meet stricter electric vehicle (EV) targets. As these targets become more stringent, there is a growing concern that the availability of EV credits on the market may decrease, potentially leading to a premium for these valuable commodities. The Canadian EV mandate requires manufacturers to sell a certain percentage of zero-emission vehicles, including plug-in hybrids, to meet their obligations. To account for any potential shortfall, companies have been developing credit purchase agreements years in advance. One company likely to have an excess of EV credits to sell is Tesla, given its focus on electric vehicles and lack of gasoline vehicle sales. Meanwhile, other automakers, such as Volkswagen, have made contractual agreements to finance EVs, with a goal of 80% of all new electric cars in their group being financed or leased through VW Financial Services. The EV policy's impact on the industry is substantial. The Canadian government has estimated that the mandate will cost the automobile industry over $3 billion by 2030. This cost is a significant consideration, especially in the face of U.S. tariffs that have hit Canadian vehicles and parts with over $383 million USD in total. The mandate's implementation was initially scheduled to begin at 20% in 2026, but it has been postponed until 2027, with an initial target of 27%. This delay provides some relief to the industry, which has been grappling with the abrupt end of the government's rebate program in January, after the funding for the rebate was exhausted. The Canadian Vehicle Manufacturers' Association (CVMA), which represents Ford, General Motors, and Stellantis, is closely monitoring the situation. The federal government has ordered a review of the EV sales mandate within 60 days, and industry leaders are urging caution and foresight. The president and CEO of Global Automakers of Canada, which represents Honda, Toyota, and Hyundai, emphasised the importance of having these credits in reserve ahead of time. This sentiment is shared by the CVMA, which has stated that companies will likely have to purchase credits from other automakers like Tesla to meet their obligations under the EV mandate. However, there is a provision in the regulation that allows automotive manufacturers to invest in charging infrastructure to earn credits, but the government has capped this provision at 10% of a company's sales target. Despite the challenges, the EV market in Canada is growing. In July, electric vehicle sales represented 7.7% of all new vehicle sales in Canada, and in 2021, EV sales reached nearly 15% of total sales with consumer rebates of up to $5,000. As the industry navigates these complexities, it remains to be seen how the review of the EV sales mandate and the evolving market dynamics will shape the future of the automotive sector in Canada.

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