Ontario applauds US bill proposing EV tax credits, but no local incentives yet

Plans to expand a proposed US tax credit on electric vehicle purchases to cover cars made in North America is a boon for the auto sector, says Ontario’s economic development minister, but the province isn’t planning no buying incentives for local drivers.

Vic Fedeli said the Progressive Conservative government plans to focus on increasing local supply, something experts argue is a missed opportunity as the climate and affordability crises converge.

The minister said the proposed US tax credit is good news as it would clear the way for Ontario to attract more auto parts manufacturers as it removes potential fears that Canadian-made products could be excluded from the huge US consumer market.

“It was in everyone’s head like ‘we better look at it before we make any decisions,’ and now that will remove any shadow of a doubt,” Fedeli said in a recent interview with The Canadian Press. “This now opens the door to go after parts manufacturers.”

Fedeli said the threat of the tax credit being limited to the US alone had not interfered with recent deals related to making electric or hybrid cars, but some meetings with international auto parts makers that started before the pandemic stalled in recent years. the last years. .

However, when asked if the province would consider bringing back buyer rebates for Ontarians looking to buy an electric car, Fedeli repeated the government’s line of action: The focus right now is on production and jobs for autoworkers.

“That’s where we’ve decided to put our money, on the supply side, supporting workers,” he said.

Prime Minister Doug Ford’s recently re-elected Tory government scrapped rebates for EVs funded by the province’s cap-and-trade system in 2018, shortly after he first came to power, and hasn’t brought them back since. .

Fedeli said the focus now is on increasing production.

“Those rebates that were in place before, if you bought an electric vehicle in Canada and were looking for a rebate, it’s on a foreign-made car,” he said.

“We want the cars to be made here, so for them to be made here, we needed to incentivize the industry and that’s where we chose to put our money.”

Fedeli did not say whether there was a point at which the government would consider bringing rebates back once a significant Canadian supply of electric vehicles is available.

Joanna Kyriazis, senior policy adviser at the think tank Clean Energy Canada, argued that now is a good time to bring in rebates for Ontario shoppers.

“Premier Ford’s EV vision is really missing half the equation,” he said in an interview. The Ford government has “done an admirable job” supporting manufacturing, but is falling short when it comes to helping residents buy the cars, he said.

“Right now, we have both an affordability crisis and a climate crisis in the province, and if the Ford government could do more to help Ontarians get money-saving electric vehicles, that would provide a solution for both.” .

Buying incentives for Ontarians would also benefit the industry, he said, because it would encourage more people to start driving electric vehicles, which “sends the right signals” to automakers. He also noted that Ontario will be behind much of the continent in terms of incentives for electric vehicle buyers once the US bill becomes law.

It’s also a good time to build incentives, as consumers are frustrated with the price of gasoline and may be willing to make the switch if the initial cost of an electric vehicle becomes more affordable, Kyriazis said.

Flavio Volpe, president of the Association of Automotive Parts Manufacturers, said the unexpected change in the US bill effectively saved the industry in Ontario, because most cars made in Canada are sold in the US. The US and automakers are shifting their operations to electric vehicles.

He said his group isn’t opposed to buying incentives for Ontarians, but said they’re not crucial to keeping the industry going because the US buyer market is much larger and more essential.

“We would support one, but … it doesn’t have an effect on car manufacturing in Canada,” he said. “Car manufacturing in Canada is geared toward the American consumer.”

Daniel Breton, president of Electric Mobility Canada, which promotes electric transportation, said the government’s decision to scrap incentives for buyers is a mistake.

He warned that as other jurisdictions bring in incentives and mandates, Ontarians could find themselves excluded from buying locally made supplies.

“It’s very important that we have rebates in Ontario,” he said.

This report from The Canadian Press was first published on August 5, 2022.