Let Canadians Drive EV Policy, Not Ottawa's Mandates
In a thought-provoking commentary, economist William Watson challenges the Canadian government's approach to electric vehicle adoption, arguing that policy should be driven by consumer choice rather than top-down mandates from Ottawa. Watson's analysis comes amid shifting federal targets that have moved from an outright ban on new gas-powered cars by 2030 to what he describes as an "aspirational goal" of 90% EV adoption by 2040.
The Problem with "Aspirational Goals"
Watson begins by questioning the very language of government policy, noting that "aspirational goal" represents what he calls "a hope-y thing we're after but don't really expect to get to." This semantic analysis sets the stage for his broader critique of what he sees as unrealistic expectations about how quickly Canadians will embrace electric vehicles.
The government's current strategy relies on what Watson characterizes as "highly visible little carrots and one really big but largely hidden stick." The carrots take the form of consumer subsidies that start at $5,000 for EVs this year but decline to $2,000 by 2030, with hybrids receiving only half that amount. Watson notes this reflects what he calls "eco-activists' hatred of hybrids" despite their relatively modest fossil fuel consumption.
Subsidies That Don't Add Up
While acknowledging that subsidies represent an improvement over outright bans, Watson questions their effectiveness. "If we had free trade in cars and could import Chinese Seagulls at $15,000 a shot, a $5,000 subsidy would be something," he observes. Instead, with average EV prices ranging from $55,000 to $70,000, and subsidies capped at vehicles costing less than $50,000, the financial incentive represents at most a 10% price reduction initially, declining to just 4% by 2030.
Watson argues this modest financial incentive seems unlikely to drive the mass adoption the government envisions. "That seems unlikely to cause a mass switchover to EVs," he writes, pointing out that hybrids receive even less support despite being more affordable for many Canadians.
The Regulatory Stick
Where subsidies may fail to motivate change, Watson identifies what he calls "the big, mainly hidden and therefore sneakier stick of emissions regulations." He quotes government documents stating that "more stringent Canadian GHG emission standards for model years 2027 to 2032 will drive emission reductions in a technology-neutral manner while increasing the number of zero-emission vehicles on the road."
However, Watson finds the language that follows "ominous and threatening." The documents state that while companies can use various technologies initially, "a larger percentage of EVs will be required by all companies to meet the standard over time." Watson interprets this as a clear message: "No more hybrids: understood?"
Fundamental Questions About Government's Role
Throughout his commentary, Watson raises fundamental questions about the appropriate role of government in shaping consumer behavior. He questions whether gas-powered cars belong in the same category as substances and practices that society has deemed necessary to ban outright, such as heroin or child pornography.
Watson imagines a future moment of reflection, wondering if Canadians will look back and ask: "Was there really a time in this country when we all accepted we would simply outlaw the most popular and efficient type of automobile engine ever?"
The Market Reality
Beyond philosophical questions, Watson points to practical market realities. With EV prices remaining high and subsidies limited, he questions where the market will emerge for all the electric vehicles the government wants Canadian industry to produce. This concern about both supply and demand represents a significant challenge to the government's ambitious targets.
Watson's commentary ultimately advocates for a more consumer-driven approach to electric vehicle adoption, one that respects individual choice while acknowledging the practical limitations of current technology and pricing. His analysis suggests that successful EV policy must align with what Canadians actually want and can afford, rather than what government planners hope they will accept.
