2023

Global EV Transportation Review

Key Regional Markets

Canada

Canada is progressively assuming the centre stage in the global electric vehicle market. The country boasts of a strong manufacturing ecosystem and is devoting a considerable budgetary provision to make it worthwhile for investors. The country’s industrial landscape is set for a drastic transformation as the policy seeks to inject massive funding support, in part to counter the extremely competitive subsidies from its trading partners in the region.

GDP (Current Prices) USD (2021)	1,988.34 bn
GDP Growth Forecast (constant prices) (2021-2025)	2.64%
EV Penetration	18% of total new passenger vehicle registrations in Q3 2022
EV Target	By 2035, all new light-duty cars and passenger trucks in Canada must be zero-emission
Planned Year of Phasing Out ICE Vehicles	2035

GDP Source: IMF, World Economic Outlook

EV Penetration and Trend

Trend in Passenger Electric Vehicle Registrations

Note: (a) The data refers to vehicle registrations, and is different from sales (b) Share of battery electric vehicles refers to their proportion in vehicles of all fuel types including conventional
Source: Statistics Canada

The long-term trend in the Canadian vehicle registrations indicate a gradual shift favouring the electric vehicles. While registrations of overall vehicles (all fuel-types) have declined over the years since 2017, the same has been consistently rising for the battery electric vehicles. By end of Q3 2022, the battery electric vehicle registrations were 18% of the total, contrasting the 1% in Q3 2017. The comparison is also stark when plug-in hybrids are considered – they held 1% share in total registration of Q3 2022, same as it was in 2017.

Canada’s rise in electric vehicle penetration is imminent and steady. But the growth is skewed and not well-entrenched yet in the mainstream automotive market. Just about two provinces of Quebec and British Columbia corner most of this market, in part due to their early start in offering rebates and the sales quotas for automakers.

Charging Infrastructure

ote: Level-3 charging generally denotes DC-based fast-charging
Source: CSA Public Centre

As of early 2022, Canada’s charging infrastructure comprised 19,502 charging ports across 7,967 sites. About 90% of the total capacity is concentrated between the provinces of Quebec, British Columbia and Ontario, the maximum being for Quebec (39%). Such skew reflects the electric vehicle penetration achieved across the country – a select few provinces have been leading the way in promoting the shift to electric vehicles while others lagged by a far margin.

Studies undertaken to assess existing and projected charging requirements indicate that home- based charging holds a predominant share in Canadian electric vehicle market. About 80% of the charging is dependent on charging at home and access to the same is a determinant in electric vehicle purchase decision. Also important is that most of the households owning electric vehicles stay in single-family house or townhouse with dedicated parking, those in multi-unit residential buildings hold a minor share. The charging infrastructure planning and norms thus must factor-in such a skew.

Canada presently does not have a battery production facility. But this could change soon. It is rapidly emerging as a destination for manufacturing investments due to the availability of critical minerals including Lithium and the related industrial setup. Most importantly, the country ranks among the top globally for the battery production ecosystem (that includes mining, mineral refining and processing, components, and others). BNEF’s survey, as of November 2022, had Canada in the second position globally, behind China, in a battery supply chain ranking of 30 countries.

Policy Regulation

The Canadian government has set targets for phasing out the conventional vehicles in transportation. By 2035, all new light-duty cars and passenger trucks in Canada must be zero-emission. This advanced the previous target of achieving the same by 2040. Transportation continues to be in sharp focus as part of the overall decarbonization objectives, considering the sector’s 25% contribution to the total emissions.
The federal regulations offer some incentives to mitigate the upfront cost of electric vehicle purchase. The Zero Emission Vehicles program (iZEV) provides point-of-sale incentives for purchase or lease of listed eligible vehicles. Battery electric or longer-range (battery-based range of at least 50 km) plug-in vehicles are entitled for $5,000. The same for shorter range hybrid or plug-in vehicles is $2,500. For the businesses there is an option to avail of tax write-off for the zero-emission vehicle, as provided since the Budget 2019.
Select Canadian provinces offer higher incentives than the federal level. Quebec is one such case. Its incentives are also cited as one of the reasons why concentration of electric vehicles is higher than in others. For electric vehicles priced up to $60,000, the available rebate is $7,000, while for the limited speed electric motorcycles/scooters, it is at $500. For most of the other provinces, it is the federal incentives that act as the primary option. The provinces of Quebec and British Columbia also appear to have taken a lead in terms of mandating sales targets. The zero emission sales mandates by Quebec and British Columbia refer to 8.5 million and 5 million respectively, with penalties defined for conventional vehicles beyond a fixed level.
Another federal government support comes from the Zero Emission Vehicle Infrastructure Program, valid till 2027, provides for a cost-sharing support for the eligible electric vehicle charging projects. The government’s contribution is restricted to 50% of the project cost or maximum absolute value of $5 million, and up to $2 million per project for the delivery organizations.

