The Ontario government will help take the sting out of buying pricey electric cars by offering purchasers incentives of as much as $10,000, Premier Dalton McGuinty is expected to announce today.
The financial incentives, which will be available to buyers beginning next year, are part of the Ontario government's ambitious plan to be in the vanguard of the next generation of the auto industry.
Mr. McGuinty, who is to unveil the government's strategy today at a Toronto Chevrolet dealership, is rolling out the incentives just as the battle heats up among auto makers to offer the first and most advanced hybrid-electric and battery-powered vehicles on the market.
The strategy includes a commitment by Ontario that plug-in or electric vehicles will make up 20 per cent of the government's fleet by 2020, sources familiar with the program said yesterday.
In addition, Mr. McGuinty will reiterate a promise made in 2007 that such vehicles will gain access to high-occupancy lanes on expressways and special parking spaces at GO Transit and government lots, as well as be given a green licence plate.
The first plug-in hybrids - also known as extended-range electric vehicles - are scheduled to arrive later this year when Toyota Motor Corp. makes available a plug-in version of its Prius. But the highest-profile hybrid-electric event will be the appearance on the roads next year of the Chevrolet Volt from General Motors Co.
The key barrier for purchasers is cost, mainly because the lithium-ion batteries that are the key component of both plug-ins and electric vehicles cost about $7,500 (U.S.) apiece. That price tag means the U.S. and Canadian governments will need to subsidize purchasers, industry executives have argued.
"We're expecting that [subsidy]to be no less than $10,000 to make it competitive with other modes of transportation," said industry analyst Bill Pochiluk, president of consulting firm AutomotiveCompass LLC of West Chester, Penn.
A rebate of $10,000 would reduce the expected price of the Volt to about $30,000 from $40,000, closer to what Americans and Canadians are willing to pay for a mainstream, everyday car.
The Premier had announced in January that his government planned to look at speeding up the introduction of battery-powered cars to Ontario's roads and highways. His officials have examined a variety of options, including financial incentives, access to high-occupancy vehicle lanes and replacing the government's fleet of cars with electric ones.
"[Today]is obviously the next step in that," a government source said. Cost, however, isn't the only issue. Some industry analysts question whether consumers will agree to give up their comfort and familiarity with internal-combustion engines to switch to plug-ins - with a range of about 60 kilometres in the case of the Volt - with a back-up gasoline engine.
Oil has to be in the range of $80 to $100 a barrel, putting a gallon of gasoline at a minimum of $3 in the U.S., for such technology to truly excite consumers, Mr. Pochiluk said.
GM has begun test drives of the Volt, which will start rolling off production lines late next year. Toyota plans to put 500 plug-in hybrid Prius models on the road around the world late this year. They will be leased to fleet customers, allowing Toyota to assess the performance and durability of its first-generation lithium-ion batteries. The auto maker will launch a battery-powered electric vehicle by 2012 for urban commuter markets.
Ontario took its first tiny steps to position itself for the coming revolution in electric cars by joining forces with California high-tech company Better Place, which is working with partners to build battery recharging stations for electric cars. Better Place plans to open a demonstration centre in Toronto next year.
"I think one of the most important things we can do is demonstrate that we are truly an electric-car-friendly jurisdiction," Mr. McGuinty said at the time.