Ontario cheers U.S. bill proposing EV tax credits, but still no local incentives

Plans to expand a proposed U.S tax credit on electric vehicle purchases to cover North American-made cars is a boon for Ontario’s auto sector, but the province isn’t planning any buyer incentives for local drivers.

Ontario’s economic development minister, Vic Fedeli, said the Ontario government plans to focus on increasing local supply, something experts argue is a missed opportunity as crises of climate and affordability converge.

The minister said the proposed U.S. tax credit is welcome news as it would clear the way for Ontario to attract more auto part makers since it eliminates potential fears that products made in Canada could be shut out from the massive American consumer market.

“It was just sort of hanging over everybody’s head as, ‘Best we look at that before we make any decisions,’ and now that will remove any shadow of doubt,” Fedeli said in a recent interview with The Canadian Press. “This now opens the door to go after the parts makers.”

Fedeli said the threat of the tax credit being limited to just the U.S. didn’t get in the way of recent deals related to electric or hybrid car manufacturing. But some meetings with international auto parts makers that began before the pandemic were paused in recent years.

When asked, however, if the province would consider bringing back buyers’ rebates for Ontarians looking to purchase an electric car, Fedeli repeated the government’s go-to line: the focus right now is on production and jobs for auto workers.

“That’s where we’ve decided to put our money, on the supply side, backing the workers,” he said.

Premier Doug Ford’s recently re-elected Tory government scrapped electric vehicle rebates funded by the province’s cap-and-trade system in 2018, shortly after first coming to power, and hasn’t brought them back since.

Fedeli said the focus is now on increasing production.

“Those rebates that were in place before, if you bought an electric vehicle in Canada and you were looking for a rebate, it’s on a foreign-made car,” he said.

“We want cars made here, so in order to have cars made here, we needed to incentivize the industry and that’s where we chose to put our money.”

Fedeli wouldn’t say if there was a point where the government would consider bringing back rebates once significant Canadian supply of EVs is available.

Joanna Kyriazis, a senior policy adviser at the think tank Clean Energy Canada, argued that now is a good time to bring in rebates for Ontario buyers.

“Premier Ford’s EV vision is really missing half the equation,” she said in an interview. The Ford government has “done an admirable job” supporting manufacturing, but is falling short when it comes to helping residents buy the cars, she said.

“Right now, we have both an affordability crisis and a climate crisis in the province, and if the Ford government could do more to help Ontarians get their hands on money-saving electric vehicles, that would provide a solution to both.”

Buyer incentives for Ontarians would also benefit the industry, she said, because it would encourage more people to start driving electric vehicles, which “sends the right signals” to automakers. She also noted that Ontario will be behind much of the continent on EV buyer incentives once the U.S. bill becomes law.

It’s also good timing to bring in incentives as consumers are frustrated with the price of gas and may be willing to make the switch if the up-front cost of an electric vehicle becomes more affordable, Kyriazis said.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said the surprise change to the U.S. bill effectively saved the industry in Ontario, because the majority of Canadian-made cars are sold in the U.S. and automakers are transitioning their operations towards electric vehicles.

He said his group isn’t opposed to buyer incentives for Ontarians, but said they aren’t crucial to keeping the industry running because the U.S. buyers’ market is far larger and more essential.

“We’d be supportive of one, but … it doesn’t have an effect on auto manufacturing in Canada,” he said. “Auto manufacturing in Canada is geared to the U.S. consumer.”

Daniel Breton, president of Electric Mobility Canada, which promotes electric transportation, said the government’s decision to rule out buyer incentives is a mistake.

He warned that as other jurisdictions bring in incentives and mandates, Ontario residents could be shut out from buying supply that’s made locally.

“It’s very important that we have rebates in Ontario,” he said.

Feature image by iStock.com/3alexd