On Thursday, Ontario and Ottawa announced a $590-million subsidy to Ford, to encourage the building of electric vehicles at its Oakville, Ont., plant. Automakers the world over are aiming for rising sales of electrics, and the two governments hope Ford will make Oakville North America’s leading electric-vehicle assembly plant.
For governments, it’s part of a twin strategy, to lower emissions by spurring the purchase of more electric vehicles, and to put Canada at the centre of that industry. The second goal will be a challenge. The first is likely to come to pass – eventually.
Nearly every vehicle on Canada’s roads today runs on gasoline, and that’s going to be the case for some time. Electric cars are still relatively expensive, and only a tiny part of the market. As a result, achieving even minor increases in gasoline vehicle fuel efficiency will deliver, at least for the foreseeable future, a bigger environmental bang than upping the miniscule number of electrics on the road.
What’s Canada’s bestselling vehicle today? The Ford F-150 truck.
It used to be that cars dominated the market, but about a decade ago, things shifted. In 2019, SUV sales in Canada topped 900,000, with trucks and cars each selling about half a million. The top-10 list is dominated by trucks and SUVs.
This preference for hulking vehicles puts this country at the top of an ignominious list. Canada’s fleet of personal vehicles is the least fuel efficient on the planet. For each kilometre driven, the average passenger vehicle on Canada’s roads uses 13 per cent more gas than the average Australian, 50 per cent more than the average German and 68 per cent more than the average French passenger vehicle.
In Canada, emissions from SUVs and trucks have surged 30 per cent in the past decade, more than offsetting the decline in emissions from cars. That is in part why Canada’s emissions keep climbing.
There are two main levers of change available. The first is a straight-up tax on gas. Make gas more expensive, and nudge people to buy a car that gets good gas mileage and hence pollutes less. Gas taxes, of course, already exist in Canada, from federal and provincial excise taxes to the carbon tax, but together they have not been high enough to push Canadians to think like Europeans, who tend to buy smaller and more fuel-efficient cars.
The second lever is government regulation – ordering automakers to achieve certain fuel-efficiency standards. Because of the nature of a continental industry, when it comes to those fuel standards, Canada is to some extent hitched to decisions made in the United States.
In 1973, the standard North American car was a giant boat, getting about half the mileage of the Ford Model T of decades earlier. Then, in the wake of the Yom Kippur War, the Arab oil embargo hit, prices spiked – and change smacked the auto industry.
The U.S. began instituting fuel-efficiency rules in 1975 and by the mid-1980s the same amount of gas moved new vehicles twice as far. After the crisis passed, change stalled. It wasn’t until 2007, when oil prices again spiked, that new goals were set. Vehicles at the time were worse on gas than in the late 1980s.
President Barack Obama toughed the rules and in 2012 his administration promised to nearly double fuel efficiency by 2025. In Canada, the governments of Stephen Harper and then Justin Trudeau were on board and along for the ride.
Enter Donald Trump. Earlier this year, the U.S. President officially ratcheted down the Obama targets by almost a third. But California and other states have declared that they will stick with something close to those targets. Canada has also signed on; together, the group of jurisdictions represents about 40 per cent of new cars sold on the continent. Ford and four other automakers have sided with California, and the fight is expected to reach the U.S. Supreme Court.
Like so much in politics this year, the future hinges on Nov. 3. Ottawa is taking a quiet wait-and-see approach.
There is little doubt, however, that Canada should be aiming higher when it comes to fuel efficiency. And history shows that automakers can adapt to meet higher standards. Back in 1974, Ford claimed raising fuel-efficiency targets would mean it would only be able to sell tiny subcompact cars. A look at the average Canadian suburban driveway today puts the lie to that.
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