Charger type	Output	Maximum funding	Maximum funding for indigenous businesses and communities
Level-2 (208/240 V)	3.3kW – 19.2kW	50% of total project costs, to a maximum of $5,000 per connector	75% of total project costs, to a maximum of $7,500 per connector
Fast charger	20kW – 49kW	50% of total project costs, to a maximum of $15,000 per charger	75% of total project costs, to a maximum of $22,500 per charger
	50kW – 99kW	50% of total project costs, to a maximum of $50,000 per charger	75% of total project costs, to a maximum of $75,000 per charger
	100kW – 119kW	50% of total project costs, to a maximum of $75,000 per charger	75% of total project costs, to a maximum of $112,500 per charger
	200kW and above	50% of total project costs, to a maximum of $100,000 per charger	75% of total project costs, to a maximum of $150,000 per charger

Source: Press releases, company websites

Market Opportunity

The Canadian government’s critical minerals strategy, unveiled in December 2022, outlined the broad contours of a CAD3.8 billion funding allocation for the emerging mineral demand in the clean energy and zero emission transport technologies. Additional available support includes a 30% exploration tax credit for targeted minerals. Importantly, the strategy document puts forth measures to expedite the regulatory processes across national, sub-national and international levels. Such a policy statement is also pertinent in the backdrop of several government-led investments planned or underway in the electric vehicle ecosystem.

A marked shift in policy focus from yesteryears is the intent at supporting or even subsidizing the costs in the electric vehicle and its related manufacturing ecosystem. It promises a transformative impact on the country’s industrial landscape. While a formal statement to this effect is yet to be released, the pattern from recent government support is indicative of the stance. There are other projects in the pipeline for which the formal funding support information was not released due to the commercial negotiations.

The government’s statements hold forth that budgetary support for private investments will be scaled up. Leading automakers such as Volkswagen and Mercedes have been in talks for their plans to invest in Canada. In December 2022, Volkswagen committed to setting up a battery production unit in Canada, as part of its agreement with the authorities.

The commercial discussions with battery manufacturers are part of the larger policy aim to subsidize operational costs and thus counter the similar federal support available from the US. The end goal is to incentivize entities to set up, or to retain their existing production facilities in the country. The ambit of discussions is thus wider, including not just leading global automakers but also entities in the South Korean battery sector.

Company	Funding support/grant	Description
Stellantis	$529 million	Federal funding to support modernization of assembly plants.
General Motors	$518 million	Funding split equally between Ontario and federal government for reconfiguration of existing capacity
Honda	$130 million	Funding by each of Federal and Ontario government for company’s switch to electric / hybrid drivetrains.
Umicore	–	Federal support yet to be announced. Company plans $1.5 billion investment for battery components.
E3 Lithium	$27 million	Contribution under the Net Zero Accelerator Initiative for a demonstration plant of Lithium production
Vital Metals	$27 million	Federal funding to support processing and production at the existing facility

Source: Canada Prime Minister’s Office, Government press release, Globe News and Reuters

The policy narrative is also being shaped by the push for ‘friendshoring’ – a means to realign the supply chain networks in favour of regimes that share similar aims and practices in government policymaking. The implicit thrust is to enable and develop alternatives to China’s near-unavoidable grip on the global supply chain. Despite lacking comparable scale, Canadian manufacturing ecosystem is progressively getting attention for the capabilities and support on offer.

Following the practice of other leading markets globally, the Canadian local and municipal authorities are gradually initiating procurement for electrification of their bus fleets. In January 2023, the capital city of Ottawa received $350 million in funding for a batch of 350 electric buses. By 2036, the city’s public transport operator could convert its entire fleet to one based on electric. Other key cities and municipal authorities taking the same route include Toronto Transit Commission (270 hybrid-electric buses ordered in April 2022), Regina (Master Plan approved for electrification), and Saint John (plans submitted to local council for electrification).

Public funding is also supporting the charging infrastructure build up. Federal funding worth $900 million has been made available for about 50,000 charging stations. It includes support from Canadian Infrastructure Bank. There is also the $680 million Zero Emission Vehicle Infrastructure Program that funds eligible charging infrastructure projects through cost-sharing agreements. Public charging points are expected to gain a greater focus as authorities seek to moderate the existing skew in access to charging. A study done on behalf of Natural Resources Canada indicated an investment requirement of about $20 billion over the next 30 years for scaling up the Canadian charging network.

Outlook

To fast-track the targeted shift to electric and other zero-emission vehicles, the government has introduced sales targets, starting 20% of all passenger car, utility vehicle and truck sales by 2026, 60% of the same by 2030, and 100% thereafter by 2035. The manufacturers or importers unable to meet these could expect penalties. Also under consideration is to issue sales credits for such vehicles – sale of fully electric cars or trucks will earn higher credits than plug-ins. Government’s estimates indicate that with such targets, new sale of zero emission vehicles could be at 2 million units by 2035.
The targeted electric vehicle penetration is fairly ambitious considering the progress so far. A skewed progress across provinces and the limited scale of charging infrastructure makes it difficult to chart a rapid scale up in the electric vehicle sales. It also does not help that there is a significant variance in the regulations between federal and provincial level. The sales mandates for instance, are being found overtly stringent in provinces against what the federal level prescribes.
A much more encouraging picture is however found in the manufacturing space, where government funding has set the context. Starting 2023, the scale of such government spending, both at federal and the state level could rise. The flip side of the upcoming drastic push for industrial investment is that it comes in the backdrop of a somewhat avoidable competitive subsidy regime where US and Canada strike bargains in their incentive offerings for prospective and existing investment capital.

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Global EV Transportation Report 2023

United States

2023

Global EV Transportation Review

Key Regional Markets

Canada

EV Penetration and Trend

Charging Infrastructure

Policy Regulation

Market Opportunity

Outlook

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