2024-08-29 23:50:24
Buying electric vehicles is more cost-effective than gasoline models in the long run, but the savings must be higher if Canada is to meet its electric vehicle sales targets, the Parliamentary Budget Officer (PBO) has concluded in a new analysis.
The PBO report released Thursday comes eight months after the federal Liberals decreed that electric vehicles must account for one-fifth of all new sales by 2026, increasing each year until they reach three-fifths by 2030 and all vehicle sales by 2035.
The latest statistics show that by 2023, electric vehicles will account for nearly 11% of new car registrations, the first time that the figure has exceeded 10% nationwide.
The report compared new vehicle purchase prices, as well as federal and provincial electric vehicle rebates and operating and maintenance costs over eight years.
For sedans, the eight-year cost of a 2022 electric model is 88% of the eight-year cost of a comparable gasoline model, and for SUVs and trucks, the electric model is about 92% of the purchase, operation and maintenance costs of a comparable gasoline option.
Although electric vehicles cost more to buy than gasoline models (about 6% more for comparable models), annual operating and maintenance costs can be up to 2.5 times lower.
However, the Congressional Budget Office said that wouldn’t be enough to get people to switch to electric vehicles at the pace the government would like.
To achieve the 2030 goal, sales price savings are expected to increase by 31%, the report said. That means if an electric car or truck costs 95% of what a gasoline model costs to buy and maintain today, that should drop to about 65%.
For Joanna Kyriazis, director of public affairs at Clean Energy Canada, electric vehicles are clearly cheaper to run, but that’s not enough to entice many people to switch to EVs.
“After all, the higher upfront cost is a barrier for many cash-strapped households, even if they recognize that an EV could save them money over time,” she said.
Price matters, she said, noting that electric cars will account for a quarter of new cars sold in Europe by 2023. Europe has 11 different electric cars to choose from, priced under $45,000. In Canada, there are only two, and electric car sales accounted for 10.8% of sales last year.
Environment Minister Steven Guilbault said in a statement that the PBO report was “well thought out,” noting that it confirmed that electric vehicle prices continue to fall compared with gasoline models.
Government regulations setting out the sales directive have contributed to this, with one study suggesting that the cost of a petrol car will increase by 6.1% by 2035, while the cost of an electric car is expected to fall by 22% as a result of the directive.
He noted that the PBO report does not include the purchase or cost of plug-in hybrid vehicles, which for some consumers are a bridge between pure electric vehicles and gasoline models.
By 2023, plug-in hybrids, which use both an electric motor and an internal combustion engine, will account for 3% of total car sales and 24% of all electric vehicle sales.
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