Here’s what makes ZEV mandates work

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Daniel Breton is President and CEO, Electric Mobility Canada (EMC)

Unveiled in March, Canada’s new 2030 Emission Reduction Plan includes establishing zero-emission vehicle, or ZEV, sales mandates for light-duty passenger vehicles and for medium- and heavy-duty vehicles. A ZEV mandate is a regulatory credit program that requires a growing percentage of a manufacturer’s sold vehicles in the regulated market to be electric, and its main objective is to improve availability of electric vehicles for consumers and businesses who wish to acquire them.

Under the ZEV mandate, auto manufacturers will be required to sell a growing number of EVs and plug-in hybrids annually, based on the total number of vehicles they sell in the regulated jurisdiction. The ZEV sales targets are 20 per cent by 2026, 60 per cent by 2030 and 100 per cent by 2035. For each EV sale, the manufacturer receives a certain number of credits. Surplus compliance credits in a given year can be banked for future use, traded or sold. A manufacturer who does not comply with the regulation can buy credits from another manufacturer who has surplus credits. Currently, 16 states representing more than a third of the U.S. market and two Canadian provinces (B.C. and Quebec) have adopted a ZEV mandate. It is clear that Canada is not alone in its will to accelerate EV adoption through a ZEV mandate.

Under a ZEV mandate, Canadian dealers will not be forced to sell EVs if they do not want to, and Canadian consumers will not be forced to buy an EV if they do not want to. The ZEV mandate will only enhance car buyers’ freedom of choice by ensuring that EVs are an available option, which is hardly the case now as waiting lists for most EVs range from six months to three years.

ZEV mandates have had positive effects on EV sales where they have been implemented. For example, California, B.C. and Quebec have seen more EV supply and sales than other markets where only rebates are in place. In its 2018-2020 implementation report, the Quebec government wrote that “Some motor vehicle manufacturers have clearly stated that they are prioritizing Quebec within the Canadian market due to the ZEV standard.” Case in point: Toyota recently announced that its new all-electric SUV, the bZ4X, will initially be available only in Quebec and B.C.

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The reasons why Canada needs to adopt a ZEV mandate are clear:

– Self-regulation does not work. For example, in 2005, a voluntary agreement signed between the federal government and car manufacturers requiring them to reduce their GHG emissions missed the mark by 95 per cent;

– Canada’s light-duty vehicle fleet has the highest fuel consumption and GHG emissions per kilometre driven in the world;

– Transportation represents 24 per cent of Canada’s GHG emissions. Between 1990 and 2020, GHG emissions from the transport sector grew by 32 per cent, mostly driven by passenger light trucks and freight trucks;

– Health Canada estimates the economic cost of air pollution is $120-billion a year, and that it contributes to 15,300 premature deaths; emissions from transportation account for a significant percentage of this air pollution. Accelerating EV adoption through a ZEV mandate and other EV policies will save the lives of thousands of Canadians and billions of dollars;

– Even though twice as many EV models are now offered in Canada compared to just a couple of years ago, Canadian drivers who want to go electric in light of high gas prices feel they have few options due to EV unavailability. In jurisdictions and countries where light-duty vehicle regulation is more stringent, EVs are more readily available for consumers who want them.

EV rebates and EV infrastructure deployment are indeed important to stimulate EV adoption, but they will not make much impact if dealerships lack the supply. A ZEV mandate is an important key success if Canada wants to reach its EV adoption and climate targets. For these reasons, EMC fully supports the Canadian government in its will to adopt a ZEV mandate.

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