Article content
Electric vehicles don’t run on electricity so much as they run on government subsidies.
Article content
In Canada, this includes federal and provincial subsidies for consumers to buy electric vehicles and federal and provincial subsidies to EV manufacturers to build assembly and EV battery plants here.
Article content
Now, there’s a new twist.
CBC News reports the Trudeau government is planning to subsidize the ongoing production costs of EV battery manufacturers.
It says the government believes it’s necessary to compete with similar subsidies offered by US President Joe Biden to American manufacturers of EVs and the batteries to run them.
To be clear, our governments were subsidizing the manufacture of internal combustion engine (ICE) cars and trucks long before EVs entered the market.
Prime Minister Justin Trudeau and Premier Doug Ford now regularly appear on the same stage jointly announcing billions of dollars in taxpayer-funded support for EV manufacturers, just as previous governments did for the production of ICE vehicles.
Article content
RECOMMENDED VIDEO
We apologize, but this video has failed to load.
But the new wrinkle is this reported federal decision to subsidize the ongoing production costs of EV batteries in order to compete with the US, whereas previously government support of the auto sector was focused mainly on capital costs to build new production facilities.
Governments are also subsidizing the build out of EV charging stations across Canada and planning to upgrade and retrofit electricity grids to meet the increased demand for electricity.
Much of this is inevitable, given that the auto sector is a major part of the Canadian economy and 85% of vehicles and parts produced in Canada are exported to the United States.
What taxpayers should be aware of is that subsidization of the EV industry here will involve huge costs, which are only going to increase.
In Ontario, for example, while the Ford government is making a major play to make the province a North American center for EV vehicle and battery production, it also canceled financial subsidies to EV car buyers introduced by the previous Liberal government.
Without those subsidies, experience has shown, EV sales tend to lag behind other jurisdictions that have them, so the pressure in Ontario will grow to do the same.
In other words, the public costs of EV vehicles are not going anywhere but up.