Gas-powered cars and trucks to be phased out by 2035: federal government

The end of the road is coming for gas-powered vehicles in Canada as Environment Minister Steven Guilbeault finalizes new regulations mandating the transition to battery-operated cars, trucks and SUVs.

Automakers will have the next 12 years to phase out combustion engine cars, trucks and SUVs, with a requirement to gradually increase the proportion of electric models they offer for sale each year.

The move fulfils a promise made by the Liberals more than two years ago to phase out the sale of combustion engine passenger vehicles by 2035. It was applauded by multiple environment groups Tuesday.

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Automakers themselves are more skeptical of the plan, insisting more needs to be done to encourage people to opt for electric cars, including installing thousands more charging stations and upping the ante on government rebates of EV buys.

Guilbeault made the announcement of the final regulations for the Electric Vehicle Availability Standard on Tuesday at George Brown College in Toronto, which last year launched a new electric-vehicle service technician training program.

"They know electric cars are the future," said Guilbeault of the students and staff in the program.

He insisted it will ensure more electric vehicles are made available in Canada and at more affordable prices, as the companies that make the cars will have to manoeuvre to ensure their supply and demand fit the new mandate.

"There's no mistaking it. We are at a tipping point," he said, noting sizable growth in EV sales in Canada and demand that has previously outstripped the available supply.

The regulations say that in 2026, automakers must ensure one in five vehicles they put on the market in Canada are battery electric or longer-range plug-in hybrid models. That will rise slightly to 23 per cent in 2027.

After that, the increased share of EVs will begin to jump much faster, so that by 2028, 34 per cent of all vehicles sold need to be electric, 43 per cent in 2029 and 60 per cent in 2030.

That number keeps rising until it hits 100 per cent in 2035.

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Gas-powered models sold before 2035 will remain on the roads for many years after that but no additional ones will be added.

At the national level, so far in 2023, about one in 10 new vehicles registered were electric, suggesting EV sales need to double within the next three years.

They already doubled in the last three years, growing from 38,425 EVs sold in the first nine months of 2020 to 132,783 in the first nine months of 2023.

"Two provinces are already above the 20 per cent threshold -- Quebec and British Columbia," Guilbeault said.

However, no other province exceeds even eight per cent.

Electric-vehicle advocates say the provincial disparities are not an accident. Quebec and B.C. both have EV sales mandates at the provincial level, which compelled automakers to prioritize those two markets for the EVs they have for sale.

They have also had consumer rebates the longest, though they were joined by Yukon and Northwest Territories in 2020 and the four Atlantic provinces in 2021. They can all pile on top of the $5,000 federal rebate for EVs.

Since 2019, Canada has paid out more than $1.36 billion in rebates for nearly 300,000 battery-powered vehicles.

Guilbeault said all provinces should get "on board" with the EV plans, singling out Ontario as one of the laggards.

Ontario once had a provincial consumer rebate, but it was cancelled by Premier Doug Ford when his Progressive Conservatives won the provincial election in 2018.

EV sales in the province nosedived for a time after that, though they have started to pick up steam again in recent years.

"The federal government is making multi-billion-dollar investments in the EV supply chain (in Ontario)," Guilbeault said.

"There's no reason the government of Ontario shouldn't do what the government of B.C. is doing, or Nova Scotia, Prince Edward Island and Quebec."

Cara Clairman, president of the EV adoption advocacy non-profit Plug'n Drive, said a national mandate will help "level the playing field" for EVs in every province.

Clairman said the chief concern she still hears when people seek out information about EVs is that it's still too hard to get one in Canada.

"Long waiting lists are definitely discouraging consumers," she said.

However, Brian Kingston, president of the Canadian Vehicle Manufacturers' Association, said inventory shortages are not an issue any longer.

The association represents Ford, Stellantis and General Motors, three of Canada's biggest automakers.

"EV inventories have been increasing exponentially," he said, noting inventories of such vehicles were 146 per cent higher in November 2023 than they were a year earlier.

Kingston said the government refused to listen to automakers that told it a mandate wasn't needed because they are already investing heavily in EVs.

"I've yet to see any evidence from the federal government that this regulation is necessary, because (inventory is) not a problem anymore," Kingston said.

"The horse has left the barn, electrification is happening, and so let's help Canadians switch as opposed to putting in place this redundant and frankly challenging regulation."

He said that for the first time, this puts Canada out of step with U.S. regulations for vehicles, a major problem when the two sectors are so intertwined.

The United States is pushing electric vehicle adoption federally with an emissions policy that will require more EVs to be sold so that overall emissions go down.

The federal Liberals in Canada, however, note that 10 states have EV sales mandates similar to Canada's, including California.

By 2027, they say, 40 per cent of the North American auto market will be covered by a mandate like Canada's.

Automakers are also concerned about charging capacity, noting it to be a barrier to EV adoption.

The federal environment commissioner said this fall that Canada was on track to meet the goal of having 33,500 charging ports by 2026, but said these are not evenly distributed or properly tracked for operational issues.

A Natural Resources Canada database on charging shows there are now more than 25,500 charging ports in 10,568 locations, which is up from 23,000 ports in 9,100 locations in mid-August.

However, 85 per cent of them are in Quebec, Ontario and B.C.

With 80 per cent of charging expected to happen overnight while cars are parked at home, residential charging capacity is among the most critical issues.

Guilbeault said the government is working on a revision of the national building code so residential buildings constructed after 2025 have the electric capacity to accommodate the charging stations.

The new sales mandate will be regulated under the Canadian Environmental Protection Act using a credit system for each EV put up for sale.

Manufacturers that sell more EVs than they need to meet each year's target can either bank those credits to meet their targets in future years, or sell them to companies that didn't sell enough.

They can also cover up to 10 per cent of the credits they need each year by investing in public fast-charging stations. Every $20,000 spent on DC fast chargers that are operating before 2027 can earn the equivalent of one credit.

Automakers can start earning some credits toward their 2026 and 2027 targets over the next two years, in a bid by the government to encourage a faster transition.

This report by The Canadian Press was first published Dec. 19, 2023.