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The Ontario government is eliminating rebates given to buyers of electric and hydrogen-fuelled vehicles, a move that will delay the adoption of zero-emission vehicles that are considered a crucial part of the longer-term effort to fight climate change.

The Progressive Conservative government of Premier Doug Ford said it made the move after cancelling the previous Liberal government’s cap-and-trade program, revenues from which financed incentives to purchasers of vehicles ranging from Daimler AG’s Mercedes-Benz Smart mini-car to Fiat Chrysler’s Pacifica minivan.

While battery-electric and plug-in hybrid sales now represent a fraction of the market, they are seen as the eventual replacement for the internal-combustion engine (ICE) in the 2030s and beyond as other governments around the world restrict the use of gasoline-powered vehicles or ban sales of them altogether.

The end of the rebate system for vehicles and electric-vehicle (EV) chargers is the first of two Ontario government moves that will likely hurt EV sales. Mr. Ford has said he will reduce gasoline taxes by as much as 10 cents a litre. Lower gas prices have tended to discourage sales of fuel-efficient vehicles and encourage consumers to buy larger cars and trucks.

“If experience has shown us anything, it is that EVs and fuel-cell-vehicle sales tail off dramatically without incentives to decrease the price differential between ICE vehicles and advanced propulsion technology vehicles,” said David Adams, president of the Global Automakers of Canada, which represents the Canadian units of Asia and Europe-based car manufacturers.

“This change in Ontario policy will be a setback for us, but will not stop the worldwide shift to EVs that is taking place,” Cara Clairman, founder and chief executive officer of Plug’n Drive, a Toronto-based electric-vehicle advocacy group, said of the change in Ontario’s rebate policy.

The change will also complicate the federal government’s efforts to craft a strategy for zero-emission vehicles that would have been built on rebate programs offered in Ontario, Quebec and British Columbia, three of the four largest vehicle markets in the country. Quebec and British Columbia will be the only provinces offering rebates to consumers with the end of the Ontario program.

The federal government is examining ways to increase the penetration of electric vehicles to 30 per cent of the national market by 2030 with a national recharging network also in place.

The impact of rebates is evident from sales figures for the first quarter of 2018 compiled by consulting firm FleetCarma.

Drivers bought just 116 of the vehicles in Alberta, compared with purchases of 1,400 electric and plug-in hybrid vehicles in British Columbia, even though the overall vehicle markets in the two provinces are about the same size.

Vehicle manufacturers sold 2,633 such vehicles in Ontario in the first three months of the year, almost double the 1,450 sold a year earlier, FleetCarma data show.

The rebates ranged from $5,000 for Toyota Motor Corp.’s Prius Prime plug-in hybrid to $14,000 for Nissan Motor Co. Ltd.’s Leaf, General Motors Co.’s Chevrolet Bolt and other models that run strictly on battery power.

Toyota Canada Inc., vice-president Stephen Beatty said incentives are only one element that goes into a consumer’s decision on what vehicle to purchase, “and we know that they are not sustainable over the long term.”

Toyota is seeing strong demand for hybrid electric vehicles across the country, Mr. Beatty said, even in provinces that do not offer incentives to purchasers.

“I think Canadians understand the benefit of moving to more efficient, lower-emission vehicles, but they also want value and are looking for the additional cost of advanced technology to be equal to or less than the savings at the pump,” he said.

With files from Shawn McCarthy in the Parliamentary Bureau.

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