ENVIRONMENTAL DEFENCE, ÉQUITERRE

Study reveals automakers use ‘greedflation’ to capture value of electric vehicle purchase incentives to boost profits and subsidize sale of gasoline cars

Ottawa | Traditional, unceded territory of the Algonquin Anishinaabeg People – Today, Environmental Defence and Équiterre released a new report titled Profiting from Pollution: How the auto industry is fighting against clean car regulations. The report finds that requiring automakers to meet Ottawa’s climate goal of reaching 100 per cent electric vehicle sales by 2035, as outlined in the federal emissions reduction plan (ERP), would lead to a 20 per cent reduction in electric vehicle prices because automakers would have to put affordable models on the market instead of just focusing on luxury models. 

Zero emission sales targets must be enforced to reach climate goals

The report is supported by a study led by Dr. Jonn Axsen, Director of Simon Fraser University’s Sustainable Transport Action Research Team (START). The study finds that enforcing sales targets with a regulation called a Clean Car Standard would cut carbon emissions by 135 million tonnes, equivalent to 57.5 billion liters of gasoline not burned.

Through economic modeling, the study compares recommendations from auto industry lobbyists and climate groups to analyze the different outcomes from proposed policies to manage Canada’s transition to zero-emission vehicles (ZEVs). Results indicate that a business-as-usual scenario will mean ZEV sales will only account for 39 per cent of new market share by 2035.

“Canada will miss its zero-emission vehicle sales targets unless we back them up with strong regulatory action. As climate negotiations are still ongoing at COP27, Ottawa has a clear choice to make: they can either listen to the auto industry’s costly false solutions and miss our ZEV sales targets or show leadership by delivering real climate action for Canadians with a strong Clean Car Standard. Not only is this policy successful in Quebec and in British Columbia, but it also complies with Canada’s global climate commitment made at COP26.” stated Andréanne Brazeau, Mobility Policy Analyst at Équiterre. 

Automakers lobbying for a costly false solution that misses sales targets and lines their pockets

Despite their commitments to produce more electric vehicles, automakers have been working through their industry associations, the Canadian Vehicle Manufacturers Association (CVMA) and Global Automakers of Canada (GAC), to push back against this proposed regulation. The auto industry is recommending that the federal government triple EV purchase incentives (from $5,000 to $15,000) as a preferable alternative. 

The study reveals that the auto industry is able to capture a significant portion (up to 18 per cent ) of the money supposed to go to consumers in the form of purchase incentives for electric vehicles. By raising their EV price markups, they utilize the captured public funds to subsidize the sale of gasoline powered cars. Ultimately, modeling the policy they are lobbying for up to 2035 reveals that it would cost the public purse more than $54 billion dollars, $10 billion of which would get pocketed by the auto industry, and still fail to meet sales targets because the money is used to lower the price of gasoline cars by $2,300 and subsidize their sale instead. 

“Automakers are using ‘greedflation’ to capture electric vehicle purchase incentives meant for consumers to line their own pockets and subsidize the sale of gasoline cars. Now they want the federal government to subsidize their profits even more instead of complying with a regulation which will make electric vehicles more affordable for everyday Canadians. It’s clear that we can’t trust the auto industry with the future of our climate because they will always put their bottom lines first. The federal government should not let the greed of the auto industry stand between us and a sustainable future. A Clean Car Standard is a win for both the planet and pocketbooks.” Nate Wallace, Clean Transportation Program Manager at Environmental Defence said. 

The full report can be read here.