Electric-vehicle sales more than doubled in Ontario in 2017 as rebates worth up to $14,000 per car propelled the province past Quebec to become Canada's EV leader. Many electric-car fans celebrated this as proof that Ontario's latest incentives to encourage EV sales are working.
Working for them, maybe. But what about for taxpayers and the planet?
We already know that government rebates on EV purchases are a horrendously expensive way to reduce carbon. Encouraging consumers to move to smaller gasoline-powered cars by increasing sales taxes on fossil fuels would do so much more to cut emissions.
What's more, it is now becoming clear that mining the massive amounts of cobalt and lithium needed to manufacture the bigger batteries required to increase EV range and reliability risks creating a slew of unintended social, economic and environmental consequences.
Raising such concerns is not to signal one's membership in the "EV-hater club," as Josh Goldman of the pro-EV Union of Concerned Scientists has labelled critics. It simply seeks to ensure that politicians and the bureaucrats who enable them are asking the right questions before they act.
So far, they are not. If they did, they would consider a life cycle analysis of carbon emissions. One such study by the Massachusetts Institute of Technology showed that a compact Mitsubishi Mirage with an internal combustion engine produces less carbon over its useful life than an all-electric Tesla Model S in the U.S. Midwest, where coal-fired electricity is predominant.. So, why should the buyer of that Tesla get a $14,000 subsidy in Ontario?
Tesla sold about 1,700 Model S's in Canada in 2017, according to Fleet Carma. The car has a list price in excess of $100,000, compared with less than $20,000 for the Mitsubishi. Assuming 40 per cent of all Model S's were sold in Ontario last year, and that buyers applied for the $14,000 rebate, that's more than $9.5-million in subsidies for people who don't need subsidies.
And that doesn't include rebates on sales of the Telsa Model X in the province. Canada-wide sales of the Model X totalled 1,803 in 2017. Ontario's rebates are the most lucrative. Quebec's offers a $3,000 rebate on EVs worth more than $75,000, while British Columbia offers no subsidies on EVs over $77,000.
Ontario's subsidies are disturbing enough. Acquiring the ever-increasing amounts of cobalt from war-torn countries needed to increase production of Teslas raises even more serious concerns.
Tesla committed in 2014 to using only North American-sourced raw materials to produce batteries at the so-called Gigafactory it is building in Nevada. But whether it can meet that objective – it has so far failed to uphold most of its other sales- and production-related promises – is far from certain.
More than half of the world's cobalt currently comes from the Democratic Republic of Congo, a country torn apart by conflict and that repeatedly gets flagged by human rights organizations for child labour. As Western and Chinese policy makers stoke EV sales with incentives, the ethical and environmental equation will only get dicier.
Canada accounts for about 6 per cent of global cobalt mining, and anticipated demand for the metal if EVs take off has sparked renewed speculation in Northern Ontario and elsewhere.
But Tesla and other EV makers will have a difficult time securing enough ethically sourced cobalt. Most of the current cobalt supply chain is controlled by Chinese entities and they're not picky about where it comes from.
As for the other major government incentive – zero emission vehicle (ZEV) mandates – that is also problematic. Starting this year, Quebec requires ZEVs to account for 3.5 per cent of the cars that major auto makers sell in the province, a threshold that will rise to 15.5 per cent by 2025. Car makers that fail to meet the annual target will have to purchase ZEV credits from auto makers that do.
Guess who that benefits?
A similar ZEV mandate in California and a handful of other U.S. states has been a cash cow for Telsa, which pocketed US$179-million from ZEV-credit sales in the fourth quarter of 2017 alone, up from US$20-million in the final quarter of 2016. The company still lost almost US$2-billion over all in 2017.
Ottawa indicated last year that mandates will not be part of the package of measures included in the ZEV strategy it is developing. That's the good news. But the strategy is taking longer than expected to hatch. Tuesday's federal budget was silent on the matter.
Let's hope that means Ottawa is thinking twice about padding the pockets of Tesla buyers.
Konrad Yakabuski