Canada

Major Developments in 2023

2023 Federal Budget

In March 2023, the Government of Canada (GoC) launched its federal budget, which amongst various measures to build a stronger and more sustainable economy, proposed a refundable tax credit equal to 30% of the cost of investments in new machinery and equipment used in the manufacturing and processing of clean technologies, and in the extraction, processing, and recycling of critical minerals essential for EV batteries.

Zero-Emission Vehicle Purchase Incentives

The GoC Incentives for Zero-Emission Vehicles (iZEV) Programme experienced unprecedented uptake in 2023, up 153% compared with uptake in 2022. By the end of 2023, the iZEV Program reached a cumulative milestone of 330,000 Zero Emission Vehicles (ZEV) incentivised since its launch in May 2019. In October 2023, the GoC implemented some adjustments to the Incentives for Medium and Heavy-Duty Zero-Emissions Vehicles (iMHZEV) Program to better ensure program integrity and efficient use of funding towards commercial vehicles. The adjustments include a revised vehicle eligibility criteria to clarify certain vehicle classes as commercial vehicles or medium-duty passenger vehicles (MDPVs) under the program, a new incentive rate of 3,700 USD for classes 2B and 3 MDPVs, and a 74,000 USD retail price cap for MDPVs.

Electric Vehicle Availability Standard

In December of 2023 as part of Canada’s 2030 Emission Reduction Plan, the federal government expanded their plan to reduce light duty vehicles GHG emissions by publishing the Electric Vehicle Availability Standard. Under the Standard, automanufacturers and importers must meet annual ZEV-regulated sales targets. The targets begin for the 2026 model year, with a requirement that at least 20% of new LDVs offered for sale in that year be ZEVs. The requirements increase incrementally over time and reach 100% of sales by 2035, for new LDVs which include passenger cars, sport utility vehicles (SUVs), and light trucks. In conjunction with the 2030 Emissions Reduction Plan, this standard places Canada on a path for a 40 per cent emission reduction when compared to 2005 levels. In addition, Canadian EV owners can expect a cumulative 27.3 billion USD in savings on fossil fuel costs by 2050. Moreover, the continued rollout of ZEVs in Canada is expected to reduce GHG emissions by over 360 million tonnes by the same year.

Outlook

Canada continue to support the adoption of EVs with targeted policies and an integrated approach to tackling climate change.