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Report on Business Fleet managers gear up for an electric future as Ottawa offers tax breaks for EVs

Serge Viola, director of national fleet maintenance at Purolator Inc.

REMI PARENT/Purolator Inc.

Purolator Inc. runs the country’s largest fleet of in-city delivery vehicles, and expects to add all-electric trucks in the coming years in order to reduce operating costs and greenhouse gas emissions over the coming decade. To date, however, it has not found an electric-vehicle (EV) model that can operate efficiently in Canada’s harsh winter.

Purolator – a subsidiary of Canada Post – has been a leader at introducing fuel-efficient hybrid vehicles over the past 15 years, and is now testing an EV delivery van in Montreal to see how it performs when the electric engine has to not only power the drivetrain but also defrost the windows and keep the driver warm. The company has seen constant improvements in battery cost and technology, and is approaching the point where it would consider purchasing electric-powered trucks, Serge Viola, the company’s director of national fleet maintenance, said in an interview.

“We’re getting closer – every time we test a new vehicle, we see improvements," Mr. Viola said. "We’re seeing more range; we’re seeing the heating issue addressed, slowly; we’re seeing better reliability, and we’re seeing a lot of courier acceptance as well.”

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Consumer sales of EVs surged last year, backed by generous provincial subsidies that help offset the higher sticker price compared with conventional gasoline-powered cars. While consumers are warming to the idea of all-electric vehicles, the biggest breakthrough may come from businesses that run large fleets of passenger cars and trucks, and are looking to reduce both operating costs and their greenhouse gas emissions.

Purolator is not the only company heading down this road. Last fall, Walmart Inc.'s Canadian subsidiary announced it will convert 20 per cent of its fleet to electric power by 2022, with the purchase of 40 Tesla Semis, with a target of 100 per cent of trucks on alternative power by 2028. IKEA Canada has set similar goals, aiming for 25-per-cent EVs or hydrogen-powered by 2020 and 100 per cent by 2025, company spokeswoman Kristin Newbigging said. She noted that IKEA now has EV charging stations at each of its 14 Canadian stores.

The federal government is looking to boost that effort with a new tax incentive – announced in last week’s budget – that will allow companies to write off the cost of an EV in the first year of operation. That accelerated capital cost allowance (ACCA) is available immediately for all-electric, plug-in electric (which have back-up gasoline engines) and hydrogen fuel cell vehicles.

“While it will likely garner less attention than the personal vehicle rebate, from an emissions perspective [the business incentive] will deliver more reductions,” said Dan Woynillowicz, a policy analyst with Clean Energy Canada advocacy group. Because companies tend to put more kilometres on their vehicles than do personal drivers, the opportunity for fuel savings and lower maintenance costs is also even greater, he said.

Mr. Viola said Purolator had not fully analyzed the federal budget measure but added that, given high upfront costs for electric trucks, “an incentive of any kind will help” until the industry can bring down costs to be more in line with traditional vehicles.

While there are few EV-truck models currently available, the electric passenger car choices have grown dramatically in recent years. Companies that operate large light-duty fleets and small-business owners and professionals who own vehicles through their companies stand to benefit from the federal tax incentive.

Capital costs for business-operated personal vehicles such as passenger cars and light trucks will be fully deductible up to a limit of $55,000 plus sale tax. That’s a higher threshold than the price limit for the consumer subsidy of $5,000 introduced in the budget, which is available for EVs with a manufacturer’s suggested retail price of $45,000 or less. The $55,000 cut-off means business owners (or others required to use their vehicles for work) can deduct the full cost of a wide range of EVs while advocates have complained the lower limit for consumers covers only a few lower-performance models.

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